Overlawyered: Chronicling The High Cost Of Our Legal System

Archive for 2014

New at Reason: Bigger bounties for tax tipsters

[cross-posted and slightly adapted from Cato at Liberty]

I’ve got a guest post up at Reason on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt:

Will the spread of a culture of informants sow distrust and disloyalty in the workplace, while encouraging dissident executives and their lawyers to shake settlements out of risk- and publicity-averse targets by seizing on doubtful, gray-area legal theories? That’s part of the game too. Lately hedge funds and litigation finance firms have moved in to bankroll the filing of likely “whistleblower” cases. …

…by getting pro-plaintiff laws through the legislature in just a few states—New York liberalized its law four years ago—advocates can set the stage for a nationwide informant push.

In Illinois, a single Chicago lawyer was reported in 2012 to have used that state’s whistleblower law to file at least 238 lawsuits against retailers, pocketing millions in settlements, over alleged failure to charge sales tax on shipping-and-handling.

Whole thing here.

P.S. More recent coverage of the runaway False Claims Act train: “Repeat whistleblowers reap millions of dollars in false-claims suits” [ABA Journal] David Ogden testifies for the U.S. Chamber on what needs to happen with the federal FCA [House Judiciary] “UK Commission Takes A Pass On U.S.-Style Whistleblower Bounties” [Daniel Fisher, Forbes]

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A disability mandate to shut down ride-sharing?

“The suit, filed by three mobility-impaired plaintiffs from San Antonio and Houston, claims that Uber and Lyft have violated the Americans With Disabilities Act, or ADA, by failing to provide a way for wheelchair users to take advantage of their services.” [Ted Troutman, Next City] Both services serve as intermediaries for users to offer rides in their vehicles.

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Torts roundup

  • Celebrated as the “most insane amusement park ever,” New Jersey’s notorious Action Park reopens, minus some of its most extreme hazards [National Post]
  • Insurance industry study finds attorneys getting into higher share of auto crash claims [IJ]
  • Medical monitoring cases, once seen as wave of future, have not fared well in court [Steven Boranian, DDL]
  • “Florida high court’s irrational ‘rational basis’ rejection of state tort reform undermines Rule of Law” [William W. Large, Washington Legal Foundation]
  • For a sense of where tort pressure is being felt, list of litigation groups at AAJ (including newly formed groups) often provides clues;
  • Los Angeles jury finds team partly liable in $14 million negligent security award for man beaten in Dodger Stadium parking lot [AP]
  • “Perhaps this is the first of a wave of hose-entanglement cases” [Lowering the Bar, Louisiana]

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FEC hands out approvals on political books

Among its other duties, the Federal Election Commission hands out — under conditions that may involve some discretion — hall passes giving permission for political candidates to publish books without legal hassle. [Providence Journal editorial] Last fall, in a (highly recommended) Yale Law Journal piece, Stanford law professor and former appeals judge Michael McConnell proposed that the Supreme Court’s much-demonized Citizens United decision would have rested on firmer ground had the Court characterized it as a free press rather than a free speech ruling; the case arose from a complaint against the makers of a documentary critical of Hillary Clinton.

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NLRB claims franchisors are joint employers

In this Cato podcast (7:01), I talk with Caleb Brown about the National Labor Relations Board’s groundbreaking attempt last week to tag McDonald’s with liability for labor violations found at its independently owned local operators. (Reportage: Steven Greenhouse, NYT; Jon Hyman; Diana Furchtgott-Roth/RCP) It’s a drastic departure from current law that would carry implications for outsourcing more generally: a food company that contracts with independent farmers to grow a particular crop, for example, might wind up being liable for the farmers’ treatment of farm workers, a company that outsources its cafeteria, vehicle maintenance, or janitorial services to outside vendors might become legally responsible for ensuring the labor-law compliance of those contractors, and so forth.

The McDonald’s case is the first of what is expected to be multiple cases filed by the NLRB’s general counsel (akin to a prosecutor), and the full Board has not ruled on the resulting complaints, although given the union-friendly role of the Obama NLRB that is likely to be little more than a formality. The initiative will inevitably land in the courts, which have not always been friendly toward Obama regulatory adventurism, and perhaps eventually the Supreme Court.

One consequence, successful or otherwise, if this ploy works: by treating legally distinct entities that contract with each other as if they were parts of a single vertically integrated enterprise, progressive labor law thinkers will create an incentive for giantism to become more real, by giving fast-food franchisers, for example, legal reason to move toward company-owned rather than independently-owned store arrangements. Not for the first time, the law would mow down the ranks of mid-sized businesses in favor of large or nothing. Commentary from others: Megan McArdle; Stephen Bainbridge; Catherine Fisk, On Labor (supporting the idea); Steve Caldeira, The Hill; Alex Bolt. And a relevant House hearing.

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Philadelphia narcotics squad, cont’d

Another scandal from its seemingly bottomless depths [CNN, earlier here, etc.] “Are Narcotics Corrupting the Police Force?” [Joel Mathis, Philadelphia magazine] And the police union wants an investigation of investigative reporters Barbara Laker and Wendy Ruderman, whose exposure of misconduct by narcotics squad members won a Pulitzer prize, on the grounds that some anonymous source has allegedly charged that they might have made payments to sources [NewsWorks]

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