• Iowa federal judge hits EEOC with $4.5 million attorney fee award over “sue first, ask questions later” litigation strategy;
• Jim Copland continues his weeklong blogging of Trial Lawyers Inc.: K Street with posts on the plaintiff’s bar’s Washington, D.C. presence (with discussion of CPSIA, employment litigation, qui tam, and arbitration, among other topics); state lobbying; and public relations, including legal academics, the media, and consumer groups;
• Hmm: House committee conveniently subpoenas Toyota defense documents that plaintiffs had been seeking to unseal (and more on Toyota);
• Obama administration plans crackdown to make more employers reclassify independent contractors as employees;
• Trial bar stirs pot in Florida politics;
• Feds swoop down on 2003 settlement to demand that parties reimburse Medicare as provided by retroactive law.

New at Point of Law is a post from Overlawyered - Chronicling the high cost of our legal system

“How Litigators Tried to Sneak a Pet Earmark into Health Reform” is a post from Overlawyered - Chronicling the high cost of our legal system

A friend points out a little nugget of absurdity and political mendacity in the Pelosi health-care bill. Remember Obama’s effort to try a “test” for tort reform? (We don’t actually need a test, since it has worked to lower medical malpractice coverage and help increase access to doctors in states that have tried it.) Well, Pelosi’s bill has an anti-tort-reform measure. On pages 1431-1433 of the 1990-page spellbinder, there is a financial incentive for states to try “alternative medical liability laws.” But look — you don’t get the incentive if you have a law that would “limit attorneys’ fees or impose caps on damages.”

In other words, Congress is providing a financial incentive to uncap damages. Marvelous.

Buried on page 1431: Potemkin tort reform is a post from Overlawyered - Chronicling the high cost of our legal system

But the main effect will be to increase settlement pressure in cases where there are unjust punitive damages awards. Because settlements can be characterized as “compensatory” and tax-deductible while court-ordered judgments cannot, trial lawyers will be able to use the tax differential to discourage defendants from seeking appellate review. So one cannot expect very much tax revenue from this: “punitive damages” will drop precipitously, but money going to trial lawyers will go up. Moreover, appellate courts will have fewer opportunities to correct bad decisions by trial courts, creating more uncertainty in litigation, which raises litigation expenses because it will be harder to predict outcomes.

Note that taxpayers are not subsidizing punitive damages award deductions by businesses: the income “lost” because a defendant deducted the punitive damages award will be income realized by the plaintiff and his or her attorney. If the deduction is forbidden, the government will be, in effect, double-taxing the same money.

The Obama administration makes much of its claim of being pragmatic, rather than ideological, but this looks like an indirect giveaway to the trial bar rather than a source of government revenue. More: Walter at Point of Law; and my shining mug quoted at the Southeast Texas Record.

Trial lawyer earmarks: ending deductions for punitive damage payments is a post from Overlawyered - Chronicling the high cost of our legal system

No doubt we’ll hear about the Paycheck Fairness Act bill because she’s not endorsing anyone for President.  “Equal Pay for Equal Work” has been one of the talking points of the week.   

There’s been lots of talk of late about the act, which arose from the Ledbetter case (though there was also a Lilly Ledbetter Fair Pay Act bill out there as well). One of the bill’s co-sponsors, Rosa DeLauro commented on it on the Huffington Post late last week and I summarized the latest debate about the bill in a post as well.  Businesses and others have been critical of the act, even though it passed the U.S. House of Representatives last month  (Heritage WebMemo, 7/30; Examiner, 8/6; OpenMarket, 8/6). 

What’s missing from the debate about the bill, unfortunately, is a discussion about what the bill is about and should be about.   It’s not really about pay equity — after all, we already have the Equal Pay Act for that. It’s really about allowing indivdiuals to recover much more in the way of damages than they could otherwise recover (though you’d be hard-pressed to make heads or tails of it from the seemingly technical language used).   And frankly, there’s nothing wrong with advancing that goal if there was a fair debate on the merits.

But unfortunately, the public debate on the bill seems to fall into the classic stereotypes that each side rolls out with a piece of new legislation.  Proponents of the bill suggest that those who are for the bill are FOR pay equity, and those opposing the bill are AGAINST pay equity, which is just hyperbole.  Opponents of the bill have used hyperbole of their own, ignoring the fact that corporations have had to comply with the Equal Pay Act for years and that many are well-suited to address such claims.    

It’s hard to see how some changes will have any real impact on employers.  For instance, one part changes the language regarding a “factor other than sex” defense that an employer can raise to a “bona fide factor other than sex”.   While one can debate the theorhetical differences in language, the real-world effect of the change is probably minimal for employers.  After all, do employers really make salary decisions and think “well, I can explain the differences with reason, but is it a ‘bona fide’ reason”?  And small businesses will be excluded from the act, in the same way that they are excluded from coverage under the Fair Labor Standards Act.

On the other hand, proponents of the bill gloss over the fact that removing some caps on compensatory and punitive damages — as the bill proposes — could have a significant effect on employers and the likelihood of lawsuits (one need only look at the rise of Title VII litigation after the Civil Rights Act of 1991 was passed for a historical perspective). 

Proponents also ignore the fact that the punitive damages portion of the bill would mark a change in philosophy regarding punitive damages (to see the changes in context, click here).  For example, one change would allow punitive damages to be awarded even when no intentional discrimination has been proved — which contradicts the traditional notion that punitive damages should be issued to punish the defendant for some type of malice or reckless behavior. 

The political reality is that some version of this bill is going to get passed and employers need to keep a watchful eye on the bill.  We’ll see in the upcoming weeks whether a compromise is eventually fashioned (much like the compromise being done for the ADA Amendments Act of 2008) or whether this is just political posturing in an election year.  Either way, here’s (perhaps foolishly) hoping that the debate on the bill’s merits gets more substantive than just slogans.

(At Point of Law, Walter Olson’s other site, Carter Wood provides his insights into tonight’s happenings as well.)

Paycheck Fairness Act Takes Center Stage is a post from Overlawyered - Chronicling the high cost of our legal system

The article also inaccurately characterizes the Obama-Clinton medical malpractice legislation, and furthers the idea of “Kennedy is a moderate,” blurring the role of the Supreme Court by implicitly endorsing the liberal idea of it as a political superlegislature rather than a judicial body with an obligation to follow the law. The focus on anti-preemption legislation, as opposed to some of the dozens of other pro-trial-lawyer-lobby bills pending in this Congress and likely to be renewed next Congress, is unusual. (Separately, I disagree with Jim Copland; I don’t think McCain would hesitate to veto the giveaways to the trial-lawyer lobby if they’re in single-purpose bills and not attached as hidden amendments to omnibus legislation.)

I’m less surprised than Fisher and Bill Childs that Obama is getting money from defense firms, or, more accurately, attorneys who work at defense firms. The legal establishment is overwhelmingly liberal (hence the 3:1 fundraising advantage Obama has), and many defense attorneys are perfectly happy with a status quo that requires companies to pay them millions of dollars to continue doing business. (Some are too happy, and have vocally supported ABA resolutions that would harm their clients–something their clients should pay closer attention to.)

While plaintiffs’ law firm contributions are often coordinated (sometimes a bit illegally, as when Tab Turner’s firm and Geoffrey Fieger’s firm were caught reimbursing their employees for donating to John Edwards), it’s a mistake to think the same thing happens in the defense bar, where attorneys are donating on an individual basis because they perceive future government administration (or Article III) jobs of a certain political caliber as pay-to-play or because they’re otherwise simply interested in the political process. Kirkland & Ellis may have tobacco and asbestos defense in its portfolio, and many alumni in the Bush administration, but most Kirkland attorneys are doing other things, and a disproportionate number of them at the Chicago-based firm are going to be former classmates of or students of Harvard Law graduate and Chicago Law lecturer Obama, and have the six- and seven-digit incomes to give maximum contributions–and it only takes a few dozen $4600 contributions to make a firm look like a big contributor.  (And, on the other hand, as if to demonstrate the bipartisan nature of most law firms, John McCain turned to a Republican attorney, former Reagan White House Counsel A.B. Culvahouse, at the largely Democratic O’Melveny & Myers to lead his vice presidential search.) During the primaries, the trial lawyers were giving most of their money to Edwards, Clinton, and Biden, but those fundraisers are now doing business with Obama, as the recent press coverage of Fred Baron shows.

But the article is correct that the outlook for federal tort reform is grim, and that reformers are looking at rearguard actions defending against numerous attempts to make the system worse.

“November Election A Lawyer’s Delight” is a post from Overlawyered - Chronicling the high cost of our legal system

“The trial bar goes on the offensive” is a post from Overlawyered - Chronicling the high cost of our legal system

$1.6 billion tax break for trial lawyers? is a post from Overlawyered - Chronicling the high cost of our legal system

“Pelosi betrays her own House for a slew of trial lawyers” is a post from Overlawyered - Chronicling the high cost of our legal system

Top Ten Reasons to Oppose the CPSC “Reform” Act (S. 2663)

1. Makes it legally impossible to fire disruptive employees: Once an employee – be they a union salt or just your average disgruntled employee – notifies the CPSC of an action they “believe to be” a violation of a consumer product safety regulation, the employer faces fines in excess of $250,000 if they discharge or take any “negative” action against them. This will dramatically expand the scope of federal whistleblower protections. (Section 21)

2. Creates a public government-sponsored website to anonymously smear companies: The substitute requires the federal government to establish a website to post complaints from consumer groups. Now left-wing interest groups don’t have to harass businesses via their organization’s website, they can post them on CPSC.gov. This places the imprimatur of the federal government on oftentimes frivolous complaints filed by left-wing interest groups. This database will be of little use to anyone other than trial attorneys and left-wing interest groups. (Section 7)

3. Creates a new tool for anti-business state AGs to harass companies: Under the “Spitzer Section” of the bill, State Attorneys General will now have a new cause of action to sue companies to enforce the Consumer Product Safety Commission rules. Instead of having to comply with only one federal authority regulating consumer product safety, American businesses now have to worry about complying with the varying interpretations of law of 50 state Attorneys General. (Section 20)

4. Undermines a cooperative relationship between businesses and the CPSC: Under the information disclosure provisions of current law, information is reviewed for accuracy and fairness. Under the bill, this protection would go away and all information will be posted on the internet within 15 days. This will eliminate thousands, possibly tens of thousands of voluntary reports the CPSC uses every day to do their job. This cooperative relationship ensures that businesses and the CPSC share information and work together to protect consumer safety. Under the new regime, instead of having experts cooperating with experts, you’ll have lawyers fighting with lawyers. (Section 7)

5. Massively increases fines, threatening small businesses for no good reason: The substitute increases maximum civil penalties more than 10-fold and the individual violation penalty more than 50-fold subjecting each product that wrongfully enters the stream of commerce to a $250,000 fine. The threat of a $250,000 fine will cause many small manufacturers and retailers who commit only minor violations (50 toys) to declare bankruptcy. Larger businesses are already discouraged from having defective products in the stream of commerce by the impact on their reputation and more importantly their stock price. After the 2007 scandals alone, Mattel’s corporate valuation lost $5.4 BILLION. (Section 16)

6. Dick Durbin’s Garage Sale: Senator Durbin, at the behest of an Illinois-based company, has included language in the bill that overrides the garage door safety standards developed by the non-profit independent Underwriters Laboratory and American National Standards Institute (UL 325). Senator Durbin decided that it was appropriate to substitute his judgment, and the judgment of the company’s lobbyist, for that of the panel of technical experts who were assembled to evaluate what technologies were safe for use in garage door openers. Senator Durbin is setting a terrible precedent by substituting the judgment of a lawmaker for that of experts in a highly technical and complex subject area. (Section 31)

7. Threatens to send the owners of small companies to prison for unknowingly selling a dangerous product: Section 16(b)(2) states, “(2) DIRECTORS, OFFICERS, AND AGENTS.—Section 21(b) (15 U.S.C. 2070(b)) is amended by striking ‘‘19, and who has knowledge of notice of noncompliance received by the corporation from the Commission,’’ and inserting ‘‘19’’.” Under the new regime, unknowing violations of the CPSA could lead to jail time for business owners. This may make the bill proponents feel good, but it does nothing to improve product safety. (Section 16)

8. Eliminates protections from disclosure of confidential preliminary information: Under current law industry can share information with the CPSC discussing preliminary factual matters (i.e. the company had recently received a report that a product had malfunctioned) even if the information may or may not have a bearing on a possible future recall. This open sharing of information provides a significant amount of important information that the CPSC can use to make informed recall decisions. Under the vague authority to allow disclosure when the CPSC deems the information “in the public interest” companies will be extremely unlikely to voluntarily share information because of fear of having all the information end up on the CPSC’s website regardless of whether it has an actual bearing on public safety. (Section 7)

9. Increases the CPSC’s budget by nearly 100% and significantly increases the staffing at CPSC: The bill increases the budget of the CPSC from $80 Million in FY08 to over $158 Million in 2015. It would also take the CPSC from its 2007 level of 393 full time equivalents to 500 full time equivalents. While there may be needs at the CPSC, there has been scant justification for these increases in the size and scope of government. (Sections 3 and 4)

10. The Bill has been endorsed by the Consumer Federation of America and the Consumers Union: The Consumer Federation of America said the measure contained “significant improvements over the status quo” and the Consumers Union, said the agreement “adds important new tools to the CPSC toolbox, and moves us closer to finally fixing our broken product safety system.” But in fairness, Public Citizen dissented saying the Senate bill would leave the CPSC with “far less authority than most regulatory agencies.” There’s always conference.

“Senate CPSC Bill: A Boon for Trial Lawyers at the Expense of Product Safety” is a post from Overlawyered - Chronicling the high cost of our legal system