GlobalTort : Commentary from lawyers and experts on mass torts, law, insurance and science

A new article is out regarding problems with asbestos bankruptcy trusts, which are the antithesis of transparency, as previously described here and here. In a prior article last year, three Cozen O'Conner lawyers (they represent insurers) wrote a significant Norton Bankruptcy Journal article detailing the lack of transparency in the asbestos trusts. The authors are William P. Shelley, Jacob C. Cohn and Joseph A. Arnold. You can obtain the full article here at Cozen's website.
Now, Messrs. Cohn and Arnold are back with an updating June 22, 2009 article titled: New Generation of Asbestos Trusts Encourages Double Dipping. The article is published at the Daily Journal, which requires a subscription.

Among other things, the article describes two recent events that are helping focus more sunshine on the asbestos trusts and give trial defendants the benefit of offsets. Thus, they describe a Washington state court decision in which a trial judge allowed "asbestos defendants "a setoff for amounts: "received to date," "agreed to and to be received," "that can be obtained by application to existing bankruptcy trusts" and "that can be obtained from bankruptcy trusts expected to soon become available" Coulter v. AstenJohnson, 2008 WL 4103199 (Wash. Super Ct., May 30, 2008). The authors also address developments in Los Angeles where the judge presiding over asbestos cases issued a May 27 Third Amended General Order No. 29 requiring plaintiffs to file a case report disclosing basic product identification and exposure information, and to attach a "copy of each bankruptcy proof of claim relating to asbestos exposure which plaintiff(s) has submitted to any bankruptcy Trust."

As simple as those steps sound, most trial courts have not yet entered similar orders. Why? Some plaintiff lawyers have too often managed to defeat letting sunshine make a its way into asbestos trusts. Much more sunlight is needed.

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The Wall Street Journal for June 29 is reporting that GM agreed to assume the financial burden of future product liability claims. The article, by Mike Spector. is here.

Meanwhile, Docket Number 2609 is a Rule 30(b)(6) deposition notice from counsel for an asbestos creditor to take depositions of persons designated to speak by the Treasury Department and GM regarding various facts, including the reasons for the structure of the GM deal. The deposition notice is well worth reading. It call for depositions beginning Monday morning at 10:00. The same lawyers at Caplin & Drysdale previously issued notices calling for depositions of persons submitting declarations on behalf of the government.

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Ms. Gina Kolata is back with another important but depressing New York Times article on the failure of our national policy for addressing cancer. Her series started with a late April article. I mentioned it here in a post that provided links to sources showing that more people die in the US every two days due to cancer than died on 9/11/01, and that a careful, extended study showed that the direct costs of cancer treatment are exceed by indirect costs of cancer at a ration of about 2.3 to 1 by the indirect costs.

The gist of her new article is to demonstrate that our nation fails to fund research on new ideas and instead strongly tends to fund new research in old areas. Doing so of course has its advantages in that little risk is taken, but the article also explains that taking risks and following new ideas is often how we make real progress. Indeed, just think of where we might be if Dr. Salk had been stuck thinking in conventional ways. Ironically, the later online version of the Sunday NYT includes a new article reporting on success in battling cancer in animals through some unusual techniques developed in Australia that take advantage of leaks in tumor blood vessels to deliver minicells that mark the area for treatment.

For a dramatic, detailed and easy to read example of why new thinking is a MUST for cancer, read Dr. Folkman's War. http://www.amazon.com/Dr-Folkmans-War-Angiogenesis-Struggle/dp/0375502440
The book tells the story of how a stint doing pathology and seeing tiny tumors throughout bodies ultimately caused Dr. Judah Folkman to reach the profound insight that all solid tumors need blood vessels to grow, and that something in the body must turn on and off the ability to generate blood vessels. As the book details, Dr. Folkman and his ideas were rejected and indeed even ridiculed. But after many years , his unorthodox theories ere proven correct. Research continues today into how to delay or stop tumor growth using some of the principles he developed, and some promising results have been obtained.

In short, there is much to be done to create a strong national or global strategy for solving or managing the myriad types of cancer. Indeed, I've come to the view that all the walkathons and charities are in a way counterproductive. Why? Because they implicitly send the message that cancer has to be solved through relatively modest hard-earned donations instead of through a massive national and international funding of efforts to find cures for cancers.

Finding ways to cure or manage cancer should be a priority of our government for both objective and subjective reasons. On the objective side, the direct and indirect costs of cancer are huge as detailed by the study mentioned above, and our economy needs the short term and long term jobs that new science may create (which would blue collar jobs as well because fermenting yeast to grow medicines is much like brewing beer, except even cleaner). For subjective reasons to find answers for cancer, consider that every two days, over 4,000 people will die from cancer. Our government, however, has not spent hundreds of billions of dollars a year to avenge the thousands of the thousands of "homeland" cancer deaths that occur every day.


For data for cancer for 2009, see:
http://www.cancer.org/docroot/STT/STT_0.asp

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Non litigation alternatives are indeed being pursued in GM to try to settle pending and future product liability claims, as is evidenced by a Friday's June 26 Wall Street Journal article my Mike Spector and Jeffrey McCracken regarding state attorney generals trying to negotiate with the Obama administration over the treatment of product liability claims in GM. The article does not provide any specifics on where the money would come from, but my bet is still on the concept of asking the government to turn over some of its ownership rights in "new GM" to a product liability trust created to pay claims.

The article does not mention multiple key issues that would have to be addressed if a trust is created. One would be: how will someone decide whether or when future product liability payments would be made. Would the claims be made be made through a trust with money set aside to pay claims? Would claims be processed administratively without a trial ? Would the bankruptcy court delegate to state courts the job of trying cases to resolve claims through actual trials ?

Beyond those direct issues, consider also the important rights and interests of the myriad other entities who are routinely sucked into product liability cases with GM when cars are in crashes. Let's assume a trust is set up to pay future product liability claims from a financial base comprised of some cash and stock, as is typically done in asbestos bankruptcy trusts. If a trust is created, then multiple issues arise.

One issue when and how the trust coordinates with state court tort system claims and the rights of other tort system defendants. Suppose, for example, that a car crash victim driving a GM car claims that he is a quadriplegic because a seat malfunctioned. Assume also that the claimant cannot sue GM due to the bankruptcy court having issued an injunction purporting to prohibit future product liability claims against New GM, and old GM has no money. Suppose the quadriplegic does not sue either Old or New GM and instead files a state court lawsuit that names as defendants the entity that manufactured and sold the car seat system to GM, the manufacturer of a component of the seat, and the car dealer that sold the GM car.

In that state court lawsuit, can those defendants do what they would normally do in the state court tort system, which is to bring a contribution or indemnity claim against GM (or the trust) if GM designed and specified the car seat system and/or the characteristics of the component? What are the rights of the car dealer who argues that she should not have to pay any money because all she did is sell the car? Can her company obtain indemnity from that trust or GM ? Can the plaintiff file a claim against the trust and keep it a secret from the parties to the state court litigation on the grounds that processing a trust claim is "a settlement?" Can the plaintiff take the state court case to trial, win money and then later obtain additional money from the trust?

All of these issues are very real, and exemplify problems that have been dealt with badly in asbestos bankruptcy cases where the rights of co defendants have been given at best nominal treatment, and trusts have frequently failed to honor the rights of co defendants. The problems are exacerbated by the reality that many but not all members of the plaintiff"s bar have been gaming the overall compensation system by bringing a state court claims for asbestos injuries, but trying terribly hard to keep the state court defendants from learning anything about claims submitted to any of the many asbestos trusts that collectively hold something in the vicinity of $30 billion. The problems also are made worse by terms in many of the asbestos bankruptcy trusts that purport to allow the plaintiff's lawyers and their clients to resolve the state court claim in full and to then later bring claims against the trusts, thereby obtaining compensation twice in some but not all cases.

Why have these lousy situations emerged in asbestos bankruptcies ? There are a variety of answers and factors, including the plaintiff's bar and debtors trying to keep co defendants and insurers from being allowed to exert any rights in bankruptcy. Another problem is that the bankruptcy court lawyers and judges in general have little or no understanding of the intricacies of product liability claims. Yet another problem is that the bankruptcy code was not designed in terms of its intersection with product liability claims, in part because product liability as we know it today did not really take off and become a major issue until the 1970s. And, when an asbestos bankruptcy code section was added in 1994, the section was very poorly done and bears much of the blame for the asbestos bankruptcies. Yet another problem is that insurance that might be used to pay such claims is often compromised through "an insurance policy buyout" in which an insurance company agrees to pay a fixed amount of money in return for the insured company releasing all of its rights under the product liability insurance. To the dismay of product liability claimants, the money generated by such buyouts typically is not put into a trust and instead of the money may be used for any other purpose, including trying to stave off bankruptcy by paying fees to lawyers and/or investment bankers, or may be be used to pay off secured creditors, leaving no source of funds for product liability victims. And, cynics have said that bankruptcy courts are out of control and so pro-debtor that they will do anything to get a debtor out of chapter 11, including trampling the due process rights of co defendants and tort victims.

One hopes that a much better solution will be created for the GM and Chrysler bankruptcies. One hopes that a better solutions will then be implemented for past and future asbestos bankruptcy trusts. Some but not all of the existing asbestos trusts have failed to respect the rights of tort system of co defendants, and have left the remaining manufacturers to beat he financial burdens created by the bankruptcies of other defendants. This would be a great time to start fixing some of the myriad problems created by the intersection of "long tail liability" claims and chapter 11 cases.

Here are a key excerpts from the Wall Street Journal article:

"The case law is unclear and ambiguous on the issue of future product-liability claims. So when the case law is all over the map, a lot of times it makes sense for both sides to settle," said one administration official."

***

Last year, GM set aside $921 million for product-liability litigation, and in 2007 it had $1.1 billion available.

"Everyone agrees there has to be some access to the courts," said Maryland Attorney General Douglas Gansler, a Democrat who co-chaired Mr. Obama's presidential campaign in the state.
The auto task force has been caught off guard by the recent outcry from attorneys general and consumer groups. The task force modeled GM's bankruptcy plan after Chrysler's, without giving much weight to the potential fallout from leaving product-liability claims behind, said people familiar with the matter."

"In opposing GM's product-liability plan, state attorneys general are raising a number of complex legal issues, ranging from the power of federal bankruptcy courts to supercede state law to constitutional due-process rights of Americans to sue GM if they're injured by the auto maker's vehicles in the months and years ahead."

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Here is Walter Olson's recent post linking to articles and underlying documents regarding California's voluntary dismissal of its appeal in its global warming lawsuit against car makers. Here, Jenner & Block provides some older commentary on other rulings in the area. For pro plaintiff coverage, see the warminglaw blog that is here and an old post here includes a link to the district court's opinion.

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More and more, entities with a stake in actual or potential litigation are taking different paths to an outcome regarding the costs suffered by persons harmed by defective products. My personal bet is that soon there will be requests to Congress to use some of the government's shares of New Chrysler and New GM to provide the financial basis to create a fund to pay the product liability claimants against Chrysler or GM for whom apparently will be no money to pay whichever of the claims are valid. Indeed, in a hearing yesterday, tort claimants made no forward progress with Judge Gerber.

Two recent examples of creative solutions are set out below. In one, legislators are asking for tax deductions for homeowners with Chinese drywall problems. In the other example, states have specifically legislated that health insurers must pay for some autism treatments that insurers such as Blue Cross of Michigan had refused to cover, and now Blue Cross has agreed to settle the claims AND is now selling a special form of coverage for intensive autism therapy. The message of course is: think creatively. See below for more specifics.
_______________________________________________________________Here is the link to the article on the Chinese drywall.
Lawmakers Ask IRS for Chinese Drywall DeductionWashington, D.C.(June 22, 2009)
By WebCPA StaffFour Southern congressmen have written to the IRS asking for casualty loss deductions for homeowners whose property has been damaged by installations of defective Chinese drywall.Sens. Mark Warner, D-Va.; Jim Webb, D-Va.; and Bill Nelson, D-Fla., along with Rep. Glenn Nye, D-Va., wrote to Floyd Williams, national director of legislative affairs at the IRS, to point out the problems that their constituents have experienced with the drywall.Sen. Jim WebbThey noted that many homes with Chinese drywall have shown evidence of extreme corrosion of pipes, air conditioning coils and electrical appliances.
________________________________________________________________

Here (very detailed) and here are links to articles about autism and Blue Cross Blue Shield of Michigan

In a settlement, Michigan insurance company agrees to pay for autism treatments Tresa Baldas June 22, 2009In what plaintiffs' lawyers are calling a landmark autism case, a Michigan insurance company has agreed to reimburse at least 100 families for costs involving treatments for their autistic children.The $1 million class action settlement from Blue Cross Blue Shield of Michigan comes amid a legislative wave in which a growing number of a states are passing laws that require insurance companies to pay for autism treatments and screenings. To date, 13 states have such laws, the most recent being Connecticut, Colorado and Nevada. New Jersey is currently considering an autism bill, and Pennsylvania's law goes into effect July 1.

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Per this article from Delaware Online:

June 25, 2009
DuPont sued over asbestos in ArgentinaEx-Lycra plant workers say they were exposed
By ANDREW EDER and AARON NATHANS
The News Journal

DuPont Co. exposed workers in Argentina to asbestos until the late 1990s despite knowing the risks of the material, according to three lawsuits filed Wednesday in Delaware.
The lawsuits came from former workers at a Lycra spandex plant in Mercedes, Argentina, that was part of DuPont until the sale of its textile unit in 2004.
DuPont knew that exposure to asbestos could harm workers as early as 1964, the complaints said, but the company continued to use asbestos in the heat pipes and machinery of its Argentina facilities until the late 1990s.
The workers, Cristian Dematei, Juan Carlos Laborda and Ceferino Ramirez, are represented by the Wilmington law firm Jacobs & Crumplar. The law firm said more lawsuits would follow.
Dematei, who worked at the facility for 11 years, suffers from asbestosis, a chronic condition that causes shortness of breath and an increased risk of lung cancer, the complaint said.
Laborda worked at the plant from 1968 to 1980, according to his complaint, and suffers from asbestosis and asbestos-related lung cancer.
Ramirez worked at the facility for 32 years before retiring in 1993. He has been diagnosed with asbestos-related laryngeal cancer and asbestosis, his lawsuit said.
The lawsuits allege that workers were never warned of the dangers of asbestos exposure or given respiratory protection.
Amanda Velazquez, asbestos medical paralegal for Jacobs & Crumplar, said: "They need to break the double standard," referring to DuPont stopping using asbestos in U.S. plants earlier.
DuPont spokesman Dan Turner said, "While we have not had the opportunity to review the filing yet, and cannot comment on the specifics, we do find it puzzling that the plaintiff's attorneys have filed the compliant in Delaware rather than the country of origin. The safety and health of our employees, our neighbors and our community has and continues to be DuPont's highest priority."
Velazquez said it makes sense to sue a company in the place where it is based.

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In response to some requests, there is now an email subscription that allows you to receive an email of every new post. If that is of interest to you, look at the top left hand corner of the blog.

As to technical issues, even Google screws up. In fact, Google is having problems getting posts to actually show up on the blog when scheduled to appear. So, for that reason, two new posts showed up at about the same time today. The same posts may repeat themselves in the future. If that happens, I apologize but I cannot control when Google gets the problem fixed.

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Current articles here and here follow up on a conference in Israel regarding a town there with high mesothelioma rates. Asbestos campaigners long-ago reported here that the town included an asbestos-cement plant that used the amphibole asbestos fibers known as crocidolite and amosite. A detailed report with pictures is available here at World Asbestos Report. The company operating this plant is said here to have been Eitanit, formerly known as Isabest; wit the town and factory located in Nahariya, in the Western Galilee.

According to one of the articles above:

According to an old article you can find online through various paid sources:

COPYRIGHT 1991 Israel Business TodayEitanit Set to Re-enter U.S. Market The U.S. Federal Court recently canceled the ban on asbestos products initiated by the EPA in 1989. The decision opens the way for Eitanit, formerly called Isasbest, to reenter the U.S. market. The company is the only manufacturer of asbestos products in Israel and anticipates sales of $25 million in 1991. Managing Director Uri Peled says the company has invested significant sums in reducing health hazards to its 200 employees. Eitanit is owned by the Federman family.

Old manufacturing plants also have created issues'>http://www.eia-usa.org/forum/viewtopic.php?id=14">issues in the Chicago area as an old Manville plant that used amphibole fibers was located in Waukegan near an Illinois public beach and state park.

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Do not miss a fascinating June 24 article in the New York Times regarding the tort litigation seeking damages from the Saudi royal family for the 9/11 attacks, and make sure to click back through the prior articles and briefs linked to in the past articles. One issue of course is sovereign immunity. Another issue is secrecy - the article quotes from documents said to help prove the claim that some members of the royal family provided financial support to groups said to be linked to terrorists. So far, the immunity defense is prevailing. There also is an ongoing battle about whether the documents can be made public since they were apparently leaked to one of the plaintiff's firms, the Motley Rice firm of asbestos and tobacco fame.

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Asbestos campaigners in the UK have embarked on a 1,200 mile bicycle trip to publicize the need for more medical research into asbestos-related cancers and to publicize asbestos issues. The trip is the subject of a blog known as "Breath-Taking Journey" and is found here. The ride is to end on July 4.

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An article here provides a quick comment from Elizabeth Warren and mentions law students who helped Prof. Isacharoff.


A Law360 article here includes the following quotes:

"Gary Svirsky, a partner in O'Melveny & Myers LLP's securities litigation practice who has been observing the case, said in an e-mail that the Supreme Court "opted to rule on the narrowest of grounds." The court may have opted to keep its decision narrow "so as not to unduly limit the court's flexibility in addressing complex problems that might be raised in future bankruptcies," such as the recently filed bankruptcies of U.S. automakers, Svirsky said."While beyond the scope of this report, the issues posed by nonderivative claims remain open and alive after this decision in our opinion," he said.
The court "seems to have gone out of its way to not adjudicate the actual merits of the dispute and just say that it has to progress in an orderly fashion from the bankruptcy court," said Samuel Issacharoff, a New York University law professor who represented asbestos claimants in the case before the Supreme Court.serving the case, said in an e-mail that the Supreme Court "opted to rule on the narrowest of grounds."
An Am Law blog article by Alison Frankel reminds readers of prior exuberant comments by Travelers' counsel, Mr. Ostrager, and quotes him as follows:

Ostrager told the Litigation Daily by e-mail that the Supreme Court ruling is "100 percent in our favor." He added: "Every aspect of the Second Circuit's substantive legal reasoning was rejected (either expressly or by implication). It is, therefore, a complete and total victory."

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An article by Steve Korris in the Madison County Dail Record provides an update on CSX's lawsuit targeting the Pittsburgh-based Peirce, Raimond plaintiff's law firm and radiologist Ray Harron, one of the doctors identified by many as facilitating bogus claiming. The case is set for trial in August on CSX's claims that in essence accuse the law firm and doctor of manufacturing bogus law suits. Here are some key excerpts from the article:

"Baylor's case was a sham," CSX lawyer Marc Williams of Huntington, W.V. wrote to U.S. District Judge Frederick Stamp on June 16.During his May 11 deposition, Baylor "had virtually no knowledge of the circumstances" around his representation by Peirce, Raimond and Coulter of Pittsburgh, Williams wrote.

He wrote that Peirce firm lawyers "consistently acted without his authorization."He wrote that at his deposition Baylor identified his own signature on a questionnaire but said handwriting on the asbestos exposure section belonged to someone else.

Stamp plans to start trial Aug. 11 on CSX's fraud conspiracy suit against the Peirce firm, owner Robert Peirce, and radiologist Ray Harron of Bridgeport, W.V."

The Record, as its known, is a great source for general information about litigation developments in some well-known venues for tort litigation. The information comes with a definite but disclosed pro-defense view, as explained here. Different iterations of the Record focus on different "plaintiff-friendly" jurisdictions, including West Virginia (go here) and southeast Texas (go here).

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What will the global litigation industry look like in 10 years? My bet is that it will look increasingly entrepreneurial, and more like the litigation industry as it presently exists outside the US.

In Australia, a personal injury law firm known as Slater & Gordon went public back in May 2007, as it describes on its history page. That development caught the eye of the WSJ - see here.

In Europe, there is an interesting variation on that theme as corporate law firms already include groups of lawyers working on contingent fees for personal injury claimants. Thus, Field Fisher Waterhouse looks like and is a corporate law firm with offices across Europe, as you can see by visiting its home page. In addition, however, the firm also has an apparently active, successful practice representing personal injury claimants in a wide range of claims. The website page for personal injury claims is here, and describes the firm representing plaintiffs in medical malpractice litigation and in asbestos litigation.

In the US, the move to entrepreneurial litigation is today the subject of a growing number of discussions about moving away from the billable hour to flat fees and contingent fees for litigation and corporate work. Indeed, there is an already active alternative entrepreneurial approach used by boutique law firms (e.g. Bartlit Beck; Valorem Law Group; Boies Schiller ) and some large law firms (e.g. Robins Kaplan for some time, with Saul, Ewing and Kirkland & Ellis now saying they are doing the same) working for corporations on contingent fees and various forms of flat fees. And, firms such as Robins Kaplan sort of took on personal injury litigation as plaintiffs when it represented the state of Minnesota in tobacco litigation. Take a read through the websites and note the wide range of cases handled for corporate Americas as plaintiffs.

Where will this end up in the US ? Hard to say due to state by state ethics rules, but plainly the American liitigation industry will become even more entrepreneurial, as it already is around the globe. And, with more and more corporations acting as plaintiffs, some traditional positions are going to become harder to sustain. It will be, for example, harder for corporate America to complain credibly about contingent fees and "trial lawyers" when corporate America is using the same approach.

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Chinese drywall claims are emerging as a would-be class action issues in the WCI Communities chapter 11 case pending in Delaware. Would be class representatives filed papers seeking permission to present a class proof of claim. WCI has now responded with a brief opposing the class. The opposition is routine in the sense that it follows all the now-standard tactics for seeking to block a class action regarding conditions in buildings. More interesting is the way this debtor wants to treat tort claims individually, in contrast to other "mass tort" cases in bankruptcy in which aggregation is said to be the answer. WCI's opposition brief is here.

WCI explains the issue as follows:


"By her Motions, Goldstein seeks permission to file a claim on behalf of a group of
individuals who have allegedly suffered damages from defective drywall originating from China ("Chinese Drywall") installed in homes by WCI built in Florida. In order to file a class proof of claim, Goldstein also requests that this Court certify a class for purposes of pursuing claims on theories of negligence, strict liability, breach of warranty, and negligent misrepresentation."

Unlike debtors in some other mass tort cases, the debtors here provided individual mailed notice on a broad scope to potential tort claimants. Specifically, the brief says that notice was sent to all who purchased WCI Homes in the last 10 years:

"6. All individuals or entities that purchased a home built by the Debtors in
the last ten years (the "Home Purchasers") received notice of the commencement of the Chapter 11 Cases and separate actual and constructive notice that February 2, 2009 at 4:00 p.m."

According to the brief, the number of claims filed is small ("over 70"), and so one one sees why the debtor opposes a class action that would increase claims. Also interesting is the Debtor's argument that bankruptcy court can and should individually resolve thousands of tort claims, an argument not heard when debtors and other plan proponents seek to "estimate" claim values.

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I've been through the opinion and dissent (here) a couple of times. Travelers won, sort of, and the Second Circuit was reversed, sort of. While reading, I wondered how much the opinion was or was not shaped by the efforts to stay the order on the asset sale in Chrysler, and the now pending efforts to obtain certiorari. We may know that answer some day, but who knows.

Further reading and reflection is in order, but some immediate reactions are as follows, bearing in mind that my reaction is influenced by recency. Specifically, this past Monday, I listened to a talk by Professor Jeffrey Rosen to the Chicago Lawyers Club regarding the Supreme Court. He spent some time focusing on his interview of Chief Justice Roberts and the Chief Justice's hope to use "business cases" to produce unanimous narrow rulings to enhance the authority of the Court. (BTW, lots of people have lots of things to say about Professor Rosen and shifting views, e.g. here, so I am not holding him out as "the expert.") Today's Manville/Travelers ruling is not unanimous due to the two dissents but certainly does fit the "narrow" criteria.

For Chapter 11 cases that involve material amounts of product liability claims, including Chrysler, GM and "asbestos bankruptcies," the Manville/Travelers decision today is so narrow that all sides likely will claim to take some comfort from the ruling. Realistically, no one can claim to have won a clear victory through today's opinion, except that Travelers is happier today than it would have been if Justice Steven's dissent were the Court's ruling. In fact, today's ruling is so narrow that the case is sent back to the 2d Circuit for more proceedings as to which entities are or may be bound by the prior rulings. The opinion thus highlights the importance of the 2d Circuit's conclusions and reasoning in 1) the direct appeal in Chrysler and 2) its opinion on remand in this case.

The opinion can be read to suggest that it is safer to challenge bankruptcy court rulings on direct appeal instead of through rulings in other, later legal proceedings, such as future product liability cases against the debtor or an alleged or actual successor entity, such as New Chrysler. That message will not be lost on 1) debtors that sold mass produced products, 2) product liability claimants, and 3) all other parties to state court product liability cases that involve a product made or sold by a debtor, including component suppliers and other co-defendants in the state court tort suits. Insurers also no doubt will take note too. Certainly today's ruling puts more focus on the presently pending direct appeal papers now in front of the Supreme Court in the Chrysler case.

No doubt others will have comments over the next few days; I will try to collect comments into one post.

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and available here, but I've not yet read the opinion.

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Who knew- apparently there is "libel tourism," a concept I learned about from reading Walter Olson at Pointof Law and then reading a recent Wall Street Journal article for which he provided the link. The article arises from a libel judgment entered against a science writer (Mr. Singh) who commands the respect of the WSJ. The article goes on to say that the burden of proof is essentially reversed in Britain, and that the burden is on the author to prove is on the author to prove that the article is "not libelous." This particular case apparently arose from the science writer taking issue with an article in which chiropractors asserted that they could cure are things such as colic, and the author called that claim "bogus." A 2006 article from Overlawyered indicates the House of Lords that year adopted a defense based on fair public comment. A group known as Sense About Science is complaining bitterly. Mr. Singh's credential s appear quite good; an account of his situation and appeal is posted here, and describes him as follows:

"Simon Singh completed a BSc in physics and a PhD in particle physics at Cambridge University before becoming a director and producer in the BBC science department. He worked on Tomorrow's World and Horizon and won a BAFTA for directing a documentary on the subject of Fermat's Last Theorem. After leaving the BBC, he wrote a series of bestselling popular science books, such as "Fermat's Last Theorem", "The Code Book" and "Big Bang". He has also presented several radio and TV programmes, and his educational initiatives include the Enigma Project and the Undergraduate Ambassadors Scheme. In 2003 he received an MBE for services to science education and communication."

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In Chrysler, the Official Committee Of Unsecured Creditors has filed a "limited objection to the efforts of the debtors to obtain their release of all potential tort and other claims against managers and others related to old Chrysler. The objection is Docket number 3991 on the Chrysler bankruptcy website and also is available here. The gist of the objection is that it is premature to release such claims until at least a hurried investigation has been conducted. The hearing on this issue apparently will occur tomorrow, June 18.

In other chapter 11 cases, the US Trustee's office in NY has recently objected to releasing non debtor parties when they have not made an extraordinary contribution to the bankruptcy estate, as I learned yesterday from reading LAW360 on bankruptcy. The objection was asserted in the Charter One bankruptcy, and is available here.

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Walter Olson 's PointofLaw has a June 12 post about Judge Weinstein writing a pessimistic paper about the way courts handle mass tort claims. Judge Weinstein may feel the need to write again after considering the Manville Trust's quarterly report for the 1st quarter of 2009. The report is available here, and is depressing both for what it shows and what it does not show.


The visible and depressing part of the report involves nonmalignant claims - the ones that seemingly have been fading away. But, that's not true for Manville during the first quarter of 2009. Instead, nonmalignant claims went back up - significantly - contrary to prior trends. They are said to be category 2 nonmalignancies, which means "asbestosis/pleural plaques" with a scheduled payment of $12, 000 (subject to prorated payment ) under the terms of the 2002 Manville TDP procedures available here - see page 7.

Specifics? Doing a little math from figures shown in the report's cover letter to Judges Lifland and Weinstein, it looks like there were about 2,900 nonmalignant claims, which is far more claims than ALL the Manville claims filed in 1Q 2008. According to the report's cover letter:

"During the first quarter of 2009, the Trust received 4,853 new claim filings compared to 1,776 for the same period of 2008. The malignant filing population has accounted for approximately 40% of the total for the first quarter of 2009 claim filings compared to 68% for the first quarter of 2008. The percentage decrease in malignancies is attributed to the sharp increase in the filing of unimpaired non-malignant Level 2 claims." (emphasis added)

"The Trust settled 3,749 claims for $30.4 million during the first quarter 2009 compared to 1,582 claim settlements for $14.8 million during the same period of 2008. The average settlement amount for the first quarter of 2009 and 2008 was approximately $8,100 and $9,300, respectively. Once again, the decrease in the average settlement amount is due principally to the higher percentage of non-malignancy claims settled during the first quarter 2009."


Also depressing is the lack of data in the report to tell readers where these nonmalignant claims are coming from and the nature of the supporting proofs. Are these claims from persons resident in the US or persons who live overseas? Are some of these claims from older claimants who perhaps really did inhale large amounts of Manville fibers, or are some these claims from younger claimants with x-rays read by physicians of dubious repute who have not yet been banned from submitting the reports ? Or, are these all valid claims supported by sound medicine and science ? The report does not shed light on the answers to the questions. Once again, bankruptcy- related proceedings prove themselves to be the antithesis of transparency, and the Manville Data apparently remains unavailable, thus making it harder for anyone to figure out the real facts about tens of millions of dollars that perhaps should instead be available to be paid to mesothelioma claimants.

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The UK is famous for assessing costs if a case actually goes to judgment. A new look at that topic is underway and is slated to produce a final report by year end 2009. A preliminary draft report has been issued and will be the subject of meetings and comments over the summer. More specifically, a press release from the British Judiciary explains that " Lord Justice Jackson has published the preliminary report in his Review of Civil Litigation Costs.The report is a major piece of work, deriving from four months of fact-finding, research and receiving submissions, and it extends to over 650 pages with three annexes and 30 appendices. It is available" online here.


A June 1, 2009 article in Business Insurance by Sarah Vesey provides a terse summary of the report. She comments:

"In the report, Justice Jackson said several potential changes to the existing cost regime for group actions "merit consideration."

Among them are instituting a no-cost-shifting rule; allowing cost-shifting for only part of the proceedings, for example only after the stage where a class wins certification; implementing a common funds doctrine, such as that used in the United States in which successful lawyers are entitled to have their fees reimbursed from the fund awarded to the class; public interest litigation, whereby the court has power to order that no cost-shifting occur when a group representative brings an action on an issue of public interest; and using a lower-cost scale for collective actions.

Justice Jackson said his "tentative view" to do away with cost-shifting for collective actions merits serious consideration in the second phase of his review and would, among other things, promote access to justice and be fairer for defendants."

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Looking for a tight but informative summary of changes around the globe with respect to (1) aggregate or class action litigation, (2) contingent fees and litigation funding, and (3) exemplary or punitive damages? If so, you should read a new article, "Global Litigation Trends." The authors are Mark Behrens, Gregory Fowler and Silvia Kim, who are all Shook Hardy lawyers. The article was published at 17 Michigan State Journal of International Law 166 (2008-09). You can download it here from the TortsProf blog.


I particularly liked the article because it packs a material amount of information into 30 pages. The first two sections provide an overview of particular developments in aggregate litigation/class actions and some nation by nation citations to articles on aggregate litigation. Those highlights are followed in section III by an incredibly handy reference tool that provides a country by country synopsis of the aggregate litigation procedures increasingly available in countries ranging from Argentina to Taiwan, followed by a brief section IV addressing EU law aggregate litigation developments. Section V addresses developments in paying for litigation. First covered are changes around the world with respect to contingency fees (they are permitted more places than you might think - for example, Italy recently passed legislation to permit contingent fees), as well as uplift fees, success fees and multipliers. The section also touches briefly on the rise of litigation funding outside the US. Global developments in punitive damages are covered in section VI. The article provides cogent cites to demonstrate that new attitudes are developing outside the US with respect to non compensatory damages.


As the name of this blog reflects, it seems plain enough to me that tort litigation is indeed going global, albeit with regional and national twists, not to to mention the intricacies of comparing civil law countries to common law countries, as well as developments in Asia where some countries have this century essentially embarked anew in their approach to courts and law because past law was feudal or otherwise outmoded. I was curious though to read the the concluding remarks of Mark and his colleagues since they (like me) are not academics and represent the defense side in most cases. Here's what they had to say:



"A growing list of countries outside the United States, including Canada, Australia, most European, and several South American countries, now recognize some form of multiclaimant litigation-- whether class actions, groups actions, or representative actions by consumer or public organizations. The trend, however, has been to reject wholesale adoption of U.S.-style class actions. What has emerged instead is a distinctly "un-American" approach that generally disfavors opt-out procedures and often allows public bodies and private consumer organizations to bring collective actions in addition to (and sometimes in place of) individuals. Foreign countries also have "not so far been inclined to change other rules that have helped make class action lawsuits practical in the United States." In particular, there have not been widespread calls to do away with the loser-pays rule. Contingent fees and punitive damages remain generally prohibited, but changes are occurring in this area and past prohibitions are softening. The stepstaken so far in these two areas, in particular, have been incremental and modest--but a wall is built one brick at a time. If collective actions become more prevalent, and the foreign plaintiffs' bar better funded and coordinated as a result, it would not be surprising to hear calls for broader and speedier reform."

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An interesting post at the Adams Drafting blog points out various issues regarding the meaning of the word "occurrence" in commercial insurance policies. Billions and soon trillions of dollars will change hands based on the meaning given or found by court's deciding insurance coverage cases for underlying toxic tort cases. The post includes comments from some lawyers who focus on insurance coverage for insureds, including Scott Godes. The following words from Scott are key:

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An article here describes a construction group in Dubai trying to raise consciousness regarding asbestos in building projects. This type of activity was what the US went through in the mid to late 1980s, and it spawned tort litigation seeking to recover the costs of coping with asbestos regulations. According to the article:

"By volume, there is more asbestos here than in the UK. The asbestos here is different to what you find back in the UK. It is usually asbestos cement and is classified as a lower risk. There is also legislation but it did not come into effect till 2006 and there is low awareness and a possibility that it is present in projects before that period. Besides, the current law only applies to asbestos boards. So it is legal to use water pipes for water supplies and sewage," said Faulkner. "Hence we are working with Build Safe UAE to create greater awareness among the 90 signatories of BSU."

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Update: The drywall litigation industry apparently is booming. A friend told me that prior seminars were attended by lots and lots of lawyers, and that the insurance coverage seminar for drywall was especially popular. I'm also getting emails telling me that only 9 seats are left for a June seminar in New Orleans on the topic by the HB Litigation Conferences Group.
Tort litigation is probably one of the few industries that tends to increase when there are tough economic times.

___________________________________________________________________
Media stories abound regarding the purported hazards of "Chinese drywall," and some websites provide links to some of underlying class action complaints.

Now my email inbox is filling up with other signs of the litigation picking up speed.



For one, a conference on the topic is being organized by Harris-Martin, which is a firm that publishes specialized litigation reporters and puts on specialty litigation conferences.



For another, industrial hygiene companies are touting their skills in this area and providing links to various online sources of information on the topic.

So, how far will this all go and what does it mean? I'm sure I do not know all the answers. What I can say with confidence is that the plaintiff's bar will use this situation to expand their knowledge of and precedents regarding suits against Chinese manufacturers and their distributors here in the US. I'm less sure of what the American distributors will do, but one suspects that they will want to minimize their risk of being the target defendants by working to help bring the actual manufacturers into court in the United States.

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The point of this post is to explore, briefly, whether injunctive relief is warranted in chapter 11 cases for harm that may arise if deadlines can not be met that arise from self -created emergencies? Indeed, can a debtor be deemed to have the "clean hands" typically required for equitable relief if it has fouled up a business so badly that it will fail with so little money that it will be unable to pay even 1 cent per dollar of tort claims against it?

These questions of course are posed in the light of the recent Chrysler situation where the debtor and Fiat cited deadlines they had agreed to as the basis for obtaining rapid injunctive relief. Certainly there are some situations in which a deadline actually may be real, and perhaps Chrysler was such a case. But certainly there also is room to question self-imposed deadlines and/or the genuineness of alleged harms said to arise from agreed dates for agreed actions. In some bankruptcy cases, courts have rejected self-created deadlines as a basis for preliminary or permanent injunctive relief. This issue arose, for example, in an asbestos bankruptcy, In re Federal-Mogul Global, Inc., No. 01-10578 (D.N.J.). There, bankruptcy Judge Raymond T. Lyons was called on to consider a request for a preliminary injunction to block the litigation of underlying asbestos cases against a non-debtor. According to the debtor, a preliminary injunction was critical because the debtor had made a deal that required the injunction by a date certain as a condition of the contract.

Ultimately, Judge Lyons held that injunctive relief was inappropriate because the situation involved essentially a self-created emergency. The path that took Judge Lyon to that result is presented in a January 20, 2006 hearing transcript available here. The debtors opened the hearing on their motion by arguing that a preliminary injunction could be issued under section 105 of the Code in order to protect the possibility of later entering a section 524(g) injunction to enjoin a host of underlying asbestos cases. See Tr. at 87. Various counsel for asbestos plaintiffs' lawyers, on the other hand, opposed the injunction, arguing that their clients should not be deprived of their underlying tort trials. The lawyers making this argument included lawyers representing asbestos plaintiffs' firms SimmonsCooper; Seitz Van Ogtrop & Green; Levy Phillips & Konigsberg; David Lipman and Gebhardt & Smith. One of the plaintiffs' lawyers, Mr. Ruckdeschol of the David Lipman law firm in Florida, explicitly argued that the injunction should be denied because it was "an emergency of the creation of the drafters of the term sheet." Tr. at 115.

Ultimately, Judge Lyons accepted that argument, among others, and denied the request for injunctive relief. In ruling, Judge Lyons memorably referred to a self-created emergency depicted in the movie Blazing Saddles:

"Let me focus first of all upon irreparable harm. And one of the opponents here has characterized this as a self created irreparable harm. And this really reminds me of the scene from the movie Blazing Saddles where the sheriff played by Clevon Little is being hassled by a crowd and he's being threatened with physical violence. And he pulls out a gun and he holds it to his head. And he says, stand back or I'll shoot the sheriff. The debtor in this case has agreed to a deal in which they've undertaken to get a preliminary injunction and the other party to the deal has said, if I don't get this preliminary injunction I'm going to withdraw from the deal. This to me is a totally self created scenario for irreparable harm. "

It seems to me pretty hard to argue with the logic of Judge Lyons.

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In a win for defendants in general and some asbestos defendants in particular, the U.S. Supreme Court issued a June 1, 2009 per curiam opinion holding that when FELA claimants pursue "fear of cancer" claims, the defendant is entitled to an instruction that the jury must find evidence that the fear is "genuine and serious." The opinion is titled CSX Transp., Inc. v. Hensley, 556 U.S. _______ (2009). The slip opinion is here. The issue arose because a plaintiff said to have suffered other severe diseases also claimed damages for alleged fear of cancer due to having been diagnosed as having asbestosis.


The win is significant for railroads and others because FELA applies nationally since it is a federal statute. Click here for a Wikipedia article on the history of FELA.

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The June 8, 2009 opinion is here. I've not made time to read it. Scotusblog provides a synopsis here. The bottom line is a holding that claims for torture etc under Hussein can not be made because of legislation signed by President Bush II.

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Now that the Chrsyler asset sale has been consummated, there apparently will be ample numbers of angry yterminated car dealers thinking about legal remedies. Especially for those who recently purchased or invested ample money in a dealership, a very recent Illinois Surpeme Court decision may become popular for some of those seeking remedies as it explictly allows a promissory estoppel remedy even when a contract-based recovery would not succeed. The damages awarded may be limited but could prove better than nothing IF a source of funds could be found. The April 2, 2009 decision is Newton Tractor Sales, Inc. v. Kubota Tractor Corp. , --- N.E.2d ----, 233 Ill.2d 46, 2009 WL 886866 (Ill.). The Court's free version of the opinion is here. There may also be exploration of claims that seek to reach pockets of insurance, such as D & O coverage.

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http://www.courtoons.net/2009/06/10/fiat/

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Walter Olson's Overlawyered blog post steers readers to a New York Times article with a link to the US government's brief opposing suit against Saudi Arabia for 9/11. Interesting reading on the Foreign Sovereign Immunities Act.

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The Medicare, Medicaid, and SCHIP Extension Act of 2007 is prompting lots of concern among tort litigants. The gist is that many but not all parties expecting to pay a tort settlement - to a person eligible for Medicare - must register with the federal government and then report payments to the federal government effective as of July 1, 2009. The point of course is to let the government seek to obtain reimbursement for its expenses to delay the day when Medicare becomes insolvent.


Guidance on compliance is out there. For example, the basic rules are spelled out in a short online article by defense lawyer Keith Whitson and others at Schnader Harrison, and other more detailed online articles also are avaible here . On the plaintiff's side, bar groups are advertising seminars to educate plaintiff's lawyers about the rules. Some deep background from Matt Garretson to plaintiff lawyers is available here, but is useful for anyone.

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The stay was lifted in a two page order available here. The experts at Scotus blog offered some interesting views on how much this order does or does not mean and noted in commentary that one appeal for certiorari has been filed with the Court. As to the issues for future product liability claimants, it seems fair to assume that collateral changes will arise in the future, as was successfully done in the later stages of the Agent Orange litigation by future claimants whose interests were not properly represented in the original Agent Orange proceedings. See Stephenson v. Dow Chemical, 273 F.3d 279 (2d Cir. 2001). Here, it seems difficult to realistically argue that future product liability claimants could be or were given meaningful or timely notice of the Chrysler proceedings, and there was no designated futures representative, much less an adequate future representative or a meaningful hearing on the issues specific to the future claimants. Time will tell what happens on direct appeal or later collateral attacks. But the Manville/Travelers opinion should be out withing the next three weeks and perhaps will include relevant rulings or clues.

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How many chances will you have to actually save a life? An opportunity for you may be at hand. June 8 - 22 is the time period for free registration to be a potential donor for the bone marrow cells that may well be the only chance life for the hundreds of thousands of individuals in the United States who every day are battling blood cancers and other diseases. The matches really do happen; a recent news story describes one such match. http://abclocal.go.com/wls/story?section=news/local&id=6854698

Perhaps you, like me, may have thought the need for bone marrow donations is an old problem that's been solved by new science. Not so. In fact, the need for bone marrow donors actually is increasing rapidly !

Why? Two key reasons, among others.

First, the rates for lymphomas and leukemias are spiraling upwards to stunning annual numbers. Consider just one of those cancers - non-Hodgkins lymphoma. The rate used to be 55,000 cases per year in the United States, but now the rate is up to 66,000 new cases per year in just the United States.

As of 2008, about 575,000 people in the United States are living with NHL, and the victims may relapse at any time even after having achieved remission through treatment. Some persons will need more than one bone marrow transplant to come even close to a normal life span. For all the grim statistics, go to the website for the Leukemia and Lymphoma Society. It has all the stunning numbers. http://www.leukemia-lymphoma.org/all_page.adp?item_id=7087

Second, there are today many inter-racial children, and many more will arrive in the future due to the huge growth in international adoptions that move children into a new continent where the odds are they will not marry another person from the same race. Finding marrow for children from inter-racial marriages is a rapidly growing challenge that will only get bigger due to globalization.

In short, leukemias, lymphomas and other diseases can be treated (sometimes cured) through bone marrow donations, so please register now while registration is free.

Two more things. Treating these diseases through chemotherapy requires significant amounts of blood transfusions to replace cells killed during chemotherapy, and therefore blood donations also are very important. Umbilical cord blood donations also are welcomed. So, please keep those donation paths in mind, including mentioning cord blood donations when grandchildren are arriving. And, donations for scientific research are always welcomed.

The online donation form is at the link below. All you have to do is fill out the forms and mail back in a swab you will be sent by mail.

Please take action now - time may well be short for the person whose life you really could save by donating bone marrow your body will easily replace !

http://www.marrow.org/JOIN/index.html

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Akin Gump's SCOTUS blog provides expert Supreme Court commentary that includes a post explaining why why the stay issued by Justice Ginsberg may not have much substantive meaning. The so-called "consumer groups' " request for a stay is here. The papers cogently cite some of the caselaw recognizing the constitutional issue inherent in enjoining future claims. The stay request filed by Ms. Pascale, the asbestos claimant, may be found here.

The government responded on the TARP issues, but its brief does not address the arguments raised by product liability claimants. Chrysler responded in a brief that is here.

The Chrysler brief is noteworthy in two ways for tort issues. Overall, the message of the brief is a disturbing one for tort claimants because the basic premise is that Chrysler is so badly off and so mismanaged that there is not enough money left to pay tort claimants, and the remaining money should instead go to secured creditors without delay.

The general argument includes two parts. First, Chrysler argues that the tort victims lack are simply out of luck because there is, they say, no money left for them and so the claimants will not be harmed if the sale goes through. This argument is false because it ignores the relief the claimants seek - to limit the scope of the order of the bankruptcy court so that there is an open door to invoke state law to try to recover from the Buyer entity. Chrysler's argument is as follows:

"The unfortunate but unavoidable fact is that future tort claimants who will have claims against the Debtors based on vehicles manufactured by Chrysler simply have no value to be protected.
Accordingly, just as with the Funds, because the price paid by New CarCo Acquisition for the Fiat Sale exceeds Chrysler's liquidation value, creditors stand to gain more from the Fiat Sale than any other viable alternative. For both past and future tort claimants, their claims are valueless under either scenario. Accordingly, the "irreparable harm" that they claim will ensue in the absence of a stay is entirely the product of the economic collapse of Chrysler. It has nothing to do with the Fiat Sale or the Bankruptcy Court order approving it. The tort claimants' application for a stay should therefore be denied."

Second, Chrysler argues that an enormous bond must be posted in order to prosecute an appeal. The argument creates for the would-be appellants/objectors a problem reminiscent of the problems faced by oil companies and tobacco companies hit with large verdicts they sought to appeal. Specifically, the Chrysler brief argues:

"While the Funds' application for a stay should be denied for all of the reasons set forth above, even assuming that a stay were to be entered here it should thus be conditioned on the Funds posting a bond in at least the amount of $1.2 billion to protect Chrysler against damages that would be caused by a stay. See In re Calpine Corp., No. 05-60200, 2008 WL 207841, at * 6-7 (Bankr. S.D.N.Y. Jan. 24, 2008) (requiring bond of $900 million to cover "aggregate additional interest expense the Debtors could suffer if they were unable to close their existing exit financing"); ACC Bondholder Group v. Adelphia Commc'ns Corp. (In re Adelphia Commc'ns Corp.), 361 B.R. 337, 347 (S.D.N.Y 2007) (requiring supersedeas bond of $1.3 billion). (footnote omitted)

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This weekend, the Supreme Court has received stay motions regarding Chrysler that provide concrete examples of the importance of the issues the Court faces in the Manville/Travelers case regarding how far a bankruptcy court can go in issuing injunctive orders that limit the rights of third-parties, including so-called "future claimants." Indeed, some of the concerns raised this weekend illustrate the importance of due process issues raised in an amicus brief filed Manville/Travelers by a far-sighted group of bankruptcy law professors.

Specifically, the Court has received petitions seeking stays of the orders by Judge Gonzalez and by the 2d Circuit. The briefs are nicely collected and in general analyzed on the Scotus blog.

The current product liability claimants, and self-declared representatives of future product liability claimants, are of course complaining that their rights have been trampled by Chrsyler since no mony is being left behind to pay their claims, and the bankruptcy court has issued an order purporting to preclude claims against New Chrsyler. The latter of course takes away from the claiamnts their state law rights based on state law rules that would or may allow "successor liability" claims against New Chrsyler. At page 4 of their brief, they explain the rulings to data as follows:

"On June 1, 2009, the Bankruptcy Court for the Southern District of New York, Judge Arthur J. Gonzalez presiding, issued an opinion granting the relief sought in the sale motion. The opinion stated that tort claims and any potential successor liability claims are "interests in such property" that can be extinguished by § 363(f). Bankr. Op. at 42-43. The Court also held that the sale did not violate future claimants' due process rights because "notice of the proposed sale was published in newspapers with very wide circulation," id. at 43., citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 317 (1950), for the proposition that "publication of notice in such newspapers provides sufficient notice to claimants 'whose interests or whereabouts could not with due diligence be ascertained.'" In addition, the court stated that the interests of future tort claimants had been presented to the Court. Bankr. Op. at 43. The order signed by Judge Gonzalez authorized the sale of substantially all of Chrysler's assets free and clear of all liens, claims, interests, and encumbrances, "whether arising before or after the Petition date," "including all claims or rights based on any successor or transferee liability." Sale Order at 2-3; see also id. at 40, ¶ 35 (stating that New Chrysler "shall not have any successor, derivative or vicarious liabilities of any kind or character for any Claims, including, but not limited to, on any theory of successor or transferee liability, . . . whether known or unknown as of the Closing, now existing or
hereafter arising . . . .").

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This month's ABA Journal includes an article that stunned me, and it is set out below. The gist is that some physicians are trying to use contracts to preclude patients from commenting in public media about the care they receive or do not receive. According to the article, the patient is limited by contract to filing a malpractice suit, complaining to the state regulator or telling friends (not clear what's ok there - can you email or just whisper softly to your friends in the confines of your home). Even more surprsing to me is that, according to the article, the AMA "takes no position" on the propriety of such contracts.


Even though I am a defense/corporate lawyer and am in general sympathetic to defense-side issues, the contract described by the article is to me a stunningly bad idea, and a contract of adhesion that courts can not and should not enforce when entered into prior to the care being provided. Suppose you have cancer and need treatment asap - how in the heck can anyone claim there is room for fair bargaining in such a situation ?

The AMA not taking a position is to me no correct. I cannot imagine our ethical rules for lawyers letting us do this sort of thing. I won't claim to be an ethics expert, but a quick flip through the rules brought caused me to focus on Illinois Rule 1.8(b. That rules specifically precludes lawyers from asking a client for rights related to publizing the facts of an engagement until the engagement is over. I presume that rule was aimed at blocking the lawyers from acquiring the rights to a sensational story as part of a retainer agreement, which is a somewhat different situation than teh doctor who is trying to avoid publicity. That said, the situations are alike in that clients cannot possibly know what is in their interest, or not, until the professional engagement is over, and so our rules block us from asking cleints to give up rights in advance. Rule 1.8(f) also is relevant as it precludes Illinois lawyers from seeking to limit our liability to our clients unless the client has separate counsel to evalaute that agreement.

I fail to see why doctors should be treated differently, especially when their mistakes actually can kill or badly injure a person. At least for civil lawyers, the worst we can usually do is to cost someone some moeny.

Comments anyone?


http://www.abajournal.com/magazine/a_prescription_for_silence/


Opening Statements
A Prescription for Silence
June 2009 Issue By Leslie A. Gordon

Once consumer websites began rating everything from restaurants to dog groomers, it was only a matter of time before doctors found their care and bedside manner critiqued online.
As many as 40 websites, including Zagat, Angie's List and RateMDs.com, now feature anonymous, patient-written doctor ratings. Physicians say these unpoliced sites often publish unfair accounts that can destroy professional reputations. And, because the ratings usually are anonymous, doctors argue that the "patients" rating them may really be disgruntled employees, ex-spouses or competitors. Federal and state privacy laws prohibit doctors from responding, even to legitimate posts.

Now one doctor has figured out a way to help his colleagues fight back, but his technique has left some wondering about the legality of his tool.

Dr. Jeffrey Segal, a neurosurgeon and founder of Greensboro, N.C.-based Medical Justice, created mutual privacy agreements that prohibit patients from rating their doctors. Wiggling through loopholes in the Communications Decency Act, the agreements transfer to the physician the copyright on any online content about the doctor. Segal's business has licensed the agreements to 2,000 physicians, and he says the "vast majority" of patients sign them.
If a patient violates the agreement, the doctor can try to enforce it by asking the ratings website to remove the post.

While the American Medical Association has no policy on these agreements, its president, Dr. Nancy Nielsen, says Web forums "have many shortcomings." Segal says a credible system, akin to the one used to produce Consumer Reports, would verify patient status, evaluate only technical competence and require a minimum of evaluations "to soften the extremes."
While First Amendment considerations don't factor in, Sam Bayard of Harvard University's Citizen Media Law Project questions whether copyrights to content that doesn't yet exist can be transferred. But, he adds, "private parties can do what they like."

So far the agreements have not been tested in court. But that has not stopped them from being--according to Segal--unfairly characterized as gag orders, even though nothing in them prevents unhappy patients from suing, speaking to friends or complaining to licensing boards.

Bayard says rating sites are valuable because "individuals can con- tribute to the dissemination of infor­mation. There are defa­ma­tion laws to redress speech that's really bad."
Invoking the "marketplace of ideas," Bayard adds that the remedy for reckless speech is to allow more. "They are truly open forums. Someone else can come along and add a positive comment. It's healthy."

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An article in The Hill reports that product liability claimants are not happy with the developments in the Chrsyler and GM chapter 11 cases, so they are taking the issue to new fora - the Senate and the media. A similar article is in the WSJ blog known as Deal Journal. Specifically, they are upset that money is not being set aside to pay damages for pending product liability claims. Set out below is the relevant text from the article. The claims are said to be worth over $ 1 billion. One assumes the asbestos claimants are happy to let the car wreck claimants lead the charge on this issue. One also wonders who purports to speak for product liability claimants who have not yet been hurt, but inevitably will be hurt.

________________________________________________________

Lawyers cry foul over GM
By Ian Swanson
Posted: 06/02/09 08:19 PM [ET]
Consumer groups and trial lawyers are crying foul over the Obama administration's bankruptcy plans for General Motors and Chrysler.
Those plans would extinguish all ongoing auto accident claims that blame a death or serious injury on a defective GM or Chrysler vehicle.
"It's a raw deal for consumers," said Clarence Ditlow, executive director of the Center for Auto Safety.
Ditlow said the plans are unusual in that they would prevent anyone from bringing a future liability claim against GM or Chrysler if a car already purchased from either company is defective and results in an accident causing death or serious injury.
He and others said it was also unusual for no money to be set aside for liability claims. When companies producing asbestos went bankrupt, some funds were set aside for such claims, Ditlow said.
Pam Gilbert, of Cuneo Gilbert and LaDuca LLP in Washington, said Obama's auto task force should have looked out more for consumers and those with liability cases as it negotiated the complicated bankruptcy plans for both companies.
She notes that the administration is guaranteeing warranties issued by GM during its bankruptcy, meaning someone could get a broken exhaust pipe found to be defective fixed even while GM is in bankruptcy.
This means "they will fix the car, but if someone with a car suffers a serious injury or death because of a defection, we won't fix the person," Gilbert said.
Although a committee representing consumers and those with cases against the companies was involved in negotiations over Chrysler's and GM's bankruptcies, the group has received less attention compared to unions and those holding company debt.
That may change on Wednesday, when victims and families of victims with claims against the companies hold a press conference outside a Senate Commerce Committee hearing on GM's bankruptcy.
Those set to attend include the family of an ABC cameraman killed when the roof of his GM Suburban caved in during an accident, as well as the families of several children who suffered broken necks and blame faulty seatbelts, according to the Center for Justice and Democracy, a New York-based consumer group.
Three hundred plaintiffs seeking $1.25 billion in damages are affected, another attorney told The Wall Street Journal's 'Deal Journal' blog.
General Motors says claimants will have the opportunity to submit their claims and have them resolved "as provided by the Bankruptcy Code and other applicable law, both as to amount and priority."
"We won't discuss specific claims or the possible outcomes, as that will be determined by the court," it said in a statement.

But those claims must be made against the old GM company after bankruptcy, meaning people with the claims will need to stand in line with other unsecured creditors to seek compensation from the old company's remains, Gilbert said.
The new GM that arises out of bankruptcy will not be liable for those claims.
Ditlow blamed Obama's auto task force for the situation, which he said would ultimately add to other problems.
He cited the case of a young girl in New York left a quadriplegic from a car accident who has $500,000 in annual medical costs. That victim is likely to become a ward of the state, he said.

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Full text here

Pdf image here - includes old photos of workers

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Go here to Flickr

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The free version of the GM docket is located here. The case is assigned to Judge Gerber, who has been handling the Thompson-Hayward asbestos bankruptcy. An Am Law Daily article here provides a nice summary of the lawyers and parties, except that somehow it missed the lawyers for the asbestos claimants.

At least some of the lawyers for asbestos claimants show up in docket number 81, which is an appearance filed by Sander L. Esserman and Peter C. D'Apice of Stutzman, Bromberg, Esserman & Plifka as counsel for the Ad Hoc Committee of Asbestos Personal Injury Claimants. The ad hoc committee is said to consist, "at this time," of asbestos personal injury claimants represented by the law firms commonly known as 1) Waters & Krause; 2) SimmonsCooper, 3) Weitz & Luxenburg, and 4) Brayton Purcell. In addition, Stephen Kazan of Kazan, McClain, Lyons, Greenwood & Harley is listed as an ex officio member of the committee.

In addition, docket number 114 is an appearance for asbestos claimants represented by Kelley & Ferraro.

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The new opinion in Skinner is good news for opponents of the manner in which asbestos bankruptcies are currently conducted. Judge M. Bruce McCullough, a bankruptcy judge in the Western District of Pennsylvania, has issued a May 26, 2009, opinion finding the Skinner asbestos bankruptcy collusive and in bad faith. The order goes on to put the estate under the control of a court-appointed trustee, and converts the case to a Chapter 7 liquidation. The opinion is here.

The opinion is noteworthy for multiple reasons. For one, the opinion uses relatively harsh words regarding the lack of good faith in settlement of the underlying asbestos claims. Second, the Court concluded that the Chapter 11 plan and the underlying asbestos settlements were not in good faith. The Court pointed to various factors for this conclusion, and the opinion treats one of them as particularly telling. Specifically, the plan called for the debtor to receive 20% of insurance proceeds paid out to settle underlying claims, thus leaving the debtor with an incentive to settle claims instead of defending them, to the detriment of the insurers. The following text is taken directly from the opinion, but footnotes are omitted:

"The Asbestos Claims Settlement is not reasonable for several reasons. First, it is indisputable that no payment has ever been made by any of the Insurers on behalf of the Debtor to any of the Asbestos Claimants vis-a-vis the Asbestos Claims, notwithstanding that such claims have existed for roughly twenty (20) years. Such fact is strong evidence as to the futility of such claims, and it makes little, indeed no, sense to settle claims that have thus far been so overwhelmingly unsuccessful. Second, most, if not practically all, of the Asbestos Claims were administratively dismissed pre-petition by the U.S. District Court for the Eastern District of Pennsylvania, which court presides over such claims given that they were filed on such court's Asbestos Products Liability Multi-District Litigation (MDL) docket. Such fact also serves to substantiate that such claims are not very strong, so that, once again, it makes little, if not any, sense for such claims to be settled. Finally, there is really no valid reason for the Debtor to even care if the Asbestos Claims get settled given that (a) the Debtor is defunct (i.e., out of business), (b) the Debtor will never again engage in business, (c) the Debtor is in bankruptcy, (d) no funds practically exist in the Debtor's bankruptcy estate in any event to pay on any judgment that the Asbestos Claimants might obtain in excess of the Debtor's insurance (hereafter referred to as an "excess judgment"), and (e) any excess judgment obtained would, therefore, be practically worthless. In light of the foregoing undisputed facts, it makes absolutely no sense for the Debtor to settle any of the Asbestos Claims absent the consent of the Insurers, and settlement without such consent (as is the case with respect to the Asbestos Claims Settlement), the Court holds, is thus per se unreasonable."

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