Updating our Aug. 24 report: “A federal judge has upheld the $36 million malpractice verdict against Ness Motley, Loadholt, Richardson & Poole. U.S. District Judge Rebecca R. Pallmeyer agreed that the defunct South Carolina firm put its fees above the interests of Irish client Interclaim Holdings.” Appeal is planned. (Lori Patel, law.com, Jan. 14; “$36 Million Malpractice Award Against Firm Upheld”, New York Lawyer, Jan. 13).
Author Archive
Spitzer vs. the SEC
Mike O’Sullivan at Corp Law Blog says he’s not so sure it’s a bad thing for the SEC to have a reputation as “legalistic” rather than creative in its approach to fighting market misconduct: “The SEC has a great deal of authority over the U.S. capital markets. If the SEC does not act within the four corners of the law, the SEC would inject a great deal of uncertainty into the capital markets. …
“This is one of the reasons why I think it’s inappropriate to compare the SEC to Eliot Spitzer’s operation. Spitzer feels free to use New York’s Martin Act to attack anything that strikes him as abusive, regardless of whether it’s clearly illegal. The SEC has in its arsenal nothing as open-ended as the Martin Act, and that’s a good thing for US markets. The Martin Act is, as one commentator called it (PDF), a ‘fierce sword’ of uncertainty, permitting prosecutors to stretch the definition of crimes and then engage in extensive discovery to compel their targets to capitulate. This makes the Martin Act a very useful tool for a prosecutor looking to make his mark, and a nearly useless guide to a person looking to avoid becoming the target of a prosecutor looking to make his mark.
“Beyond creating uncertainty, another interesting consequence of open-ended criminal statutes like the Martin Act is the freedom they give prosecutors to legislate on the fly.” (Dec. 29). Plus: welcome National Law Journal readers (Andrew Harris, “Waging war against Wall St. corruption”, NLJ, Dec. 22, not online, quotes me suggesting that Spitzer is “imposing a different regulatory scheme nationwide than the one imposed by the federal government,” not necessarily a good idea given that he isn’t answerable to a nationwide electorate).
Jacob Sullum on class actions
The syndicated columnist takes a look at the Schwartz v. Citibank class action, and also points out a couple of weaknesses in a much-hyped new study by Cornell law professor Theodore Eisenberg and NYU law professor Geoffrey P. Miller which found no upward trend in the average amount of settlements or fees in 370 class actions recorded in court decisions from 1993 to 2002. (syndicated/Reason Online, Jan. 9; see Jonathan D. Glater, “Study Disputes View of Costly Surge in Class-Action Suits”, New York Times, Jan. 14; “Attorneys Fees in Class Action Settlements: An Empirical Study”, Sept. 24).
Posting lull
I’ll be taking the next two days off while I deliver a speech at a private conference and catch up on other matters. You should keep checking in for posts by Ted Frank, but there won’t be any by me before the weekend. In the mean time, you might consider dropping by some of the weblogs listed on our blogroll on the lower right column of the front page. Or check out one of the following very disparate blogs from our bookmark list: Aaron Haspel, Lawrence Solum, The Minor Fall, The Major Lift, Jim Henley, Agenda Bender, Matthew Yglesias, The Agitator. See you soon.
ADA filing mills: coming to your town next?
I’ve just published, in the new City Journal, an article on the thriving industry of filing disabled-accessibility complaints against unsuspecting businesses and building owners which are then traded in for hard cash, often couched as legal fees, payable to the organizers of the complaints. Established disabled-rights groups mostly say they’re dismayed by the practice, which doesn’t mean they necessarily support any steps that would stop it. (Walter K. Olson, “The ADA Shakedown Racket”, City Journal, Winter). For earlier coverage of the issue on this site, see Aug. 12, this group of links, and our disabled-rights page generally.
Doctors on trial
In last week’s issue of the Journal of the American Medical Association ($ access), Baltimore physician David Merenstein writes about a malpractice case which resulted in a $1 million verdict against the residency program in which he was working (though he himself was let off the hook for liability) over his failure to insist on a PSA test in a middle-aged male later diagnosed with advanced prostate cancer. Central to the plaintiff’s attorney’s strategy was to put on trial the mode of medical practice known as “evidence-based medicine”. Medical blogger Ross Silverman at “The Bloviator” (Jan. 8), who is often critical of attempts to limit malpractice litigation, nonetheless finds the result in this case “horrible” and “ridiculous”. MedRants (Jan. 8 and Jan. 9) comments, as does Medpundit Sydney Smith (Jan. 9). More: The LitiGator, from Michigan, also comments (Jan. 18)
In the same Jan. 9 post, Medpundit links to an illuminating Cleveland Plain Dealer piece (Harlan Spector, “Fleeing the malpractice crisis”, Jan. 4) about a neurologist who lost his malpractice insurance and moved out of Ohio after he was hit with six claims. Six claims sounds like a lot, and we keep hearing that “problem doctors” account for a large share of the malpractice problem; but how weak were the six claims? Well, four of the six were dismissed before he had to meet with a lawyer; in a fifth, which is pending, the plaintiff has no lawyer of record. And the sixth? That resulted in a defense verdict, and was called “frivolous” by the presiding judge, who however also said: “They paid these experts who sign affidavits, and I can’t throw the case out.” “I feel like I’m being shot at all the time,” said the defendant, Dr. Bruce Morgenstern, who moved to less litigious Colorado.
Mavericks eroding settlement tobacco share
More trouble (besides the trouble described yesterday) for states financially dependent on the spoils of the great 1998 tobacco robbery: the market share of companies that signed the agreement is eroding at a surprisingly rapid clip, despite the passage of harsh state laws aimed at protecting the loot by discouraging the rise of new, small or foreign cigarette companies. “In four years, the market share of the small cigarette companies has multiplied more than tenfold, from 0.5 percent of cigarettes sold in the United States in 1998 to 6.5 percent in 2002, according to the National Association of Attorneys General. The group said the numbers for 2003 will be more startling.” (“Small Cigarette Companies Whittle Away At Big Tobacco’s Sales”, AP/WRAL, Jan. 5) (via Vice Squad)(& see Jan. 23)
How to drive away mortgage capital
Lawmakers in various states and cities are aiming legislation at so-called predatory lending, and in a handful of jurisdictions, including Oakland and Los Angeles, the laws have “targeted not just mortgage lenders and brokers who engage in dubious practices but also investors who buy securities backed by even a single mortgage later deemed predatory.” The laws make provision for something called “unlimited assignee liability,” which “puts investors in mortgage-backed bonds on the legal hook for misdeeds by lenders and mortgage brokers”. The idea is “to force investors and their agents to act as policemen against predatory lenders and to provide plaintiff lawyers with deep-pocketed targets for predatory-lending suits.” To make matters worse, “many advocates of the new laws use an expansive definition of predatory lending that classifies as evil a mortgage with high interest rates or fees, a prepayment penalty or even a provision requiring arbitration.” One likely result is to drive capital away from the housing markets of the cities involved: “Standard & Poor’s and Fitch, which rate mortgage-backed securities before they’re sold to investors, say they won’t rate mortgages covered under Oakland’s ordinance (and some under Los Angeles’) because the risk to investors is impossible to quantify.” How long do you think before investors fleeing the new legal risk will get accused of “redlining”? (Ira Carnahan, “Predatory Lawmaking”, Forbes, Jan. 12).
“OK, so I won’t sue cable firm”
Updating Wisconsin’s tempest in a cable box (see Jan. 7): “A man who blamed a cable TV company for his television addiction and his wife’s 50-pound weight gain said Thursday he won’t follow through with a threat to sue the cable operator. In an unusual news conference held in the basement of his West Bend home,” Timothy Dumouchel insisted that cable TV provider Charter was to blame for his family’s addiction to its televised fare, because it had failed to cut off service as requested, but said most of his dealings with the company had been pleasant and that he would not pursue legal action. Dumouchel also “said he never claimed his three children — ages 30, 23 and 16 — were lazy. He also said he knows people are snickering about him, and that his wife was angry about his statements on her weight gain.” (Lauria Lynch-German, Milwaukee Journal Sentinel, Jan. 9; “Man won?t sue over TV addiction”, AP/Appleton Post-Crescent, Jan. 9).
“Lotto loser’s lawyer defends his actions”
Lawyer of the week? Once-obscure Ohio attorney Sheldon Starke seemed to revel in the sudden worldwide publicity as he represented Elecia Battle in her claim to be the true winner of a $162 million lottery jackpot — until her story fell apart and she turned out to have a rap sheet. “A Cuyahoga County judge has threatened to find Starke in contempt of court after seeing Starke’s animated defense of Battle this week on television — after Starke had said he couldn’t come to court because of an injured back. And Starke can’t seem to avoid questions about how he handled Battle’s incredible claim on the Mega Millions lottery — about how he maintained his belief in Battle’s story when just about nobody else did. ‘I felt like a fool,’ said Starke, who insists he handled the case properly. ‘If there was one person that was damaged this week, it was me.'” (Scott Hiaasen and Jesse Tinsley, Cleveland Plain Dealer, Jan. 10)