Blog
Los Angeles Will End Arbitration Program
After 20 years of operation, the Los Angeles Superior Court is shutting down its alternative dispute resolution program due to an extreme budget shortfall, the National Law Journal reports. The loss of the ADR program, the largest in the country, will especially punish “the average citizen who finds himself in a lawsuit,” according to the president of the LA County Bar Association Richard Brudge.
U.S. Chamber Statement on House Asbestos Reform Hearing
"For too long, asbestos bankruptcy trusts have operated without adequate oversight. Courts around the country have uncovered examples in which plaintiffs' lawyers have filed inconsistent or fraudulent claims with multiple trusts and in the court system. This abuse shortchanges legitimate asbestos claimants while hurting solvent companies, their shareholders and employees.
"The bipartisan Furthering Asbestos Claim Transparency (FACT) Act addresses this problem by requiring the trusts to file quarterly reports on their claims to the federal bankruptcy courts. This commonsense legislation would help discourage fraud and abuse in the asbestos compensation system.
"We commend Representatives Farenthold and Matheson for introducing the FACT Act, as well as Chairman Goodlatte and the House Judiciary Committee for holding this week’s hearing. We urge swift House and Senate passage of this important legislation."
WSJ: 'As Asbestos Claims Rise, So Do Worries About Fraud'
Today's Wall Street Journal carried this must-read, front page story that highlights the fraud and abuse surrounding asbestos litigation and the bankruptcy trusts.
This watershed article is the first detailed examination of the trusts in a major media outlet.
As the Journal reports:
"With dozens of asbestos-related manufacturers forced into bankruptcy, a burgeoning swath of the legal action has shifted out of the courtroom and into a nebulous world of trusts that evaluate claims and authorize payouts with little outside scrutiny."
The story underscores the urgent need for greater oversight of the trusts.
On Wednesday, the House Judiciary Committee will hold a hearing on the Furthering Asbestos Claim Transparency (FACT) Act, which would require the trusts to file quarterly reports on claims with the bankruptcy courts.
In addition, several states are considering trust transparency measures similar to the one enacted in Ohio last year.
Unemployment Discrimination Bill Vetoed in NY
A bill in New York City would allow out-of-work job applicants to sue potential employers for discriminating against the unemployed, reports the Associated Press. Mayor Michael Bloomberg recently vetoed the measure, calling it a misguided plan that would create more lawsuits than jobs, but the New York City Council is planning a vote to override the veto.
Orszag: To Fix U.S. Budget, Reform Medical Malpractice Law
Medical malpractice reform could improve the country’s fiscal picture, former OMB Director Peter Orszag writes in Bloomberg. “Presumably, health-care costs could come down if all states’ malpractice laws protected doctors who followed national standards of practice,” writes Orzag, and “the change in behavior could, in turn, do more to improve the U.S.’s fiscal picture than implementing the sequester would.”
SCOTUS Roundup
On Wednesday, the Supreme Court heard arguments in a case over the enforceability of arbitration agreements. “The questioning didn’t go well for the plaintiffs,” writes Dan Fisher in Forbes, and a ruling in favor of the defendants could open the door to more arbitration clauses in contracts. In other Court news, the justices ruled unanimously that the Securities and Exchange Commission cannot rewrite the statute of limitations for seeking civil penalties in fraud cases (Wall Street Journal) and also ruled that plaintiffs do not have to prove materiality before class certification (National Law Journal).
The Trial Lawyers’ New Merger Tax?
Lawsuits are filed in 96% of mergers and acquisitions valued over $500 million, according to a new report from Cornerstone Research (D & O Diary). In October, ILR released a paper analyzing the remarkable M&A litigation explosion, finding that “trial lawyers hold transactions hostage until they collect a ‘litigation tax,’ draining a share of the merger’s economic benefit away from shareholders and into the lawyers’ own pockets.”
Surge in Litigation & Investigations in 2012
A new survey found that companies in the US and UK devoted more time to dealing with litigation last year than in the past, reports Corporate Counsel. The survey, conducted by the law office of Fulbright & Jaworksi, also revealed that regulatory investigations reached a five-year high and that respondents expect an additional increase in investigations in the coming year, particularly from the Department of Justice, Securities and Exchange Commission, and state attorneys general.
Alabama Ruling Could Open the Door to Novel Lawsuits
Lawyers for Pfizer are asking the Alabama Supreme Court to reconsider its recent decision that can hold name-brand drugmakers liable for the generic versions of their products, reports the Wall Street Journal. The company says the ruling violates the “basic legal tenet that a manufacturer is liable only for its products” and could make the state a “magnet for novel personal-injury lawsuits.”
Business Community Responds to FCPA Enforcement Guidance
Today, the the U.S. Chamber Institute for Legal Reform (ILR) and more than 30 state, national, and international business and advocacy groups sent a letter responding to guidance released by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) regarding their enforcement of the Foreign Corrupt Practices Act (FCPA).
The DOJ and SEC guidance was a positive step forward that clarifies many of the agencies’ enforcement positions, but critical issues remain unresolved. The agencies have provided clear rules of the road in some circumstances, but the business community is left guessing on others.
Specifically, the coalition’s letter praises the agencies for identifying components of an effective compliance program and acknowledging thresholds that must generally be met before an entity is considered a government instrumentality. The letter also applauds the guidance’s alignment of the agencies’ positions on subsidiary liability, its favorable treatment of voluntary reporting, its clear acceptance of a mens rea standard for corporate criminal liability, and its inclusion of specific examples of enforcement actions that the agencies declined to pursue, and why.
However, the letter also observes that the guidance fails to assure the business community that the agencies will give sufficient weight to strong compliance programs, falls short of clearly defining who is a “foreign official,” and introduces new uncertainty with respect to the agencies’ expectations in the wake of a merger or acquisition. Furthermore, the letter points out that the guidance does not illustrate, through examples or hypotheticals, the level of due diligence expected when businesses hire outside vendors and contractors to engage in foreign markets. Finally, the letter asks the DOJ and the SEC to make disclosure of their declination decisions a routine practice.
In February 2012, a similar business coalition sent a letter to the DOJ and the SEC that identified numerous areas of ambiguity, uncertainty, and inconsistency that the FCPA guidance could address. In April 2012, ILR hosted a roundtable discussion with officials from DOJ and the SEC to discuss the guidance and the business community’s need for certainty and clarity under the law.
