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Foreign Tort Cases Increasingly Borrowing Pages from a Common Trial Lawyer 'Playbook'

June 21, 2010 - 12:05pm

Think Globally, Sue LocallyA new study documents how plaintiffs’ attorneys and advocates are working with foreign plaintiffs and employing a common set of aggressive, out-of-court tactics that approach, straddle and sometimes cross ethical lines to gain litigation advantages against transnational companies. The first-of-its-kind study, released by the U.S. Chamber Institute for Legal Reform (ILR), also shows a dramatic increase in the number of global tort claims or transnational tort cases filed in the U.S. against American companies for alleged injuries that occur abroad.

Read More: A Common Trial Lawyer 'Playbook'

Download the Study: Think Globally, Sue Locally (PDF)


    
    


U.S. Chamber Continues to Express Serious Concerns about McConnell Nomination

June 17, 2010 - 6:53pm
Lisa A. Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform (ILR), made the following statement on today’s Senate Judiciary Committee vote to advance John J. “Jack” McConnell’s nomination for a judgeship on the U.S. District Court in Rhode Island to the full Senate:

“While the outcome of the Senate Judiciary Committee’s 13 – 6 vote today to approve the nomination of John “Jack” McConnell was not unexpected, we were encouraged by the vocal concerns raised by members of the committee about his fitness to serve a lifetime appointment to the federal bench. . ."

Read More: Serious Concerns about McConnell Nomination


    
    


Think Globally, Sue Locally

Jonathan Drimmer | June 10, 2010 - 12:00am

It was no coincidence that a lawsuit filed against Coca Cola this February in New York City's federal court coincided with the release of a documentary called "The Coca Cola Case." The documentary featured the plaintiffs lawyers in the case—concerning allegations of violence against workers at a Guatemala bottling facility—and five others like it in Turkey and Colombia.

It didn't seem to matter that federal appellate courts in New York and Atlanta had already dismissed all five of the earlier lawsuits, or that the alleged violence in Guatemala was perpetrated by individuals not affiliated with Coke. It also didn't seem to matter that a judge had sanctioned the plaintiffs lawyers for violating a confidentiality order involving settlement discussions. The documentary continues to play in North America, Europe, New Zealand and elsewhere, bringing additional publicity and pressure against the company.

Welcome to the Wild West of transnational tort cases, where what happens inside the courtroom is often overshadowed by what happens outside. Old-fashioned motions and pleadings are now accompanied by public-relations campaigns complete with documentaries, community organizing, political lobbying and efforts to drive down stock prices of companies and multinationals with a U.S. presence. It's all part of an effort to inflict maximum punishment on companies that choose to fight, trying to force them into lucrative settlements for alleged conduct overseas, and to pressure foreign courts in cases filed abroad.

Plaintiffs lawyers are filing scores of cases in U.S. and foreign courts against companies in connection with their foreign operations, particularly in emerging markets. The cases filed here often rely on the Alien Tort Statute, an 18th century artifact that allows non-U.S. nationals to file lawsuits in federal courts for certain claimed violations of international law.

One current lawsuit in Indianapolis against Bridgestone/Firestone involves claims of alleged forced labor on a rubber plantation in Liberia. Plaintiffs lawyers have pursued a vigorous campaign that includes video clips, graphic allegations of abuse by nongovernmental organizations (NGOs), lobbying for city resolutions, and calls for the National Football League to cease airing company commercials during games.

Lawsuits have been filed in California against Occidental Petroleum for violence by the Colombian military (allegedly directed by Occidental) near an oil pipeline, for the company's alleged complicity in human-rights violations by paramilitary units guarding a pipeline in Ecuador, and for alleged environmental harms in Peru. Accompanying the suits have been calls for boycotts, staged protests and in the Peru lawsuit a documentary narrated by actress Daryl Hannah.

Some of these transnational tort cases are tainted by fraud. Three separate U.S. courts have now found fraud and unfairness in proceedings against Dole, the Dow Chemical Company and others, arising from the alleged exposure of workers to pesticides on banana plantations in Nicaragua. This fraud includes fabricating injuries, submitting false evidence, conspiring with corrupt foreign laboratories to bolster false claims, suborning perjury, and helping create foreign litigation regimes so overtly hostile to U.S. companies that they violate the most basic notions of due process. Some of the cases are still pending.

A new study I have overseen on behalf of the U.S. Chamber of Commerce's Institute for Legal Reform, "Think Globally, Sue Locally," shows that these transnational lawsuits frequently involve tactics that fall into four categories. There is the media campaign, including full-length films and mini-documentaries, and heavy reliance on print, radio, television and the Internet, including social media websites and shared video sites. There are also investment-related activities, such as stock divestment drives, pressuring institutional investors, feeding harmful information to Wall Street analysts, and attending and participating in shareholder meetings.

There are also political efforts. These include advocating for and testifying at Congressional hearings (increasingly being held as a trial date approaches), soliciting politicians to advocate for the plaintiffs, lobbying for the passage of local city resolutions, and in overseas litigation using political pressure to influence susceptible foreign courts.

Finally, community organizing in the form of protests, boycotts, letter writing, on-campus efforts and other techniques are undertaken to bring pressure on companies.

There is evidence these tactics are effective. In one well-known Alien Tort case, Talisman Energy, listed on the New York Stock Exchange, spent millions of dollars in local development programs in Sudan, assisted in the efforts to bring peace to the civil war ravaged nation, and prevailed in a lawsuit in New York arising from its investment in an oil consortium there. (The case involved allegations the company was complicit in human-rights violations committed by the government.) Yet Talisman succumbed to the political and litigation pressure, selling its interest to an Indian state-controlled oil and gas company rather than continuing to operate.

Companies with U.S. ties considering even relatively small overseas investments must be conscious that a perceived failure to adhere to certain social expectations can lead to high-profile, multimillion dollar lawsuits, and with them an accompanying set of highly aggressive tactics aimed at decimating the company's image.

This article originally appeared in the Wall Street Journal.


    
    


Georgia's Transparency Law Takes Guesswork out of Implied Rights to Sue

June 3, 2010 - 3:11pm
Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), made the following statement in response to Governor Sonny Perdue signing into law S.B. 138, the Transparency in Lawsuits Protection Act:

"ILR congratulates the Georgia legislature and Governor Perdue for leading the nation with this first-of-its-kind transparency bill and encourages other states to follow suit. We are particularly grateful for the leadership of Senator John Wiles, who sponsored the bill in the Senate, as well as House sponsor Representative Earl Ehrhart for getting this bill over the finish line. . .

Read More: Transparency Law Takes Guesswork out of Implied Rights to Sue


    
    


McConnell is Unqualified to Sit on the Federal Bench in Rhode Island

Lisa A. Rickard | May 26, 2010 - 12:00am

Since it was founded 12 years ago, the U.S. Chamber Institute for Legal Reform (ILR) has never opposed anyone nominated for a federal district court judgeship. That changed this month, when the chamber joined with other business organizations in recommending to the Senate Judiciary Committee that it reject the nomination of John J. “Jack” McConnell to serve a lifetime appointment on the U.S. District Court for Rhode Island.

The decision to weigh in on Mr. McConnell’s nomination is not one that was made lightly and nor was it based on the fact that Mr. McConnell is a plaintiffs’ lawyer.

If that were the case, we would have been busy opposing other nominees.

Instead, we are opposing Mr. McConnell because he has demonstrated unsound legal judgment and has a history of strong personal anti-business bias. He is also among the lowest-rated of all current federal judicial nominees, and if confirmed, would have a clear conflict of interest because of his generous deferred-compensation deal. Further, his elevation to the bench will draw many enterprising plaintiffs lawyers to the Rhode Island federal court.

In the late 1990s, following their massive (and massively lucrative) victory over the tobacco industry, Mr. McConnell and his partners at the South Carolina law firm Motley Rice looked for their next windfall, and concocted a novel concept to use an 800-year-old common-law theory known as public nuisance to sue national paint companies. The Providence Journal editorial board has called their theory a “ludicrous interpretation” of public-nuisance law and a “preposterous scheme to raid the coffers of paint companies.” Mr. McConnell himself initially referred to the concept as “a whacky idea” first thought up by one of his law partners.

But he soon changed his mind. In 1999, Mr. McConnell — then treasurer of the Rhode Island Democratic Party, the second biggest contributor to the campaign of then-state Atty. Gen. Sheldon Whitehouse — persuaded Mr. Whitehouse to hire Motley Rice to file their “public-nuisance” theory lawsuit against the paint companies on behalf of the state. Mr. McConnell and Mr. Whitehouse agreed to guarantee Motley Rice a nearly 17 percent share of the billion-dollar-plus award they hoped to recover — this in addition to the state paying for their litigation expenses.

The first trial ended in a hung jury. A second trial ended in a verdict for Mr. McConnell and the state, which was unanimously overturned two years later by the Rhode Island Supreme Court, which said that the case should never have gone to trial in the first place because the lawsuit was not based on fact or law.

In the meantime, Mr. McConnell and his partners were shopping public-nuisance lawsuits to state and local governments across America, hoping for huge paydays. But these cases were uniformly rejected, including by the highest courts of New Jersey, Missouri and Illinois. Some observers saw this as litigation run amok.

Following the Rhode Island Supreme Court’s repudiation of his misguided theories under the public-nuisance doctrine, Mr. McConnell attacked the court’s unanimous decision. But instead of basing his argument on the law, Mr. McConnell took a different tack, stating that the Rhode Island justices “got it . . . terribly wrong” by letting “wrongdoers off the hook.” This statement is troubling because it casts light on an activist judicial philosophy that appears more outcome-driven than based on interpreting and applying the law.

Mr. McConnell’s ability to render fair and impartial rulings from the bench are further impaired by the $2.5 million-to-$3.1 million-a-year payout he stands to receive over the next 15 years from an organization tied to his current employer, the Motley Rice firm. This amount stems from his share of attorneys’ fees from the massive tobacco settlement and possibly other lawsuit settlements.

At 51, Mr. McConnell would be a federal judge for quite a while receiving these payouts. We can think of no greater conflict of interest than to have him sitting in judgment on cases brought by some of the very plaintiffs’ firms that he partnered with to give him this multimillion-dollar windfall. To make matters worse, Mr. McConnell in his responses to the Senate questionnaire said that he, if confirmed, would “possibly” even entertain lawsuits brought by his current law firm.

Mr. McConnell has never been a judge. In their review of his qualifications, the American Bar Association’s 15-member judicial-rating committee gave him a mediocre or “substantial majority qualified, minority unqualified” rating — making him at the time one of only four of the Obama administration’s 69 judicial nominees to receive such a poor rating. For a practicing lawyer with 25 years of experience to obtain such a low rating speaks poorly of his legal abilities and likely means that he generated negative comments from judges whom he appeared and/or from lawyers who know him.

One thing that Mr. McConnell has excelled at far above his nominated peers is political giving. Since 1993, according to Federal Election Commission records, the 68 other individuals nominated by President Obama to the federal bench have donated an average of $3,371 to federal political candidates. Jack McConnell has given $253,660.

To be sure, political giving does not and should not disqualify someone from being confirmed to the federal bench. Neither does lack of prior judicial experience. But looking at this nominee’s entire career and qualifications — his lack of any judicial experience, a lackluster rating from the ABA, a history of advancing legal theories that belie any common understanding of the law, his public statements indicating a clear and consistent bias against business, his outsized political contributions that go way beyond those of any of his peers, and the clear conflict of interest regarding his future payments from work done with plaintiffs’ lawyers coming before his court — we believe it is the proper and responsible position to question whether Mr. McConnell is the best person to be nominated for a lifetime appointment to the federal bench.

Mr. McConnell should be rejected. His elevation to a lifetime appointment in Rhode Island federal court will inevitably attract a generation of enterprising personal-injury lawyers to flock to Mr. McConnell’s courtroom.

Those who will determine this question should ask themselves: If a lifelong defense lawyer were similarly nominated with all the questions Mr. McConnell brings to the table, would the plaintiffs’ lawyers be right to question his or her ability to serve on the federal bench? We think so.


    
    


Rhode Island Personal Injury Lawyer Is Unqualified to Serve on the Federal Bench

May 11, 2010 - 5:26pm
Lisa A. Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform (ILR), made the following statement on the nomination of John J. “Jack” McConnell for a judgeship on the U.S. District Court in Rhode Island:

“The United States Senate Judiciary Committee should reject the nomination of John J. ‘Jack’ McConnell for a judgeship on the U.S. District Court in Rhode Island.

“In addition to earning a lackluster rating from the American Bar Association, Mr. McConnell has defined his plaintiffs’ lawyer career by suing employers based on controversial legal theories. For example, he has spent a large part of the past decade advancing a misguided interpretation of the public nuisance theory in lead paint litigation, which was rejected by four state supreme courts, including the unanimous rejection by the Rhode Island Supreme Court..."

Read Full Statement: Unqualified to Serve on the Federal Bench

In addition, a multi-industry letter opposing the nomination was sent to the U.S. Senate Judiciary Committee.

Read the Letter (PDF)


    
    


Specter's Stoneridge Amendment helps Plaintiffs' Lawyers at the Expense of the Economy and Small Investors

May 5, 2010 - 1:31pm

Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), made the following statement in response to Senator Specter’s introduction of an amendment addressing the issues in the Stoneridge v Scientific Atlanta Supreme Court case:

Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), made the following statement in response to Senator Specter’s introduction of an amendment addressing the issues in the Stoneridge v Scientific Atlanta Supreme Court case:

“Senator Specter’s amendment, which would overturn the Supreme Court precedent in the Stoneridge case, will greatly expand an already broken securities class action litigation system whose primary beneficiaries are a handful of plaintiffs’ lawyers making huge sums at the expense of millions of small investors. Allowing more private securities class action lawsuits in every corner of our economy will only slow our financial recovery and impede the creation of much needed new jobs.”

Read More: Specter's Stoneridge Amendment


    
    


Florida's New 'Sunshine' Law will Shine Light on Contingency Fee & 'Pay-to-Play' Lawsuits

April 14, 2010 - 4:29pm

Gov. Crist signing TIPAC billLisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), made the following statement in response to the signing today of Florida’s Transparency in Private Attorney Contracting Act (TPAC):

“With the signing of the TPAC legislation today, the Sunshine State becomes a model to the nation. This law will shine a much-needed light on the process that Florida attorneys general must follow when they hire private plaintiffs’ law firms under a contingency fee arrangement to sue on behalf of the state...."

Read More: Florida's New 'Sunshine' Law


    
    


Tort Lawyers Set Their Sights on Britain

Lisa A. Rickard | March 30, 2010 - 12:00am

The American legal system—which has become infamous for absurd "hot coffee" lawsuits, exorbitant costs, and systemic abuse—is widely recognized as one American import that Europe can do without. But a movement is afoot in the U.K. to pass legislation in the next several weeks that would create U.S.-style collective-action lawsuits. If it passes, the Financial Services Bill would likely be a clarion call to the masters of U.S. litigation abuse.

In the U.S., a particular breed of claimants' lawyers is notorious for back room political influence and a culture of greed and corruption. Some of the highest-profile, highest-paid trial attorneys have recently been found guilty of stealing money from their clients, bribing a judge, or racketeering. But abuses are not limited to these examples. As one trial lawyer put it, the crime that landed him in jail was simply "industry practice." And what do those lawyers have in common? Collective actions.

Collective actions, or class actions, are an originally American legal mechanism that allows one or a few claimants to file a lawsuit on behalf of a large group of claimants, many of whom might not even know about the case. They are now a multibillion-dollar industry, and their history is rife with horror stories. These lawsuits fail to accomplish their goal of efficiently compensating consumers who have been wronged, and they play a large role in making the U.S. tort system the most expensive in the world, at a cost of $255 billion per year. But, according to research by Towers Perrin, the U.S. tort system returns less than 50 cents on the dollar to the consumers it is designed to help, and only 22 cents go to compensate actual economic losses.

Thus, governments that have considered creating collective actions without replicating the problems we face in the U.S. have been advised to meticulously integrate impermeable safeguards.

The U.K., however, is failing to heed history's lessons. The Financial Services Bill, which many hope to pass before the upcoming general election, would create collective actions devoid of safeguards. Parliament has proposed leaving the details to be ironed out later.

While some may be pacified by the thought that the British might not abuse collective actions like Americans have, my bet is that British lawyers will not be the only ones filing suits. The U.S. trial bar has already set foot in Europe.

In the words of Brian Murray, a partner at an American law firm, "all the fields have been plowed in the United States. If you want to enter new markets, you have to go outside the United States." In that vein, U.S. law firms are opening new offices in London, and some are even overtly advocating for collective actions across the EU.

U.S. claimants' lawyers are looking to expand their business model across the Atlantic largely because class actions are so profitable for them. Lawyers extract enormous settlements, reaping millions of dollars in fees for themselves. But the problem is that the consumers they represent often get very little or nothing at all.

For example, claimants are now objecting to a settlement reached in an American case against retailer Costco, based on allegations that Costco improperly measured the automotive fuel it sold in some states. The claimants' attorneys agreed to settle the case, allotting US$10 million for the attorneys' fees and absolutely nothing for the claimants.

Furthermore, in the U.S., any citizen may be a claimant in one of these lawsuits without even knowing it. Without the consumers' permission, lawyers can file on behalf of everyone who bought a certain product in a given period of time or held a certain stock as long as they have one claimant to name in the case. One environmental group placed an advertisement stating that "if you breathe air," you are a claimant.

If consumers fail to "opt-out" of a suit—whether or not they know about it and whether or not they ever received any money at the end of it—they forfeit their right to make that particular claim in the future.

Not even American consumers approve of collective actions. According to a poll conducted by the U.S. Chamber Institute for Legal Reform while we were working to pass the Class Action Fairness Act to improve our system, 67% of Americans responded that lawyers benefit most from the collective action lawsuit system while 61% think that consumers or class members benefit least. Not only do consumers not benefit from the system, they end up having to pay the price for it. Seventy-four percent of respondents indicated that the class-action system drives up prices of consumer goods.

British politicians can be commended for working to expand consumers' access to justice. And, in an election year, it may be tempting to rush legislation that seems to serve that purpose. But, based on 40 years of American experience, billions of dollars squandered, and widespread consumer dissatisfaction with the American system, adopting loosely written legislation to create collective actions, without safeguards that will prevent the most egregious abuses, is the wrong way to go.

At the very least, British policy makers should take the time to carefully integrate safeguards needed to prevent abuses and protect consumers. There will be another opportunity to consider this legislation, but, once the U.K. opens the litigation floodgates, U.S. trial lawyers will most definitely come rushing in.

This article originally appeared in the Wall Street Journal Europe.


    
    


Top Five Most Ridiculous Lawsuits of 2009 Announced

December 30, 2009 - 7:53pm
ILR has announced the top five vote getters of its 1st Annual Most Ridiculous Lawsuit of the Year Poll. Nominees were drawn from the monthly Most Ridiculous Lawsuit poll winners, chosen by visitors to FacesofLawsuitAbuse.org, a public awareness campaign Web site that aims to show how abusive lawsuits affect small businesses and average families in very real ways.

The top five Most Ridiculous Lawsuits of 2009 are:

  1. Neighbor sues woman for smoking in her own home;
  2. Double-murderer sues to claim his victims’ classic Chevy pickup;
  3. Holocaust denier sues Auschwitz survivor, alleging memoir contains “fantastical tales;”
  4. Tourist sues hotel, claiming swimming pool got daughter pregnant;
  5. Illegal immigrants sue rancher who stopped them on his property at gunpoint and turned them over to the Border Patrol.

Read More: Most Ridiculous Lawsuits of 2009 Announced