Posts Tagged ‘arbitration’

“Next tobacco” watch: many Wall Street suits fizzle

After the stock market’s tech-driven bubble popped a few years back, lawyers advertised heavily for burned-investor clients, hoping to reap billions at the expense of Wall Street firms whose research had been exposed as shoddy or worse. But expectations have deflated, and now Pensacola, Fla.’s Levin, Papantonio, Thomas, Mitchell, Echsner & Proctor, whose doings are often chronicled in this space, has settled about 300 or so investor claims against Merrill Lynch “for approximately three cents on the dollar”. Although it is far from unusual for plaintiffs to recover sums in arbitration, lawyers have had trouble proving that most of their clients relied on the tainted research in making investment decisions. A Merrill Lynch spokesman claims the firm has “overwhelmingly prevailed in these cases”, while a plaintiff’s lawyer counters that “we are not doing too badly”. (Susanne Craig, “Heard on the Street: Payouts low in research suits”, Wall Street Journal/Pittsburgh Post-Gazette, Oct. 13). More: Jul. 10, 2003.

Domain name nastygrams

I find these letters depressing. These are the kind of letters that cause people to hate lawyers.

Notice of the problem and the trademark holders’ intent to file a claim are required by the [Anticybersquatting Consumer Protection Act], but the tone of these letters is not. Instead of nicely explaining what the law is, what the goal is and how appreciative the trademark holder would be if the domain name holder was courteous enough to transfer the name as requested, these letters bombard the recipients with legal jargon and serious threats without context or explanation. …

When I have a client on either side of the cybersquatting scenario, I urge starting with the polite request approach. Usually, I can succeed that way through some polite explanation of the law over the phone and a little patience. That approach also costs my clients less that either court or arbitration would since both of those require filing fees and lengthy legal briefs. More importantly, solving disputes through discussion makes me feel good and helps me prove that, at least occasionally, lawyers can act like human beings and make someone’s day instead of ruining it.

(Judith Silver, Cybersquatting Ain’t What It Used To Be).

Update: smog fee lawyers snag $23.7 million

Latest development in the affair that brought unwelcome scrutiny to former Calif. governor Gray Davis and his ties to the Litigation Lobby (see Dec. 5, 2000 and Jun. 22-24, 2001): “Court-ordered arbitration secretly delivered a $23.7 million payday to attorneys who successfully battled the state over smog fees wrongfully charged to 1.7 million motorists. The award,” down from an original $88.5 million, “represents as much as arbiters could give the team of attorneys led by a high-powered San Diego law firm, under limits imposed by a Court of Appeal ruling in 2002.” State officials had unsuccessfully sought to keep the earlier award under wraps, and attorney General Bill Lockyer was not exactly at pains to publicize this one: “The California Attorney General’s office, after rebuffing repeated inquiries into the status of the arbitration, this week confirmed that a ruling had been issued but refused to release any more information, citing attorney-client privilege.” The Schwarzenegger administration, however, responded promptly to an open-records request. (Michael Gardner, “Lawyers get $23.7 million in smog-fee fight”, San Diego Union-Tribune, Aug. 20).

“Failure to Plead 17200 Claim = Malpractice”

Legal Reader (Jun. 22) on a new development in the saga of California’s please-abuse-me law, s. 17200: “according to California’s First District Court of Appeal, failing to include a cause of action under 17200 in many civil actions may actually constitute malpractice, even if the plaintiffs’ attorney thought it unwarranted or unjustified. The opinion was filed today in Janik v. Rudy, Exelrod & Zieff. …

“My problem is that the Court’s reasoning here applies to almost any civil lawsuit against a ‘business’ in California. As a rule, if you can state a cause of action for anything, you can also state a cause of action under section 17200, as whatever wrongs constitute the first will also constitute the second. By including section 17200 you automatically get a bunch of ‘freebies,’ such as: four year statute of limitations, the ability to recover on behalf of other non-parties, and most likely a case that is at least partially impenetrable to a petition for arbitration.

“In fact, most California civil lawsuits already include section 17200 claims, but now lawyers may be subject to malpractice claims (even from non-clients) if they file compaints that don’t.” For an analogous problem, see “Omit a peripheral defendant, get sued for legal malpractice”, Feb. 15-17, 2002. More: Declarations and Exclusions analyzed the case Jun. 24, pointing out that the ruling, while exposing the defendant attorneys to a claim of breach of duty, does not establish on the merits whether or not they did breach a duty.

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).

Tobacco lawyers to Mass.: we’ll sue for the whole $2 billion

Law firms Brown Rudnick Berlack & Israels and Lieff, Cabraser, Heimann & Bernstein now say they’ll sue the state of Massachusetts for the whole $2 billion they say they’re entitled to — a 25 percent contingency share of the state’s $8 billion tobacco-settlement booty — rather than accept the measly $775 million they’ve been awarded in arbitration. The Associated Press says the firms “risk becoming poster children for attorney greed at a time when the profession is already under attack for high damage awards. ‘This lawsuit is about greed and it’s about selfishness. They should be ashamed of themselves,’ said former Maine Attorney General James Tierney, who worked with attorneys general from around the country to help negotiate the $246 billion master settlement.” (“Law firms go to court to make Massachusetts pay full tobacco legal fee”, AP/San Francisco Chronicle, Nov. 3; Steve Bailey, “Pigs at the trough”, Boston Globe, Oct. 10) For earlier coverage of the Massachusetts fees, see May 19; Jan. 2-3, 2002; Aug. 13-14, 2001; Dec. 22, 1999. (& see Dec. 17)

“Arnold’s agenda”

The governor-elect said many of the right things about litigation reform, though both friends and foes are still guessing as to how serious his commitment is. “Before the recall, the influential trial lawyers lobbying group, the Consumer Attorneys of California, had warned of judicial doom under Schwarzenegger … [CAOC president Bruce] Brusavich] worked hard to keep Schwarzenegger out of office, raising nearly $2 million from trial lawyers for Davis and Lt. Gov. Cruz Bustamante. … Brusavich expects Davis will sign three more plaintiffs-supported bills — one modifying the statute of limitations in toxic torts, one prohibiting pre-dispute arbitration in labor contracts, and one allowing causes of action for labor code violations — before he leaves office.” The litigation lobby also wants Davis, who’s been filling judicial vacancies at a feverish clip, to fill all the rest before leaving. Not if Arnold has his way: “Schwarzenegger Wants Davis to Stop Filling Posts and Signing Bills” reads a Friday morning headline (John M. Broder, New York Times, Oct. 10) (Jeff Chorney, The Recorder, Oct. 9).

Aroma attends Alabama arbitrations

In a rural corner of Alabama, four different mobile home manufacturers get sued for alleged defects and independently agree to accept arbitration of the lawsuits. Each of them then gets whacked by the arbitrator for an award ranging from $360,000 to $590,000, even though the plaintiff’s own expert didn’t claim damages to any of the mobile homes exceeding $5,000. After the companies learn of each other’s misfortune, they begin comparing notes. “What they found, according to court records, were startling similarities in the cases, including undisclosed connections between the arbitrator, Grove Hill lawyer Spencer Walker, and Butler lawyer Jeff Utsey, the plaintiff’s attorney in all four cases. … In a blistering affidavit cited prominently in the [Alabama] Supreme Court’s decision [a unanimous decision in February to reopen one of the cases], Birmingham lawyer Joel Williams laid out evidence to support his contention that the awards resulted from a secret deal between Walker and Utsey, and that the men received assistance from a third lawyer, David Jordan of Brewton. …’The facts strongly suggest that this general plot to “set up” manufacturers was hatched in early 1999,’ Williams stated in his affidavit.” Perhaps even more remarkable, it seems the state bar association blessed attorney Utsey’s questionable conduct beforehand in an opinion letter in that year. This one looks like it will be worth watching (Eddie Curran, “Arbitration awards raise questions”, Mobile Register, Sept. 21).

“N.C. Senate approves medical malpractice bill”

Interesting medical malpractice reform bill passed in the North Carolina Senate just before Hurricane Isabel (which is about to take out my power now) hit –supported by Democrats and opposed by Republicans. “Pretrial reviews in malpractice cases would come from a three-member panel appointed by a judge but with input from lawyers in the case. Panel recommendations would be entered into evidence, and a plaintiff or defendant who took a case to court despite a negative recommendation and still lost would have to pay attorney fees to the opposing side.” Insurers and Republicans seem to be unhappy with the creation of a state insurance fund, increased reporting requirements for insurers, and the lack of a damages cap. (Scott Mooneyham, AP, Sep. 16; “AIA: NC. Senate Med-Mal Bill Lacking”, Insurance Journal, Sep. 18). “A special House committee will consider the medical liability issues, but the full House will not act on any measure before May.” (Matthew Eisley, “Malpractice changes offered”, The News & Observer, Sep. 17). Game theory scholars will be interested to note that the bill requires juries who find negligence to choose between a plaintiff’s proposed damages figure and a defendant’s proposed damages figure–what is sometimes called “baseball arbitration.” This effectively constrains rational trial attorneys to perform a balancing act and make reasonable requests–the higher the demand (or the lower the counter), the more reluctant a jury to go along. This alone should encourage settlements by narrowing the difference between parties. In conjunction with what will likely be a persuasive pre-trial panel expert report, it is hard to imagine circumstances when attorneys would ever let a case get to a jury verdict.

Motley’s Sept. 11 crusade

Profile of bigshot tort lawyer Ron (“U.S. foreign policy, c’est moi”) Motley, who after ultra-successful runs in asbestos and tobacco and a far less successful run against lead paint manufacturers has embarked on a crusade to sue various rich Saudi Arabians over Sept. 11 because they allegedly had paid off bin Laden over the years, whether from sympathy, fear or other motives. The State Department has repeatedly complained that the suit (with its demands for compulsory discovery of foreign nationals, etc.) threatens to upset the delicate management of U.S.-Saudi relations, but who (aside from the U.S. Constitution) says the executive branch should get to run foreign relations anyway? Quotes our editor (Tony Bartelme, “The King of Torts vs. al-Quaida [sic] Inc., Charleston Post & Courier, Jun. 22). Newsiest nugget to us: according to the article, Motley has hired full time to work on the case a well-connected Washington lawyer named Harry Huge; this is pretty rich once you consider something not spelled out in the article, which is that Huge served on most if not all of the arbitration panels that awarded the Ness Motley firm vast fortunes in the state tobacco litigation. What could be more ingenuous and conflict-of-interest-free than for Motley to turn around and give him a job?