Posts Tagged ‘regulation through litigation’

Courts are no place to set opioids policy

The “American public may soon pay for a billion-dollar wealth transfer from the pharmaceutical industry to state and local government,” writes Margaret Little:

Proceedings moving apace before Ohio U.S. District Judge Dan Polster bode the worst of all solutions to the opioid crisis – a swift global settlement modelled on the tobacco settlement of the 1990s. The result will inflict lasting damage on our constitutional order and do virtually nothing to solve the opioid crisis. Opioid abusers, just like smokers in the infamous tobacco settlement, stand to receive nothing. A single unelected federal judge will have feigned to have “solved” opioids, levied billions in unlegislated taxation, made drugs more costly and harder to secure for non-abusers while leading abusers to turn to heroin and fentanyl, and filled state and local coffers with revenue-by-judiciary while richly endowing trial lawyer barons – hand-picked by the judge – with billions in public funds. A swift education of the American public about this abuse of the judicial process is in order, not a swift settlement.

More: “After New York Sues Opioid Manufacturers, Drug Policy Experts Warn That Legal Action Won’t Save Lives” [Zachary Siegel, In Justice Today] The FDA is charged with setting uniform national policy on pharmaceuticals; will it allow regulatory power to be transferred pell-mell to MDL court or to the actors in a resulting settlement? [WLF] And from Jim Beck, Drug and Device Law:

…injuries from illegal opioid use are precisely the sort of injuries that the in pari delicto doctrine was designed to preclude from being recovered in litigation.

Well, what about the states as plaintiffs?…[W]ho can restrict the rights of physicians to prescribe drugs for off-label uses? That would be the states, in their traditional roles of regulators of medical practice…. States could ban precisely the off-label uses they are complaining about, but they haven’t.

Earlier here.

Banking and finance roundup

  • “The Rise of Financial Regulation by Settlement” [Matthew C. Turk, Columbia Law School Blue Sky Blog]
  • Before buying into the idea that fractional reserve banking has some sort of fraudulent roots, consider the common law concepts of detinue, bailment, and debt [George Selgin, Cato]
  • Cato files brief urging Supreme Court to clarify constitutional status of SEC’s use of in-house administrative law judges [Thaya Brook Knight on Lucia v. SEC]
  • Between FATCA and the Patriot Act, American extraterritorial banking rules keep wreaking havoc on other countries [Ernesto Londoño, New York Times on Uruguay legal marijuana businesses]
  • “Congress Can Rescind the CFPB’s Gift to Trial Lawyers” [Ted Frank, WSJ]
  • “Absent Reform, Little Relief in Sight from Chronic “Merger Tax” Class-Action Litigation” [Anthony Rickey, WLF]

Suit seeks to make tech firms pay for campaign against distracted driving

“In the lawsuit, the Coalition Against Distracted Driving and Stephen L. Joseph, as an individual, seek an injunction against Apple, Samsung, Google, and Microsoft, requiring those companies to pay $1 billion annually to fund an ‘effective and ongoing national public education campaign’ to educate drivers on the dangers of using smart phones and smart watches while driving.” The suit seeks to define the behavior at issue as a nuisance under California law. [Jared McClain, Washington Legal Foundation]

“The increasing criminalization of corporate behavior in America…”

“…is bad for the rule of law and for capitalism,” opines The Economist, saying regulation-through prosecution has become “an extortion racket,” from hundreds of millions in Google drug-ad settlement money spread among Rhode Island police departments, to New York Gov. Andrew Cuomo’s muscling in to extract money from BNP Paribas in a settlement of legal offenses against U.S. foreign policy as distinct from New York consumers:

Who runs the world’s most lucrative shakedown operation? The Sicilian mafia? The People’s Liberation Army in China? The kleptocracy in the Kremlin? If you are a big business, all these are less grasping than America’s regulatory system. The formula is simple: find a large company that may (or may not) have done something wrong; threaten its managers with commercial ruin, preferably with criminal charges; force them to use their shareholders’ money to pay an enormous fine to drop the charges in a secret settlement (so nobody can check the details). Then repeat with another large company. …

Perhaps the most destructive part of it all is the secrecy and opacity. The public never finds out the full facts of the case, nor discovers which specific people—with souls and bodies—were to blame. Since the cases never go to court, precedent is not established, so it is unclear what exactly is illegal. That enables future shakedowns, but hurts the rule of law and imposes enormous costs.

“The plot to make Big Food pay”

“Lawyers are pitching state attorneys general in 16 states with a radical idea: make the food industry pay for soaring obesity-related health care costs. … So far none have agreed to sign on.” One hope: the theory popularized by former FDA chief David Kessler that bacon, brownies and buttered popcorn should be seen as “addictive.” Paul McDonald, a Chicago lawyer who is organizing the campaign, is described as a former “senior counsel at Kraft Foods.” [Helena Bottemiller Evich, Politico]

Mark Cuban (and Lyle Roberts) on the SEC

Having defied the Securities and Exchange Commission and beaten its inside trading allegations in court, the investor and team owner is not through giving them a piece of his mind: “I think they exemplify what type of organization you should expect when you have nothing but attorneys and in particular former prosecutors running the show. …There is a culture of trying to win, not trying to find justice.” In the absence of bright-line rules, notes Cuban, the commission resorts to “regulation through litigation,” trying to ram through doubtful legal interpretations by way of sheer vehemence of enforcement. [Kevin Funnell/Bank Lawyer’s Blog, Alexander Cohen/Business Rights Center, earlier] Attorney Lyle Roberts, who represented Cuban, will also be known to some of our readers for his blogging at The 10b-5 Daily.

Colorado school funding found constitutional

The Colorado Supreme Court, wisely resisting a national campaign of school funding litigation, has turned down a lawsuit arguing that the state is obliged under its constitution to step up school spending. [Denver Post, KDVR, opinion in State v. Lobato]

I’ve got a post up at Cato at Liberty about the Colorado decision, noting that although school finance litigators make a lot of noise about educational quality, they are actually on a mission of “control —specifically, transferring control over spending from voters and their representatives to litigators whose loyalty is to a mix of ideologues and interest groups sharing a wish for higher spending.” I quote from a section on school finance litigation that I wound up cutting from my book Schools for Misrule about the enormous impact such suits have had in other states:

Vast sums have been redistributed as a result. Lawmakers in Kentucky enacted more than a billion dollars in tax hikes. New Jersey adopted its first income tax. Kansas lawmakers levied an additional $755 million in taxes after the state’s high court in peremptory fashion ordered them to double their spending on schools.

The results have been at best mixed: while some states to come under court order have improved their educational performance, many others have stagnated or fallen into new crisis. Colorado is fortunate not to join their ranks. (& reprint: Complete Colorado)

P.S. From a Colorado Springs Gazette report, Jul. 31, 2011:

“Putting more money into a broken system won’t get a better results. There are improvements that could be made without money,” says Deputy Attorney General Geoffrey Blue. …

He points to a Cato Institute study that showed spending on education across the country has skyrocketed but test scores didn’t improve.

“That would mean that potentially every cent of the state budget would be shifted over to K-12 education,” says Blue, who heads the office’s legal policy and government affairs.

October 15 roundup

  • “Jury Says No to Libel Claim Over Truthful E-Mail” [NLJ, Ardia/Citizen Media Law; high-profile First Circuit Noonan v. Staples case, earlier here and here]
  • Transmission of folk music is getting tangled in copyright claims [BoingBoing]
  • Scientific shortcut? Veterans Department will presume Parkinson’s, common heart ailment are caused by Agent Orange for GIs who set foot in Vietnam [NY Times]
  • Federal hate crimes bill: yes, courts will consider speech and beliefs in assessing penalties [Sullum and more, Bader]
  • Texas trial lawyer Mark Lanier’s famed Christmas bash will feature Bon Jovi this year [ABA Journal, background here and here]
  • Let’s explain our Constitution to her: U.K. cabinet minister thinks Arnie can close private website because it’s based in California and he’s governor [Lund, Prawfsblawg]
  • Ten best Supreme Court decisions, from a libertarian point of view? [Somin, Volokh]
  • Cert petition on dismissal of suit against Beretta shows Brady Center still haven’t given up on undemocratic campaign to achieve gun control through liability litigation [Public Nuisance Wire interview with Jeff Dissell, NSSF]

“Suing Cold Medication Manufacturers Because Drug Dealers Make Drugs out of the Medication”

If it seems like a far-out idea — suing legitimate makers of cold and allergy medications containing ephedrine and pseudoephedrine because underground labs use them to make meth — be aware that it’s actually been tried, by public officials in the Midwest, often working closely with ambitious private contingency-fee lawyers. The Eighth Circuit has just rejected one such case in Ashley County v. Pfizer; Eugene Volokh and commenters discuss.

“Is Big Caffeine the Next Target?”

Tim Sandefur asks this only half-facetiously as he reviews mass torts. Of course, as a must-read comment letter to FASB (via the indispensable Beck/Herrmann) submitted by six pharmaceutical companies notes, “A mass tort occurs when the plaintiffs’ bar decides to invest in it.”