Overlawyered: Chronicling The High Cost Of Our Legal System

Archive for December, 2006

Airport Parking, Antitrust & Eminent Domain

For the past three years, Stan Cramer has been fighting to save his parking garage near the Harrisburg International Airport from eminent domain seizure by the airport’s municipal operating authority. The airport wants to eliminate competition with its own parking lots, and when Cramer refused to sell voluntarily, the authority used its powers under Pennsylvania law to take the property by force. Recently, a Pennsylvania judge allowed Cramer’s lawsuit to stop the seizure to proceed to trial.

In a related case, Pennsylvania AG Tom Corbett filed a federal lawsuit last year to stop the airport authority’s seizure on the grounds that it violates federal antitrust law. It’s a strange setup: The Commonwealth of Pennsylvania suing one of its own subdivisions in federal court over the use of power granted by state law. In March, U.S. District Judge Christopher Conner dismissed the AG’s complaint, citing the airport authority’s immunity from federal antitrust lawsuit as a state actor. Conner said the airport’s anti-competitive motives were irrelevant; its actions were clearly authorized by the Pennsylvania legislature.

Corbett appealed the judge’s dismissal to the Third Circuit Court of Appeals. Briefs were filed in October, and a decision on the appeal is expected next year. Meanwhile, new management has taken over at the airport, and they are trying to negotiate a settlement with Cramer.

Read On…

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Big Client: I’m Firing My Firm Because It Has Too Many Black Partners

Was it the snub heard ’round the world?

At a conference earlier this year, one speaker told the crowd that his former company, McKesson Corp., had cut a prominent firm out of the bidding for its legal work.

Though Arthur says he didn’t name the firm, he did explain his reason to the audience: “It had been highlighted in a legal magazine for having [more black partners than average].”

Arthur was followed on stage by Wal-Mart General Counsel Thomas Mars, who, Arthur and others say, told the audience: “I know who that firm is, and I am going to speak to them.”

…

As for Arthur, making business decisions based on diversity just makes good sense, he said. “Law firms exist to please and serve clients,” he said.

Outrageous that a client would give or take away business based on the completely irrelevant skin color of its attorneys, no?

Excuse me, I misquoted the adjectives in the story: the McKesson attorney, Arthur Chong, was complaining that the law firm had too many white partners. Which is apparently so unnotable that an entire article in The Recorder about Chong’s speech does not speak to or raise the point that his statement was appalling. (Kellie Schmitt, “Corporate Diversity Demands Put Pressure on Outside Counsel”, The Recorder, Dec. 28). Stories like this put the lie to any claim that African-American participation in big law firms is hindered by racism; if anything, law firms are forced by this socially-accepted racism to compete against one another to recruit and retain the few African-American attorneys out there, because clients apparently value the sneetches with the stars on their bellies more than sneetches who are merely the best lawyers, and shareholders tolerate this dissipation of value. (And welcome, WSJ Law blog readers, where there is a big debate in the comments.)

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Cost-benefit analysis? What’s that?

AEI research assistant Phil Wallach writes:

On today’s Washington Post op-ed page, Peter J. Woolley advances the following argument:

Cars, trucks, and getting where you need to go faster than walking:
Costs: Catastrophic! An “annual tragedy”! 44,000 deaths each year!
Benefits: Uh…

“Radical solutions in the form of regulation, [taxpayer-funded] investment and enforcement”:
Benefits: Great! Should be a “cause celebre”! We can save these people!
Costs: Uh…

Nothing like clear-headed, even-handed thinking to find the “story of the year.”

Of course, the way to eliminate 90%+ of fatalities is the reductio ad absurdum position to have a 10 mph speed limit. Woolley specializes in Japanese politics, so it’s not clear why he gets prime Washington Post space to argue thoughtlessly for a multi-billion-dollar reallocation of the American economy.

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Plaintiffs’ counsel in Exxon Valdez case will try to survive on share of lowered verdict

The WSJ’s Law Blog reported recently on the joy being experienced by lawyers in the firms representing plaintiffs in the Exxon Valdez case, their spirits dampened only mildly by the Ninth Circuit’s recent reduction in the punitive award from $4.5 billion to $2.5 billion. Those firms include traditional plaintiffs’ firms such as Milberg Weiss, but also firms normally seen representing defendants, such as Davis Wright Tremaine and Faegre & Benson.

How do Faegre & Benson lawyers feel about the prospect of sharing in perhaps one-third of $2.5 billion? “It’s great,” said partner Brian O’Neill to the WSJ. Any grief due to the $2 billion reduction is probably tempered by the amazing $2 billion in post-judgment interest that will be tacked onto the final bill. (Actually, maybe that’s not amazing in itself, since the case has been pending since 1989. Still, the interest “is not chicken s___,” as O’Neill put it.) O’Neill said of the titanic fee that is coming their way, “This is one of the few chances a bill-by-the-hour guy and a bill-by-the-hour firm has to get ahead.” I for one have been worried for some time about how the partners in these little “bill-by-the-hour firms” were managing to get by, so it’s good to know that for once they may have been able to afford that second can of beans for the family at Christmas dinner.

Damages in the case were estimated at about $500 million. The Ninth Circuit basically held that the evidence did not warrant a punitive award that went to the limit of what is permitted under State Farm v. Campbell, a 9:1 or “single-digit” ratio, and reduced the ratio to 5:1.

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Antitrust regulators tout destruction of capital

Last week, the Justice Department’s Antitrust Division issued a triumphant press release touting that 2006 recorded “the second highest level of criminal fines” in Division history. The Division is actually measuring the government’s 2006 fiscal year: From October 2005 through September 2006, the Division obtained criminal fines totaling $472,445,600, a 40% increase over the previous fiscal year. The Division also said that criminal prosecutions of individuals yielded a combined 5,383 days of jail time; and during the first three months of the current fiscal year, an additional 9,135 days of jail time have been imposed.

Thomas Barnett, the head of the Antitrust Division, said more fines for “cartels” and prison sentences for “price fixing” executives created substantial economic benefits:

“Sound enforcement of the antitrust laws ensures that illegal conduct is stopped, procompetitive transactions can proceed, and businesses are able to engage in vigorous competition resulting in lower prices, better quality and more choices for consumers.”

There’s no empirical evidence that any of this is true. Indeed, the DOJ is not legally required to demonstrate the economic effects of antitrust policy. Since price fixing is treated as a “per se” antitrust violation by the courts, it’s legally unnecessary to address such matters. Nevertheless, the Division insists that criminal enforcement improves consumer welfare. That doesn’t make sense if you think about it.

Read On…

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California’s Prop 65: Protecting Us From the Evils of Cooked Chicken

Many of you may be aware of California’s “Proposition 65,” passed in 1986 and intended to help consumers by requiring warnings of any known exposure to a variety of chemicals, many of them carcinogens, that the state identifies on its Prop 65 list. In practice, many would argue, the law has done more to help plaintiffs’ attorneys than consumers, by creating an enormous list of allegedly dangerous substances and permitting a lawsuit whenever warnings of those substances are not posted — whether or not there is any realistic risk of harm under the particular circumstances.

Here’s a good example. Those listed chemicals include “heterocyclic amines” (HCAs) which are formed by cooking meat, the highest concentration occurring in cooked chicken. And so a group called the Physicians’ Committee for Responsible Medicine recently sued several restaurant chains, including McDonald’s, Burger King, and Outback Steakhouse, charging them with failure to warn customers that they cook meat. That is, failure to warn customers about the activity that is the precise reason that those customers are going there in the first place.

According to the National Cancer Institute, while HCAs may have some association with increased risks of cancer, there is currently “no good measure of how much HCAs would have to be eaten to increase cancer risk” — more research is needed. In fact, the NCI cited to one study that specifically covered fast-food restaurants and concluded that those companies’ products had low levels of HCAs. According to that study, home cooking was a greater danger. But that’s the beauty of laws like Prop 65 — evidence tends to be optional.

American Council on Science and Health
Prop 65 News Online

Previous coverage of the animal-rights group “Physicians’ Committee for Responsible Medicine” on Overlawyered: Sep. 6 and links therein.

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More Guestblogging

Greetings, Overlawyered readers. I’m your other post-Christmas guestblogger, Skip Oliva. I’m not a lawyer, but I do write about legal subjects. For the past four years, I’ve run the Voluntary Trade Council, a public policy group that focuses on antitrust regulation. I maintain VTC’s weblog as well as write for the Mises Economics Blog. During my stint here I’ll be discussing some of the more interesting antitrust cases from the past year.

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Post-Christmas Guestblogging

Hi — I’m one of your two post-Christmas guestbloggers. I’m a defense attorney in the San Francisco office of Shook, Hardy & Bacon, LLP, and I also write a blog called “Lowering the Bar,” which is a legal-humor site, for which, I hasten to add, SHB is not responsible. I have some experience with the unnecessary-lawsuit kind of story in particular, and I think I’ll be starting today with a recent California lawsuit against grilled chicken. Should have that posted in the next hour or so. Anyway, I look forward to blogging here for the next week. Thanks to Walter and Ted for the opportunity.

UK patient: doc hurt my feelings by telling me to quit smoking

And she wins about $80,000 (plus attorneys’ fees) for her hurt feelings. Mrs. G delayed her caesarean a few minutes to have a pre-op cigarette; her coughing made her epidural more difficult, and Mrs. G and was criticized by anesthesiologist Dr. A, who noted the increased likelihood of surviving to see her daughter’s wedding if Mrs. G quit smoking. (Arthur Martin, “Doctor’s smoking jibe wins mother £44,000 payout”, Daily Mail, Dec. 21; Kevin MD blog). UK medical compensation has grown 30,000 percent in under ten years. The Daily Mail story also notes:

An employment tribunal heard that David Portman, 27, took 137 days off over a five-year period because of a series of ‘unfortunate accidents’.

When he took yet another week off because of his pet’s demise, bosses decided enough was enough and sacked him.

But Mr Portman won his claim for unfair dismissal – and this week walked away with undisclosed compensation reckoned to be at least £10,000.

The tribunal ruled his absences from work were all legitimate and mostly caused by injuries suffered in the course of his duties.

Mr Portman, who was based with Royal Mail in Sheffield, put his months off duty down to bad luck.

‘I felt really aggrieved when I was sacked without them taking into account my particular circumstances,’ he said.

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