…discussed by Jim Copland at Point Of Law, here and here. Also discussion of tobacco litigation (here and here), asbestos bankruptcies and Wal-Mart. And of course my discussion with Michael Krauss of whether gun-suit pre-emption by Congress is compatible with the Constitution continues on the featured discussion page, with one more day left to go before we wrap things up.
Sign of the times: Bankruptcy Creditors’ Service, Inc., has launched a new publication entitled Catholic Church Bankruptcy News, its mission being to keep track of legal proceedings in the case of the insolvency of the Diocese of Portland, Oregon, and whatever other dioceses or church institutions follow the same path into Chapter 11 under pressure from abuse claims. Subscribers will have to pay $45 for each issue, expected to appear approximately every 10 to 20 days, but a sample issue can be perused for free. (via Amy Welborn). One of the claimants suing the Portland diocese over abuse, whose trial had been set for Jul. 6 until stayed by the bankruptcy filing, is demanding $135 million; another wants $36.5 million. For more, see Ashbel S. Green, “Church bankruptcy and the courts”, Religion News Service/Salt Lake Tribune, Jul. 10.
Last week lawyers associated with uber-tobacco lawyer Richard Scruggs fanned out across the country to file a dozen lawsuits against thirteen large non-profit hospitals in eight states. According to one press account, the lawsuits allege that “the institutions are not living up to their charitable missions, are overcharging uninsured patients and are using overly aggressive collection tactics.” (Rob Kaiser, “Class actions filed against non-profit hospitals,” Chicago Tribune, June 18) Scruggs characterizes the litigation as his attempt “to stop profiteering by nonprofit hospitals.” (Bill Lewis, “St. Thomas among hospitals accused of ‘profiteering,'” Nashville Tennessean, June 18)
The Tennessean article further explains:
“The lawsuit said Saint Thomas unfairly benefits from its long-held tax-exempt status, and the suit alleges a breach of contract, consumer fraud and deceptive business practices because Saint Thomas and the other nonprofits allegedly haven’t provided enough charity care in return for their tax exemptions….
“He criticized the hospitals named in the lawsuits for charging what he said were their highest rates to patients who do not have insurance, while giving discounts to big insurance companies. If the poor or uninsured patients cannot pay their bills, the hospitals garnishee wages and bank accounts, seize houses and force people into bankruptcy, he said.”
University of Chicago law professor Richard Epstein, quoted in the Tribune article, had this reaction: “Dicky Scruggs has got a lot of money, and he’s looking for a lot of trouble,” Epstein said. “The question is, what’s the law that’s being violated?”
Worried about the hypothetical privacy dangers resulting from “data mining” by federal security agencies chasing terrorists? Then you might want to spare a thought for the privacy implications of a commercial service called SmartJury, affiliated with the same database company that has been selling information on private citizens to the government for antiterrorist use. As Alex Tabarrok notes, SmartJury promises to provide trial lawyers with
real-time access to public record information on potential jurors. Within seconds of entering potential jurors, you will receive reports including information such as: Criminal Records; Political Party Affiliations; Bankruptcies; Corporate Affiliations; Real Property Ownership (including value); Motor Vehicle Registrations; Web Site Domain Names; and 2000 Census Information (including median household income, average age, average years of education, and median home value).
Adds Tabarrok: “Helpfully, SmartJury also provides demographic information from survey results to predict how each juror will vote! …the board of SmartJury is littered with well-placed government types like Jack Kemp, William Bennett and Robert Kennedy Jr.”
In 1994 “Congress fiddled with the bankruptcy code in a way that allowed trial lawyers to exploit asbestos bankruptcies. It works like this: In a normal bankruptcy, a creditor’s voting weight is mainly determined by how much he’s owed. But thanks to the 1994 change, all asbestos ‘creditors’ (claimants) are treated equally.” A dying cancer patient gets the same vote as someone with no detectible health impairment at all. “It didn’t take long for tort lawyers to figure out how to game this system. The leading asbestos law firms team up and pool their unimpaired plaintiffs (who each get a vote), draw up a plan that gives the bulk of the money to their clients, and then outvote the other creditors.” Once in control, the lawyers can begin in effect running the affairs of the company in ways that provide them with further benefits, including cutting themselves large fees for their administrative and dealmaking services. (“The latest asbestos scam” (editorial), WSJ, Jun. 1)($$) See also Mar. 15-16, 2003.
Lawsuits have been filed for years blaming automakers for exposure to asbestos found in brake pads and other auto parts, but the volume of such litigation appears to be sharply increasing. Between February 2002 and February 2003 the number of cases filed against Ford nearly doubled, from 25,000 to 41,500. “In a filing with the SEC, Ford said that it is facing a rise in lawsuits as the original manufacturers of the components have gone bankrupt over the past several years. Ford’s report said, ‘In most asbestos litigation, we are not the sole defendant. We believe we are being more aggressively targeted in asbestos suits because many previously targeted companies have filed for bankruptcy.'” (Robert Lane, “Asbestos Suits Costing Ford As Others Go Broke”, Blue Oval News, Apr. 14; Ed Garsten, “Automakers see asbestos lawsuits rise”, Detroit News, Mar. 21).
“A former member and longtime critic of the Church of Scientology has been ordered by a Marin County judge to pay the church $500,000 for speaking out against the controversial religious movement.” Scientology defector Gerald Armstrong, in a 1986 settlement of earlier litigation with the church, had agreed to “maintain strict confidentiality and silence with respect to his experiences with the Church of Scientology” with a penalty of $50,000 for every offending utterance. “The church maintains that Armstrong has violated the agreement at least 201 times and owes it just over $10 million.” Armstrong’s “lawyer noted that his client had declared bankruptcy to avoid paying past damages won by Scientology, and Armstrong still vows to never pay a penny to the church.” (Don Lattin, San Francisco Chronicle, Apr. 13). See also Mar. 25-26, 2002; May 3, 2000.
The House-passed bill (see Feb. 25) that would have protected firearms makers from being held liable for criminals’ misuse of guns died last week in the Senate, although endorsed by a substantial majority of members of that body. Why? Well, it seems quite a few Senators had to pretend to like the bill, given its popularity with the voters back home, but in fact were happy to see poison pill amendments attached to it that they knew would lead to its demise. (Edward Epstein, “Gun-liability bill dies in Senate”, San Francisco Chronicle, Mar. 3). Editorial writers of leading newspapers opposed the lawsuit restrictions with sniffish near-unanimity; it’s not as if George Soros were funding a litigation campaign that placed them at risk of bankruptcy, after all. Gun-bias-watcher Alphecca (Mar. 8) finds a few balanced press accounts of the week’s doings, but not many. More: another helping from Alphecca. And the National Rifle Association’s Institute for Legislative Action ran a story last year (Chris W. Cox, “One Big Victory, Now Another Big Battle”, May 15, 2003) summarizing the progress of the bill as well as quoting highlights from my, and others’, House testimony.
“As [energy company] Mirant’s Chapter 11 unfolds in North Texas, the region’s bankruptcy bar is keenly aware that the region is playing for high stakes. The area has been trying for years to bag a big-ticket bankruptcy. Its first catch was Mirant, the 10th-largest bankruptcy in U.S. history. It’s been very, very good to Fort Worth.” Large-firm bankruptcies are enormously lucrative to lawyers, other professionals and support industries, but the competition for a business once dominated by Manhattan and Delaware puts pressure on judges to issue rulings pleasing to the managers and lawyers of debtor companies. “Judges who don’t deliver are dooming themselves and their local peers to backwater status: Let a big bankrupt company leave unhappy, and nobody else will come back.” In the 1980s, one-third of big bankruptcies were filed away from the bankrupt firm’s headquarters, an indicator of forum-shopping; since then the figure has risen to two-thirds (Margaret Newkirk, “Courts compete to bag big cases”, Atlanta Journal-Constitution, Feb. 29).
“In 1994, when Sen. John Edwards (D-N.C.) was still the biggest tort lawyer in North Carolina, he lent $30,000 to a federal bankruptcy judge who was then overseeing a case on which Edwards?s wife, Elizabeth, did much of the legal work. The judge, J. Rich Leonard, is a longtime friend of Edwards?s. … Jonathan Turley, a professor of law at George Washington University who has brought ethics charges against judges before, said the arrangement presented a ‘compelling case of conflict of interest. It is hard to imagine a judge could rationalize presiding in a case where he holds a loan from a couple,’ he said.” Both Judge Leonard and the Edwards campaign deny impropriety and say the loan was fully disclosed and was repaid. Although Elizabeth Edwards’s law firm received a $1 million contingency fee for its work in the case she handled before Leonard, the fee was paid after she had already left the firm and she has said that she did not receive any of the proceeds. (Geoff Earle, The Hill, Mar. 2). Plus: instant retrospectives on the Edwards campaign (Chris Suellentrop, “The Pretender”, Slate, Mar. 2; Michael Graham, “The littlest candidate”, National Review Online, Mar. 3).