Of most interest for our purposes for the criminal-law consequences: “’Classic resolution of a lawsuit before it’s filed,’ he told the jury. But the argument didn’t fly: in the end, the jury returned with a unanimous verdict … of extortion.” [Mark Seal, Vanity Fair]
When the Securities and Exchange Commission settles with defendants, it extracts gag orders forbidding them forever after from making or causing to be made “any public statement denying, directly or indirectly, any allegation in the complaint.” We noted that fact briefly in yesterday’s roundup adding the question: Is it constitutional for the government to do that?
It isn’t according to the Cato Institute, which wants to publish as a book a businessman’s personal memoir telling his side of the story about his legal battles with the SEC, but cannot do so given that he consented to a settlement containing the gag order. Cato, represented by the Institute for Justice, has now filed suit seeking a court determination that the government cannot use gag orders in settlements to silence those it accuses of wrongdoing. [Clark Neily, Cato at Liberty]
IJ’s press release about the case has fun with redaction:
- Maker of Steinway pianos threatens legal action against owners who advertise existing instruments for sale as used Steinways if they contain other-than-factory replacement parts [Park Avenue Pianos]
- When the Securities and Exchange Commission settles with defendants, it extracts gag orders forbidding them to talk about the experience. Is it constitutional for the government to do that? [Peggy Little, New Civil Liberties Alliance/WSJ] Update: Cato is suing about this on behalf of former businessman who wants to write book about his experience in court against the SEC [Clark Neily]
- Judge preliminarily enjoins New York City ordinance requiring home-sharing platforms like AirBnB to turn over to authorities “breathtaking” volume of data about users [SDNY Blog]
- U.S. Chamber’s top ten bad lawsuits of 2018 [Faces of Lawsuit Abuse] “The Most Important Class Action Decisions of 2018 and a Quick Look at What’s to Come” [R. Locke Beatty & Laura Lange, McGuire Woods]
- “Small aircraft engines are much less reliable than automobile engines. Why? Well, they all must be FAA certified, and it’s not worth the cost to certify, say, a new model of spark plug.” [John Cochrane, who gives HIPAA and military examples too]
- “Why logos and art are sometimes blurred on reality TV shows” [Andy Dehnart, Reality Blurred, 2017]
Presidential attorney and former NYC mayor Rudolph Giuliani, on the Stormy Daniels payment [ABC News reporting on-air comments]:
“I never thought $130,000 — I know this sounds funny to people there at home — I never thought $130,000 was a real payment; it’s a nuisance payment,” Giuliani said. “People don’t go away for $130,000.”
In a $850 million settlement of environmental claims by the state of Minnesota against 3M, private attorneys hired by the state will get $125 million, and the settlement fund is structured so as to evade the legislative appropriations power [Youssef Rddad, AP/St. Paul Pioneer Press]
Harvey Weinstein, assisted by the law firm of celebrated attorney David Boies, “hired private investigators, including ex-Mossad agents, to track actresses and journalists.” At least one agent used false names and identities to insinuate herself into accusers’ and journalists’ circles. “Techniques like the ones used by the agencies on Weinstein’s behalf are almost always kept secret, and, because such relationships are often run through law firms, the investigations are theoretically protected by attorney-client privilege, which could prevent them from being disclosed in court.” [Ronan Farrow, The New Yorker]
Would it help to abolish confidentiality in settlements, as some urge? “California State Sen. Connie Leyva… said she plans to introduce a bill next year to prohibit nondisclosure agreements in financial settlements that arise from sexual harassment, assault and discrimination cases. The rule would apply to public and private employers, she said.” [Danielle Paquette, Washington Post “WonkBlog”] “Getting rid of NDAs reduces accusers’ bargaining power so they end up with lower money settlements or perhaps no settlements,” notes HLS Prof. Jeannie Suk Gersen on Twitter and at more length in The New Yorker. Might that impair their chance of getting a private lawyer interested in their case in the first place? “[We would be choosing] to impair the ability of private parties to resolve a dispute in favor of the public interest.” [Scott Greenfield]
As we highlighted earlier this week, while it was no surprise that PETA and photographer David Slater worked out a settlement agreement to end the ridiculous lawsuit PETA had filed, it was deeply concerning that part of the settlement involved PETA demanding that the original district court ruling — the one saying, clearly, that animals don’t get copyrights — should be thrown out.
It took just a few days for Frank, on behalf of CEI, to file a wonderful and hilarious amicus brief with the court. There are a bunch of reasons why vacatur is improper here, but the real beauty of this brief is in pointing out that Naruto — the monkey — has been left out of the settlement, and thus not “all parties” have agreed. No, really.
My new piece at Cato begins:
In a memo dated June 5, Attorney General Jeff Sessions has ended the practice by which the Department of Justice earmarks legal settlement funds for non-governmental third-party groups that were neither victims nor parties to the lawsuit. This is terrific news and a major step forward in respecting both the constitutional separation of powers and the private rights that litigation is meant to vindicate.
On the separation-of-powers aspects of these slush funds, I go on to recommend a vigorous dissent by Judge Janice Rogers Brown in the recent D.C. Circuit case of Keepseagle v. Perdue. Whole thing here.
“A deaf former IBM worker claims he wrongly accepted a lowball discrimination settlement of $200,000 because his lawyer exaggerated his knowledge of sign language and confused the sign for ‘million’ with that for ‘thousand’ while negotiating the deal.” Software engineer James Wang, who had blamed his firing on his deafness, got $200,000 but says he expected $200 million. [New York Post]
With both Congress and White House now in Republican hands, the U.S. House of Representatives is moving with dispatch to consider a series of litigation reform measures, some stalled for years by Democratic opposition and others of relatively recent vintage. Bruce Kaufman at BNA Bloomberg has a three-part series (first, second, third) followed by an update today on the looming battle over the six main bills:
- The Lawsuit Abuse Reduction Act (H.R. 720) “requires judges to impose mandatory sanctions on attorneys who file ‘meritless’ civil cases in federal courts.”
- The Fairness in Class Action Litigation Act (H.R. 985) which “affects nearly all facets of class action practice” and in particular “class certification requirements, capping or delaying distribution of fees to class counsel, requiring the disclosure of litigation financing, and tying the reporting of settlement data to plaintiffs’ lawyers’ fees.” [More: various academic opponents weigh in here, Andrew Trask defends provisions of the bill here and here, and see earlier]
- The Innocent Party Protection Act (H.R. 725) “targets what is known as fraudulent joinder—the improper addition of [local] defendants to suits in a bid to keep cases in more plaintiff-friendly state courts.”
- The Furthering Asbestos Claims Transparency Act (H.R. 906) “mandates increased reporting of payments to plaintiffs by trusts that pay out asbestos exposure claims against bankrupt companies,” in hopes of preventing undisclosed duplicative collection of damages over the same injury.
- The Stop Settlement Slush Funds Act (H.R. 732) which “seeks to bar the Department of Justice from entering into settlements that steer funds to favored third-party groups.”
- The Sunshine for Regulatory Decrees and Settlements Act (H.R. 469) Goes after what have been called “sue-and-settle” processes at EPA in which the agency reaches concessionary terms with ostensibly adverse litigants who seek to expand its authority.
Trial lawyers and allies in the Litigation Lobby aren’t standing idly by: “opponents hope to gum up the works.” Even if many bills clear House passage, getting to 60 votes in the Senate in the face of filibuster threats could prove difficult, despite the departure of perennial trial lawyer ally Harry Reid (D-Nev.), and the views of President Trump are not entirely clear. More: Washington Examiner editorial on class action measures.