Blog
Alabama Court to Reconsider ‘Innovator Liability’ Decision
On Thursday, the Alabama Supreme Court agreed to revisit a controversial ruling that held a brand-name drugmaker liable for the generic version of one of its products. The ruling has raised concerns that it could open the door to a flood of lawsuits seeking to hold companies liable for products they didn't make.
“In January, the state high court found that plaintiff Danny Weeks could sue Wyeth, the maker of brand-name heartburn drug Reglan, for failing to warn about the possibility of developing a neurological disorder that causes involuntary movements, even though Weeks had taken the generic version of the drug made by two different manufacturers,” reports ThomsonReuters. “The Alabama justices had reached their decision based on court filings, without hearing oral argument on the issue.”
A hearing has been scheduled for September.
Foreclosure Settlement in Doubt
“The plaintiffs bar loves state attorneys general, who often hire the lawyers for a contingency fee and get campaign cash in return,” writes the Wall Street Journal. One such contingency fee contract could derail a mortgage-processing settlement if lawyers hired by the Nevada attorney general get their way.
According to the Journal, 49 states and the District of Columbia have agreed to settlements with Lender Processing Services, with Nevada as the only holdout. Nevada is also the only state to hire outside lawyers on a contingency fee basis. The nationwide settlement, which allows for renegotiations if any state gets a different deal, could be scuttled if the lawyers hired by the AG continue to insist on a bigger payday.
The Journal concludes:
“Contingency-fee contracts with state AGs are one of the dirtier practices in modern politics. The conflict of interest is glaring, with the pecuniary interest of the private lawyers interfering with the AG's ethical obligation to serve the public interest. But at least the damage is usually limited to a single state. In this case the harm doesn't stay in Vegas.”
U.S. Chamber Denounces Oklahoma Supreme Court Ruling Voiding State’s Landmark Legal Reform Law
WASHINGTON, D.C.—Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), made the following statement denouncing the Oklahoma Supreme Court’s ruling this week striking down the state’s landmark 2009 legal reform law.
“The Oklahoma Supreme Court’s ruling invalidating the state’s bipartisan landmark legal reform law from 2009 is deeply troubling.
“Despite the leadership and commitment of the governor and the state legislature to improve Oklahoma's legal climate, a handful of unelected officials have defied the will of the people in negating this law. “We will work with in-state allies, including the Oklahoma State Chamber, to address this misguided ruling.”
Nevada Case Could Torpedo $127 Million in National Mortgage Settlements
Yesterday, the Nevada Supreme Court heard a challenge involving a case that could tank $127 million worth of settlements between a mortgage processing company and 49 states and the District of Columbia. The case stems from the controversial hiring of plaintiffs’ lawyers by the Nevada attorney general to represent the state on a contingency fee basis, a practice that the U.S. Chamber Institute for Legal Reform has long contested nationally.
In 2009, the Nevada attorney general hired private law firm Cohen Millstein of Washington, DC, in a case involving mortgage processing firm Lender Processing Services (LPS). However, Nevada law only allows the state to hire outside counsel when state attorneys are specifically disqualified to act such as in a conflict of interest, or where the state legislature has expressly granted permission. Neither exception applies here, so LPS is asking the court to remove Cohen Millstein from the lawsuit.
The contingency fee arrangement not only runs afoul of Nevada law, but represents a troubling example of a state ceding control of litigation on behalf of its citizens to private plaintiffs’ lawyers whose interests are driven by financial gain rather than the public welfare. Cohen Millstein stands to gain up to 15% of any settlement (or have the state pay its fees if there is no cash) under its contract, and has a virtual veto over any settlement it deems unsatisfactory.
Even more troubling is the fact that Cohen Millstein can effectively torpedo similar settlements already achieved with 49 other state attorneys general and the District of Columbia. If LPS pays more to Nevada than to previous states, all prior settlements would be subject to renegotiation and could be opened back up according to their terms. Simply put, the interests of Nevada’s outside private counsel threaten to turn all $127 million in other negotiated settlements into a house of cards.
The U.S. Chamber’s National Chamber Litigation Center filed an amicus curiae (“friend of the court”) brief in the Nevada case along with the American Tort Reform Association, and the Chamber of Reno, Sparks, and Northern Nevada. Click here to read the brief.
June Ridiculous Lawsuit Nominees: Treadmills, Track Teams, Golfers and Jaywalkers
Please finish this lead sentence in a May 9 story in the Louisiana Record: “A New Orleans woman who was allegedly injured when she fell after stepping on a moving treadmill is____.”
A. grateful the fitness club staff came to her aid swiftly.
B. embarrassed that she didn’t understand how to use such a simple machine correctly.
C. suing her fitness club.
If you answered anything but C, then you clearly hold too much faith in the nation’s lawsuit system. As it happens, the New Orleans treadmill case kicks off our monthly “Most Ridiculous Lawsuit” poll where we ask you, our readers, to tell us which lawsuit can rise (or sink) to the level of most ridiculous.
Our second nominee concerns the professional golfer Vijay Singh, who admitted in a January Sports Illustrated article that he had used deer-antler spray, then a banned substance for golfers. The PGA opened an investigation, only to close it after twelve weeks when antler spray was removed from the list of banned substances. Singh promptly sued, despite the fact that he had admitted to using a banned substance – and despite the fact that the 50-year-old golfer has made more than $67 million in his career (courtesy of the PGA).
Our third entry comes to us from neighborly Canada, where an Edmonton jail inmate happened to kill a fellow inmate after stomping on the victim’s head 26 times. (Unfortunately, the United States doesn’t have a monopoly on ridiculous lawsuits.) If you’re thinking that the victim’s family has sued, well, you’d be wrong. The stomping inmate has sued the jail for $500,000 for putting him in the same cell as another inmate.
Finally, to round out this month’s nominees, we have the Philadelphia-area father who’s suing the local high school for kicking his son off the track team. According to the school, the track coach removed the son from the team for unexcused absences from practice. The father disagrees and said the school violated his son’s rights. For damages, the father is asking the school to award his son the varsity letters and championship jackets for the 2012 and 2013 seasons – that, and $40 million.
You can vote on this month’s “Most Ridiculous Lawsuit” here.
Alabama Joins Vanguard of States Enacting Outside Counsel Sunshine Laws
Last week, Alabama Governor Robert Bentley signed a law promoting transparency and capping contingency fees when the state attorney general, a state agency, or elected officials hire outside private plaintiff attorneys to represent the state.
Through this new “sunshine” law, Alabama has taken a significant step to rein in the troublesome practice of awarding contingency fee contracts to plaintiffs’ lawyers who are also major campaign contributors to the state attorney general.
Such “pay-to-play” schemes enrich lawyers at the expense of taxpayers and raise significant concerns about conflicts of interest, favoritism, and the use of a public entity for personal gain, and fairness in prosecutions.
Oklahoma Enacts Landmark Law to Curb Lawsuit Lending Abuses
Yesterday, Oklahoma Governor Mary Fallin signed the nation’s first law to curb lawsuit lending abuses. Lawsuit lenders commonly offer plaintiffs “up front” cash to cover immediate living or medical expenses while they are engaged in a lawsuit, often at sky-high interest rates of over 100%.
Lawsuit lending diminishes recoveries for injured consumers, prolongs litigation, and distorts the fundamental nature of the civil justice system.
With this new law, Oklahoma has taken the lead nationally to curb abuses by establishing common sense parameters for lawsuit lending. This law will bring lawsuit lenders under the Uniform Consumer Credit Code so that they must play by the same rules as others who provide loans in the state.
Governor Fallin, State Senator Brian Crain, and State Representative Leslie Osborn deserve credit for curbing lawsuit lending abuses in Oklahoma, and making their state a leader nationally on this front. Hopefully, other states will follow in Oklahoma’s footsteps.
DONOHUE: ‘America, the Land of the Lawsuit?’
Tom Donohue, in an op-ed published in Noozhawk, writes about our recent report which showed America to have the world’s costliest legal system.
Donohue writes:
“A rising tide of lawsuits sinks all boats. When a few members of the trial bar are able to game a flawed legal system, they destroy jobs and stifle growth across the economy.”
He also pointed to the results of the public opinion survey we released that showed:
- 87 percent of voters think that the number of lawsuits in the country is a problem;
- 69 percent believe that abuse in the legal system has risen sharply over the past decade;
- One in three voters have either been threatened with or involved in a civil lawsuit; and,
- 43 percent of small businesses have faced litigation or the threat of legal action.
Please click here to view the full op-ed.
Landmark Ruling: Colorado Court Says Lawsuit Lenders Cannot Duck Lending Laws
Today, the Colorado Court of Appeals ruled unanimously that lawsuit lenders cannot duck the state’s consumer lending laws. The National Chamber Litigation Center filed an amicus curiae (“friend of the court”) brief in the case along with the Denver Metro Chamber.
Consumer lawsuit lenders seek out plaintiffs and offer them “up front” cash to cover immediate living or medical expenses while they are engaged in a lawsuit. These loans, which are provided at sky-high interest rates of often over 100%, are then paid back to the lender from any settlement or judgment award the plaintiff may later receive.
Lawsuit lending is a serious problem: it diminishes recoveries for injured consumers, increases litigation costs, and crowds court dockets. In addition, if left unchecked, lawsuit lending threatens to erode client control over lawsuits and diminish the professional independence of attorneys.
The Colorado ruling puts some much need parameters around the industry in one of the first test cases nationally of whether lawsuit lending should be regulated under the “Uniform Consumer Credit Code” or UCCC. Two lenders initiated the case by preemptively suing Colorado Attorney General John Suthers because state law would not have allowed them to charge exorbitant interest rates.
Meanwhile, as cited earlier today, Oklahoma is poised to become the first state nationally to pass a law to curb lawsuit lending abuses by bringing lenders existing state law. Oklahoma SB 1016 would bring lawsuit lenders under the UCCC so that they must simply play by the same rules as others that loan money in the state. That bill is now headed to Governor Mary Fallin for her signature.
The lawsuit lending industry stands to suffer the one-two punch of a landmark court room setback in Colorado and a legislative defeat in Oklahoma inside of a week. This may be just the beginning, however, as numerous states nationwide eye reining in the abusive practice.
Oklahoma Bill to Curb Lawsuit Lending Abuses Heads to Governor
The Oklahoma House of Representatives passed a bill (SB 1016) Wednesday to curb lawsuit lending abuses that will now head to Governor Mary Fallin for her signature.
Consumer lawsuit lenders seek out plaintiffs and offer them “up front” cash to cover immediate living or medical expenses while they are engaged in a lawsuit. These loans, which are provided at sky-high interest rates of often over 100%, are then paid back to the lender from any settlement or judgment award the plaintiff may later receive.
Lawsuit lending is a serious problem: it diminishes recoveries for injured consumers, increases litigation costs, and crowds court dockets. In addition, if left unchecked, lawsuit lending threatens to erode client control over lawsuits and diminish the professional independence of attorneys.
Oklahoma would be the first state nationally to pass a law to protect consumers and curb abuses by bringing lawsuit lending into alignment with existing state law. SB 1016 would bring lawsuit lenders under the Uniform Consumer Credit Code so that they must simply play by the same rules as others that loan money in the state.
State Senator Brian Crain and State Representative Leslie Osborn deserve to be commended for working to advance SB 1016, and we urge Governor Fallin to swiftly sign it into to law to curb lawsuit lending abuses in Oklahoma. We are also hopeful that other states will follow Oklahoma’s lead.
