Posts Tagged ‘procedure’

Zombie Litigation

My latest Liability Outlook examines the problems of retroactive lawmaking and litigation, especially reviver statutes, and even Obama fans will find something to like:

The controversy over whether and how to seat the Michigan and Florida delegations at the Democratic National Convention shows the danger of changing rules midstream and upsetting settled expectations. Reviver statutes not only obviate statutes of limitations, which are a critical aid to justice, by “reviving” claims that have expired or never existed, but they can also pose the danger of undoing the benefits of future prospective legislation. In evaluating laws, the issue is not merely one of retroactivity, but of the importance of promoting legal certainty. For example, the FISA Amendments Act, S. 2248, while ostensibly acting retroactively to grant immunity to telecommunications companies that cooperated with the Bush administration’s antiterror surveillance program, works to protect settled expectations.

Among matters discussed: litigation against the Catholic church over child abuse by priests and the Michigan legislature’s proposed retroactive repeal of pharmaceutical tort reform in H.R. 4045. Walter has previously discussed the subject.

We’ve come for your BlackBerries…

…as well as your keychain drives, backup tapes, laptops and network servers. New rules of federal procedure will make it more likely that a litigation opponent will show up on your doorstep with such a demand. (Martha Neil, “Opponent Computer Searches Likelier Under Revised Civ Pro Rule”, ABA Journal, Mar. 12; Nolan M. Goldberg, “Is Your Data Wide Open to Your Opponent?”, National Law Journal, Mar. 12).

BP explosion trial: the uses of voir dire

It has long been noted that lawyers can (when judges let them) employ the process of jury selection to plant themes, factoids and manipulative images favorable to their cause before a trial even gets under way. Which brings us to the just-begun Galveston trial of lawsuits against BP over a deadly 2005 explosion at its Texas City, Tex. refinery:

As Brent Coon, an attorney representing four of the five workers whose lawsuits are set to be tried, talked to potential jurors, he displayed a picture of Enron’s logo on two large screens behind him.

Jim Galbraith, one of BP’s attorneys, objected to the oil company being compared to what happened at Enron, which went bankrupt in 2001. Galbraith accused Coon of arguing his case before the trial had begun.

“We are not trying to say BP is Enron. But Enron did have a major case with a lot of publicity and did a lot of things wrong,” Coon said before state District Judge Susan Criss ordered the Enron logo off the screens. …

Galbraith later objected when Coon showed the jury pool of more than 200 people a well-known photograph of major tobacco company CEOs raising their hands in 1994 just before they testified to Congress that nicotine wasn’t addictive when internal documents showed the companies knew the opposite was true.

“He’s still arguing his case,” Galbraith said.

Criss later told Coon he couldn’t show any more of these images. …

Just to confirm for those who may be wondering, BP, long known as British Petroleum, is not a tobacco company and has no particular connection to Enron other than being in the energy business. Maybe BP should have used its side of juror selection to flash large images of scandal-plagued or widely disliked Texas plaintiff’s attorneys who are not Brent Coon. (Juan A. Lozano, “BP Objects to Enron Comparisons”, AP/, Aug. 31).

Price of sending email: $160/email

Think carefully before hitting that send button. The cost of having independent attorneys review 2500 documents (mostly internal emails) that Merck had claimed subject to the attorney-client privilege was $400,000. That $160/email expense is, of course, just the cost of the independent review, and does not include the cost of attorneys litigating whether the documents should be produced to the other side. Judge Eldon Fallon ruled some documents were privileged, and others must be produced; both sides claim victory in reporting by Ashby Jones at the WSJ Law Blog.

The explosion in document creation has caused a litigation explosion in document discovery. This has had multiple effects: first, it encourages the settlement of meritless claims, because of the expense of defending such claims when document discovery can take place. This in turn encourages the bringing of meritless claims, as their extortion value goes up if plaintiffs can force defendants to spend millions of dollars defending themselves.

Separately, the explosion in document discovery has caused a leap in the demand for attorneys, and, in my opinion, is a large part of the recent increase in law-firm associate salaries. And applications to top law schools would drop precipitously if incoming law students had any idea what percentage of high-paid associates’ time is taken up on document discovery disputes over questions of attorney-client privilege.

Great moments in accountants’ liability

“An en banc Superior Court panel has ordered a new trial in a case in which a western Pennsylvania trial judge awarded $102.7 million in 2003 to one of the owners of a property company identified as being at the center of a mid-1980s Ponzi scheme.” Two couples, Thomas and Barbara Reilly and Edward and Karen Krall, each jointly owned half the stock in Canterbury Village Inc., a property development that was oversold in what was later described as a Ponzi scheme that bilked thousands of investors. When Canterbury Village landed in bankruptcy proceedings, an Ernst & Young predecessor was called in to organize the books, which were in great disarray. According to a judge’s footnote, “the male halves of Canterbury Village’s two couple-owners pleaded guilty to criminal charges stemming from the Ponzi scheme.” Mr. Reilly served about four years on fraud and tax evasion charges. The eventual reorganization plan approved by the court barred the Reillys and Kralls from any stake in the emerging business entity.

The Reillys then proceeded to sue Ernst & Young, alleging that its report had contained inaccuracies which had injured their business interests. When the Reillys filed requests for admissions in support of their allegations, Ernst first missed a deadline to respond and then, granted a do-over, omitted to include a required verification from its lawyer. The judge in response deemed Ernst to have agreed to all the requested admissions — in effect, preventing the firm from contesting the key elements of the Reillys’ case. A verdict was then entered on behalf of Barbara Reilly that “included $34 million for her ownership interest in Canterbury Village — half of the $68 million appraised value — plus an additional $50,945,222 in interest, based on a rate of 6 percent per annum beginning in 1986, for a total compensatory damage award of $84,018,989. Yeager also awarded her $18.17 million in punitive damages for a total verdict of $102,718,989.” The appeals panel has now decided, however, that loss (in effect) of its right to mount a substantive defense is too harsh a sanction for Ernst’s procedural fumblings, so a retrial is on its way. (Asher Hawkins, “Retrial Ordered in Nine-Figure Fraud Case”, Legal Intelligencer, Jul. 27; Karen Kane, “Seven Fields developer faults Ernst & Young in lawsuit”, Pittsburgh Post-Gazette, Aug. 25, 2002).

“Negligent failure to legislate”

We often discuss regulation-via-litigation, but usually there’s at least a little bit of metaphor in that phrase. But apparently some people might be taking it entirely too literally. Eugene Volokh points us to this story in the Philadelphia Daily News, in which a City Councilman named Darrell Clarke has come up with a new strategy to pass gun-control laws, despite the fact that the state legislature won’t allow him to do so:

What’s different is that he says Council also is preparing to file a legal complaint related to the Legislature’s inaction.


Asked how Council can move forward on the bills without a state enabling law, Clarke said, “We think that with our complaint, we will show in our theory that the state has been negligent in terms of enacting good-sense legislation. We think we have a compelling case.”

Indeed, why bother with state legislatures at all? Just let lawyers decide what laws would be “reasonable,” and then get courts to pass those laws.

(Think of all the time and money we could save by abolishing elections.)

More on Redwood v. Dobson

We earlier covered Judge Easterbrook’s opinion in the Redwood v. Dobson case. On Evan Schaeffer’s Illinois Trial Practice Blog I commented:

A censure for instructing a witness not to answer seems strict, considering the practicality that most parties would prefer that result to cutting off the deposition, and one unfortunately cannot be assured of a federal district judge who is as familiar with the current rendition of Rule 30 as Judge Easterbrook is. (Indeed, the district court judge in Redwood erroneously applied Rule 30 according to the appellate opinion.)

If one were to walk the tightrope that Redwood presents us, I would recommend objecting as follows: “We find that question objectionable. I would prefer not to suspend the deposition here to seek a protective order, but Rule 30 offers me no other alternative. Can we agree that you will postpone this question until the end of the deposition, and we’ll seek the protective order then?” By doing this, one demonstrates good faith and places the burden on the questioner of choosing to end the deposition early over this question. That’s not complete protection by any means: the questioner can stand her ground, and then still seek sanctions for the costs of a second day of deposition if the protective order is denied. It’s an elaborate game of chicken, to be sure, and I’ve been on both sides of intimidating junior attorneys and having senior attorneys try to intimidate me in that game.

Now, in the American Lawyer, Northwestern Professor Steven Lubet stakes a similar position (via Civ Pro Prof Blog):

The Seventh Circuit might have thought the Redwood decision would “defuse . . . the heated feelings” at depositions, but it may well have the reverse effect of making litigation more contentious, potentially turning every deposition into a high-stakes confrontation. Lawyers already play enough chicken, and now they’re going to have to learn a new game-truth or dare.

Lubet complains that Redwood leaves attorneys with only the nuclear option of the expense of seeking a protective order; this isn’t quite the case, as my February comment above shows. But Lubet is correct that there is a problem in treating the victim the same as the originally misbehaving attorney.

Of course, the problem is less with the Seventh Circuit decision as much as with the very clear instruction of Fed. R. Civ. Proc. 30(d)(1) combined with the unwillingness of courts to enforce sanctions or provide adequate protective orders for over-aggressive discovery. If district courts were doing their jobs, that Seventh Circuit opinion wouldn’t look so frightening to practitioners, because attorneys would be behaving in the first place.

Update: “Morgan Stanley-Perelman Judgment Flipped”

After the investment firm was found to have deleted some emails regarding the disputed merger, an incensed trial judge directed the jury to assume that the emails would have backed up Perelman’s charges of fraud; a $1.5 billion verdict followed, including $850 million in punitive damages (May 18 and Dec. 17, 2005). Now a Florida appeals court, by a 2-1 vote, has thrown out the award on the grounds that “no legally cognizable damage was shown as a result of the alleged fraud.” It did not reach the discovery-sanctions issue. (Joe Bel Bruno, AP/, Mar. 21; Jordana Mishory, “Fla. Appeals Court Tosses $1.58 Billion Verdict Against Morgan Stanley”, Miami Daily Business Review, Mar. 22; Carolyn Elefant, LegalBlogWatch, Mar. 21; opinion text, PDF).