- “The business model of Wall Street is fraud” line is, well, vintage B.S. (that’s Bernie Sanders to you) [Steve Chapman/Chicago Tribune, Bret Stephens/WSJ. More: “Sorry Bernie, Wall Street Wasn’t Deregulated Pre-Crash” [Jared Meyer, Forbes]
- Auto lender shakedowns by Obama CFPB and DoJ continue, latest is Toyota for $21.9 million [WSJ] “Obama bullied bank to pay racial settlement without proof: report” [Paul Sperry, New York Post]
- Delaware Chancery Court takes step toward countering plaintiff lawyers who sue on almost every deal, still has many miles to go [Ronald Barusch, WSJ “Dealpolitik”]
- New York Times endorses financial transactions tax with unconvincing regulatory rationale [Peter Van Doren/Cato, earlier]
- California insurance commissioner pushes politicized investing, which can actually complicate solvency risk by harming portfolio diversification [Business Insider]
- “Smaller community banks appear to have a valid concern that their compliance burden is rising and the playing field is becoming more uneven” [Preston Ash, Christoffer Koch and Thomas Siems, Dallas Fed via Kevin Funnell] Marshall Lux/Robert Greene study ties trend to Dodd-Frank law [Harvard Kennedy School via Todd Zywicki]
- Laws against money laundering hurt more good guys than bad guys, latest installment [Jeff Miron, Cato]
- Manufacturing while foreign: Holman Jenkins compares Department of Justice’s handling of General Motors case with those of Toyota and Takata [WSJ, paywall]
- “Electronic surveillance by the Drug Enforcement Administration has tripled over the past 20 years, and much of that increase has involved bypassing the federal courts.” [Brad Heath, USA Today via Balko]
- Sen. Hatch: criminal justice reform needs to include reform on issue of mens rea/criminal intent [John Malcolm, Daily Signal]
- Clinton administration tended to embed its anti-gun gestures in its then-popular carceral-state enactments [Jesse Walker on the 12-year lull in anti-gun legislation and whether it’s ending]
- New DoJ policy on corporate criminal prosecutions risks scapegoating [Thaya Knight, Cato] Despite transient surge early in Obama years, federal white-collar crime prosecutions have now fallen to 20-year low [TRAC Reports]
- A legal remedy should federal law enforcers falsely malign you in a press release? Dream on [Scott Greenfield]
- If you oppose high U.S. incarceration rate, but wish more corporate executives went to prison, check your premises [Matt Kaiser, Above the Law]
Details at ABA Journal. The settlement inevitably invites comparison with Toyota’s agreement to pay the federal government $1.2 billion to settle criminal charges over alleged coverup on the sudden acceleration issue. One difference that comes to mind is that GM’s use of a flimsy ignition switch was a genuine design flaw that appears to have contributed to numerous accidents and deaths, while the Toyota “flaw” was imaginary.
P.S. “Apparently, there is no Vice President In Charge Of Going To Jail at General Motors.” [Daniel Fisher]
- Lester Brickman, others testify before House subcommittee on proposed asbestos-reform FACT Act [Chamber-backed Legal NewsLine]
- “B.C. student-turned-dominatrix awarded $1.5M after car accident left her with new personality” [National Post]
- Here, have some shredded fairness: New Jersey lawmakers advance False Claims Act bill with retroactive provisions [NJLRA] Maryland False Claims Act, which I warned about last year, reintroduced as leading priority of new attorney general Brian Frosh [Maryland Reporter; my coverage here, here, etc.]
- Oregon: a “man badly burned when he poured gasoline on a fire is suing Walmart, claiming the gas can he bought there was defective.” [KOIN]
- Minnesota jury is latest to buy sudden-acceleration case, awards $11 million against Toyota [Reuters]
- Insurers, trial lawyers gear up for Texas legislative fight over hailstorm litigation [Bloomberg/Insurance Journal]
- Breaks ankle in “watch this” stunt, files negligence claim, but some spoilsport posted the footage to YouTube [U.K.: City of London police]
- “Lying to a Lover Could Become ‘Rape’ In New Jersey” [Elizabeth Nolan Brown/Reason, Scott Greenfield]
- “A $21 Check Prompts Toyota Driver to Wonder Who Benefited from Class Action” [Jacob Gershman, WSJ Law Blog]
- On “right of publicity” litigation over the image of the late General George Patton [Eugene Volokh]
- HBO exec: “We have probably 160 lawyers” looking at film about Scientology [The Hollywood Reporter]
- Revisiting the old and unlamented Cambridge, Mass. rent control system [Fred Meyer, earlier]
- Lawyers! Wanna win big by appealing to the jurors’ “reptile” brain? Check this highly educational offering [Keenan Ball]
- “Suit claims Google’s listings for unlicensed locksmiths harmed licensed business” [ABA Journal]
I was a guest Tuesday on the Roger Hedgecock program at the San Diego Union-Tribune, discussing the way Washington, D.C. seems to have come down at least as hard on Toyota as on General Motors, maybe harder, even though the safety shortcomings falsely attributed to Toyota appear actually to be present in the GM case.
One striking feature of the GM story is the extent to which a culture of putting as little as possible on paper appears to have undermined GM’s capability to grasp the scope of the safety problem with the flimsy ignitions and their relationship to nonfunctional airbags. Bill Vlasic of the New York Times reports:
To the legal department at General Motors, secrecy ruled. Employees were discouraged from taking notes in meetings. Workers’ emails were examined once a year for sensitive information that might be used against the company. G.M. lawyers even kept their knowledge of fatal accidents related to a defective ignition switch from their own boss, the company’s general counsel, Michael P. Millikin.
As I’ve often noted, organizations gripped by fear of legal consequences or hostile oversight often develop a “put as little as possible on paper” mentality, even though such a mentality regularly proves counterproductive to the organization’s mission by fostering ignorance and lack of coordination and allowing bad practice to take root.
Popular radio host Mike Rosen had me on his program last week to talk about the Justice Department’s aggressive use of criminal law against the Japanese automaker (earlier here). Also check out Canadian columnist Terence Corcoran’s view: “Intended media acceleration and the assault on Toyota” [Financial Post]
Last week the Department of Justice announced a deal with Toyota in which the Japanese automaker would fork over $1.2 billion and place itself under supervision for allegedly not being forthcoming enough with information at the height of the 2009-2010 panic over claims of unintended acceleration in its cars. The acceleration claims themselves had turned out to be almost entirely bogus, and were refuted in a report from the federal government’s own expert agency, NHTSA. Instead, the prosecution relied on a single count of wire fraud: Toyota had supposedly given regulators, Congress and the public an erroneously positive view of its safety efforts. It should therefore have to “forfeit” a huge sum supposedly related to the volume of business it did over a relevant period.
I’ve got an opinion piece in Monday’s Wall Street Journal (unpaywalled Cato version here, related Cato post here) about this whole appalling affair, which should frighten other businesses that might face draconian charges in future not just for compliance infractions, but more broadly for defending their products in the court of public opinion. Meanwhile, the Justice Department’s grandstanding and demagogic press release goes to some lengths to leave the impression “that unintended acceleration is some mysterious phenomenon of auto design unrelated to flooring the accelerator.” Someone here is irresponsibly misleading the motoring public and withholding vital safety information, but it’s not Toyota.
A few related links: NHTSA unintended acceleration report, Car & Driver’s coverage, and my 2010 opinion piece. And Holman Jenkins at the WSJ (paywalled) compares the still-unfolding story of ignition problems at GM, also discussed by Paul Barrett at Business Week.
Imagine how much they might have gotten if the cars had actually been suddenly accelerating! “Do We Really Want To Regulate This Way?” asks Daniel Fisher [Forbes]
It’s behind a paywall, but the WSJ columnist looks into a question touched on repeatedly in this space and connects it to the unpredictability with which juries may credit expert testimony, as an Oklahoma jury recently did in Toyota litigation:
Toyota had been vigorously fighting hundreds of complaints that its cars are prone to unintended acceleration. Now it’s moving toward a global settlement as a consequence of a single Oklahoma lawsuit that appears to establish that Toyota can’t prevail if it can’t prove a negative—that its software didn’t go haywire in some untraceable and unreplicable manner. …
The Bookout jury was apparently impressed by the testimony of software expert Michael Barr. He said a single “bit flip” (the smallest instance of data corruption) could cause uncontrolled acceleration when the driver had been using cruise control, stopped using cruise control, then resumed using cruise control to let the car accelerate back to its selected speed. …
The connection to Ms. Bookout’s crash, which didn’t involve cruise control and took place on an exit ramp? None, except Mr. Barr claimed that “software failure is consistent with the description of the [Bookout] accident” and “more likely than not” a factor.
Jenkins notes, as have others, that if some mysterious and unreplicable bug is causing Toyotas to accelerate suddenly while disabling the brakes, it seems to differentially appear in cars being driven by elderly drivers, which are greatly overrepresented in the crash statistics.
More: Kyle Graham on whether vaccine liability limits make a plausible precedent for limits on liability for driverless cars.