Texans for Lawsuit Reform

ABRAHAM LINCOLN: TORT REFORM CHAMPION

manager — Fri, 12 Feb 2016 14:59:23 +0000

FOR IMMEDIATE RELEASE
February 12, 2016
Contact: Lucy Nashed
lucy@tortreform.com
512-478-0200

“Never stir up litigation. A worse man can scarcely be found than one who does this.”

(Houston, TX) Texans for Lawsuit Reform again honors the 16th President of the United States, Abraham Lincoln, for his strong stand against lawsuit abuse. Lincoln’s admonition to “never stir up litigation...” continues to resonate today as we review recent reports that personal injury trial lawyers spent $892 million last year on advertising, most of which is, in fact, designed to “stir up litigation.”

Always counted among our greatest and most visionary presidents, Lincoln saw more than a hundred-fifty years ago that lawsuit abuse was detrimental, not only to the legal profession, but to America as a whole.

In his “Notes on a Law Lecture,” written on July 1, 1850, Lincoln said:

Never stir up litigation. A worse man can scarcely be found than one who does this. Who can be more nearly a fiend than he who habitually overhauls the register of deeds in search of defects in titles, whereon to stir up strife, and put money in his pocket? A moral tone ought to be infused into the profession which should drive such men out of it.

Lincoln’s complete “Notes on a Law Lecture” can be found at: http://showcase.netins.net/web/creative/lincoln/speeches/lawlect.htm

Texans for Lawsuit Reform, the state’s largest civil justice reform organization, is a bipartisan, volunteer-led coalition with more than 17,000 supporters residing in more than 869 Texas communities and representing 1,253 different businesses, professions and trades. For more information, visit www.tortreform.com.

Texas Tort Reforms are National Model: A Look at the Institute for Legal Reform’s Recommendations

manager — Mon, 23 Mar 2015 16:07:33 +0000

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The U.S. Chamber’s Institute for Legal Reform’s 2012 State Liability Systems Survey, entitled “Lawsuit Climate,” explores how fair and reasonable the states’ tort liability systems are perceived to be by U.S. businesses. (The full report is posted at www. tortreform.com.) Senior attorneys for American businesses believe that a state’s litigation environment is important to business decisions made at their companies, such as where to locate or do business. Certainly, this is borne out by Texas’s experience in the past twenty years of tort reform. Texas is consistently ranked as the best place in the nation to do business by Site Selection Magazine, and the Bureau of Labor Statistics shows that Texas continues to lead the country in job creation—all of which is consistent with Texas advancing 10 places among states on ILR’s list in the last decade. The Institute for Legal Reform’s companion publication, “101 Ways to Improve State Legal Systems,” cites numerous ways to improve a state’s civil justice system. (The full report is posted at www.tortreform.com.) We in TLR can be proud that Texas has dealt with the vast majority of the issues raised by the ILR. Here is the ILR “wish list” and where Texas stands on each one.

ILR SUGGESTION NO. 1: Provide Transparency in Hiring of Private Lawyers by State Officials.
Texas Status: Accomplished in 1999.
Following the scandalous award of $3.3 billion to five lawyers by former Texas Attorney General Dan Morales from the tobacco litigation settlement, Texas passed a law requiring state officials to approve the hiring of contingent-fee lawyers and requiring that legal fees paid to the lawyers be based on a reasonable hourly rate multiplied by the hours actually worked by the lawyers, with appropriate caps on the hourly rate and percentage of the recovery that can be paid to the lawyers (SB 178). Had this law been in place at the time of the tobacco settlement, it is estimated that the five lawyers would have received under $100 million in fees, not $3.3 billion. In 2007, the Texas Legislature expanded this law to apply to most local governments as well (HB 3560).

ILR SUGGESTION NO. 2: Prevent Double Dipping in Asbestos Litigation.
Texas Status: Partly addressed in 2005 and 2007.
In 2005, Texas led the nation in comprehensive reform to cure the worst abuses in asbestos litigation (SB 15). The law became the model for similar reforms throughout the Nation. Passage of the asbestos-reform bill in 2005 was followed by a historic decision by the Texas Supreme Court in 2007, where the Court ended the asbestos-litigation exception to the rules prohibiting the use of junk science in Texas courts. When the 2005 legislation was coupled with the 2007 Court decision, there was a dramatic, positive change in asbestos litigation in Texas. More work, however, could be done regarding asbestos litigation. Approximately 70 companies that historically had been defendants in asbestos litigation have established trust funds under federal bankruptcy law to pay claimants suffering from asbestos-related diseases. Plaintiff lawyers in asbestos litigation sometimes wait to file claims against these trusts until after the plaintiffs have received a settlement or judgment through litigation against solvent defendants. In this way, the plaintiffs do not have to offset the bankruptcy trust recovery against the settlement or judgment – which is what the ILR accurately describes as “double dipping.” The 2005 statute does not specifically address “double dipping,” and this is expected to be an issue considered by the Legislature in 2013.

ILR SUGGESTION NO. 3: Stop the Spread of Lawsuit Lending that Encourages Prolonged Litigation.
Texas Status: Needs to be addressed.
There are two problems in lawsuit lending. One is related to consumer-type lending, in which the lender makes loans directly to the plaintiff, but collects its principal and interest only if the plaintiff prevails. In these transactions, the interest rates are extraordinarily high and can consume the entire recovery by the plaintiff in the lawsuit, thus reducing the plaintiff’s incentive to resolve the case for a reasonable sum of money. The other problem is large lending of a kind similar to venture capital investing, where the lender loans money to the plaintiff attorneys to fund litigation and is paid a percentage of the ultimate recovery if the plaintiff prevails. This is like buying an interest in the lawsuit, and can have the result of encouraging specious mass-tort claims. While there is some authority for the position that this venture-capital-type lending is unlawful in Texas, there is no statutory prohibition. And there is no regulation of either type of lending provided by Texas law. The Legislature appropriately will consider these matters this year.

ILR SUGGESTION NO. 4: Ensure that Damages for Medical Expenses Reflect Actual Costs
Texas Status: Accomplished in 2003.
Texas solved this problem through the “paid or incurred” provision of the Omnibus Tort Reform Bill of 2003 (HB 4). The 2003 law provides that only those medical expenses that actually have been paid or are still owed can be claimed as damages in a lawsuit. This prevents the award of “phantom damages” for amounts that were billed by the medical-service provider, but have not been paid and are not owed by anyone.

ILR SUGGESTION NO. 5: Losers Pay for Filing Frivolous Lawsuits.
Texas Status: Accomplished in 2011.
In Governor Rick Perry’s Omnibus Tort Reform Bill of 2011 (HB 274), the Legislature passed a bill instructing the Texas Supreme Court to establish a “motion to dismiss” procedure that would allow the early dismissal of a lawsuit and the award of attorney’s fees to the prevailing party. A lawsuit will be dismissed if it has no basis in law or no basis in fact. The prevailing party in the motion to dismiss must be awarded attorney’s fees against the losing party. The loser pays. This new procedure complements the work done by the Legislature during the 1995 legislative session (the first in which TLR was engaged), when it established sanctions that a judge can impose against a plaintiff who files a frivolous lawsuit (SB 31).

ILR SUGGESTION NO. 6: Ensure that Juries Represent the Entire Community, Not Just Select Segments.
Texas Status: Largely Accomplished.
The ILR notes that laws of some states exempt certain professionals, making it easier for citizens to avoid jury service, and provide inadequate compensation for working jurors to serve. Texas already has accomplished the reforms advocated by the ILR. In 2005, for example, the Legislature increased compensation paid to jurors from $6 per day to $40 per day (SB 1704) and implemented provisions regulating attempts to avoid jury service. And Texas does not exempt any professions from jury service. Other jury-related reforms, however, might be accomplished, as is detailed in the report on juries published by the Texans for Lawsuit Reform Foundation in 2007 (“The Civil Jury in Texas, Recommendations for Reform”), which you can access on the web at www.tlrfoundation.com or by calling 713.963.9363 to have a copy mailed to you.

ILR SUGGESTION NO. 7: Reduce Forum Shopping.
Texas Status: Accomplished in 1995, 1999, 2003 and 2005.
Prior to TLR’s attention to civil justice reform, Texas was known as the “Lawsuit Capitol of the World.” Plaintiffs from all over the nation – and all over the world – came to Texas to file lawsuits because Texas’s venue statutes were exceedingly inviting. Putting an end to such “forum shopping” was one of TLR’s top priorities. The Legislature passed forum shopping reform in 1995 (SB 32) and further refined it in later sessions (SB 220, 1999; HB 4, 2003; HB 755, 2005), thereby ending forum shopping abuses in our state.

ILR SUGGESTION NO. 8: Safeguard the Right of Appeal.
Texas Status: Accomplished in 2003.
The ILR notes that in order for a defendant to stay the execution of a judgment and protect its assets, it must post an appeal bond, which can be as high as 150% of the judgment in some states. Long ago, TLR recognized that if a defendant is unable to appeal a verdict from a trial court, that person is denied justice. Therefore, we advocated, and Texas enacted, legislation providing that an appeal bond should be the total compensatory damages awarded to the plaintiff in the judgment, but not to exceed the lesser of: (i) $25 million, or (ii) one-half of defendant’s net worth (HB 4, 2003). There is also a “saving” provision allowing for a reduced bond if the amount provided by this law will cause the defendant to suffer substantial economic harm.

ILR SUGGESTION NO. 9: Support Sound Science and Expert Evidence in the Courtroom.
Texas Status: Accomplished in 1995, 1997 and 2003.
In the seventies and eighties, “junk science” was prevalent in Texas courtrooms. Not anymore. A series of excellent Texas Supreme Court decisions assure that any competent and honest state judge will allow only sound expert testimony and scientific studies into evidence. Trial judges that allow questionable expert testimony or scientific evidence are likely to be overturned by Texas appellate courts. In 2003, Texas enacted legislation (HB 4) requiring expert reports in medical negligence cases to meet certain standards and required the experts rendering those reports to have actual experience in the field of study about which the opinion was issued. Similar provisions have been applied to architects, engineers and other professions. But the trial lawyers remain persistent. In 2009, TLR and its allies successfully fought-off trial lawyer attempts to legislatively re-introduce junk science into asbestos cases.

ILR SUGGESTION NO. 10: Stem Class Action Abuse.
Texas Status: Accomplished in 2003 and before.
Class action reform was one of TLR’s first proposals. Now, abusive class actions under Texas law are a thing of the past because: (i) the Texas Supreme Court has jurisdiction to correct erroneous trial court certification orders (HB 4), (ii) class actions within the jurisdiction of a state agency must be addressed by that agency before proceeding in court (HB 4), (iii) awards of attorney fees may be challenged by members of the class or the defendant, and must be based on the number of hours actually worked by the lawyer multiplied by a reasonable hourly rate, (iv) when class actions are settled using coupons, the lawyers must also be paid in coupons in the same proportion as the plaintiffs (HB 4), and (v) the Texas Supreme Court, through case law and rulemaking, has imposed strict standards on certification of classes.

ILR SUGGESTION NO. 11: Promote Fairness in Judgment Interest Accrual.
Texas Status: Accomplished in 2003.
The purpose of awarding a prevailing party interest on its judgment is to compensate the party for the often-considerable lag between the event giving rise to the cause of action and the actual payment of damages. Before 2003, however, the statutory pre-judgment and post-judgment interest required an award of above-market interest to the prevailing party and a prevailing party could be awarded pre-judgment interest on damages that would arise after judgment (like future medical expenses awarded in the judgment). Texas resolved both of these issues in 2003, by providing that interest rates on judgments should be market rates, with a 5% floor and a 15% ceiling, thereby eliminating windfalls; and by providing that pre-judgment interest could not be awarded on future damages (HB 4).

ILR SUGGESTION NO. 12: Protect the Rights of Consumers of Legal Services.
Texas Status: Accomplished in part.
The ILR advocates something akin to a “consumers’ bill of rights” for clients of lawyers, which would include anti-barratry provisions (i.e., provisions against unethical solicitation of lawsuits), restrictions on lawyer advertising, full and clear explanations of fees, requiring all lawyers (including contingency fee lawyers) to keep detailed time and expense records, and several other transparency requirements. In 2011, the Texas Legislature passed a significant anti-barratry bill, allowing a client who was subject to barratry to recover from the offending lawyer all fees the client paid to the lawyer (SB 1716). Reforms in this area also have come in the form of Texas Supreme Court decisions and rules. The Court has implemented rules governing lawyer advertising. And, starting in 1997, the Court has handed down a series of common-sense decisions that, among other things, require that attorney fee awards be based on detailed time records. But, so far, there is not a “consumers’ bill of rights” for legal clients of in our state. This is a task the State Bar of Texas should undertake.

ILR SUGGESTION NO. 13: Encourage Compliance with Government Regulations.
Texas Status: Partly accomplished in 2003.
The ILR advocates the sensible idea that if a party complies with government regulations concerning a product, process or service, it should receive some protection from liability concerning that product, process or service. Product liability reform was on TLR’s original agenda and great progress was made in 2003, with these results: (i) in pharmaceutical cases, a rebuttable presumption exists in favor of the defendant in cases alleging failure to provide adequate warning about the product’s risk if the defendant provides the government-approved warnings with the product; (ii) in other product liability cases, a rebuttable presumption is established in favor of manufacturers who comply with federal standards or regulatory requirements applicable to a product, provided the government standard was mandatory, applicable to the aspect of the product that allegedly caused the harm, and adequate to protect the public from risk (HB 4).

ILR SUGGESTION NO. 14: Prevent Lawyers from Circumventing Product Liability Requirements.
Texas Status: Accomplished 1993.
The ILR report finds that plaintiff lawyers sometimes rely on legal theories – such as common law nuisance or statutory consumer protection provisions – to avoid the limitations found in many product liability laws. The ILR notes that only about 20 states’ product liability laws are statutory. The ILR therefore suggests that states codify their product liability laws or update their existing statutes to ensure that those who claim injury from a product fulfill the basic elements of proof necessary to recover. Texas accomplished this goal in 1993 when Texas codified its product liability laws.

ILR SUGGESTION NO. 15: Protect Innocent Product Sellers.
Texas Status: Accomplished in 2003.
The ILR advocates that the seller of a product not be held liable for defects in the product if the seller merely sold the product. Texas accomplished this goal in 2003 by enacting an “innocent seller” defense to a product liability lawsuit (HB 4). Under Texas law, a seller that did not manufacture a product is not liable for harm caused to the claimant by that product unless the seller had some actual responsibility for the condition of the product that caused the claimant’s injury.

ILR SUGGESTION NO. 16: Recognize Product Liability Ends at the Expiration of a Product’s Useful Life.
Texas Status: Accomplished in 1993.
The ILR recommends adoption of a statute of repose by which a state recognizes that, after a certain number of years, the useful life of a product ends and an injury allegedly stemming from use of that product does not result from a defect at the time of sale. Texas adopted a 15-year statute of repose in 1993.

ILR SUGGESTION NO. 17: Prioritize Recovery for Sick Litigants in Asbestos Litigation.
Texas Status: Accomplished in 2005.
Texas led the nation on asbestos litigation reform in 2005 with SB 15, envisioned and advocated by TLR. That statute: (i) creates strict, medically sound criteria to be used by courts to determine the viability of asbestos claims, (ii) provides for the transfer of asbestos lawsuits (old and new) to a single multi-district court, so that all asbestos cases receive fair and consistent treatment, (iii) provides that asbestos cases cannot proceed to trial until the claimant shows through a medical report written by a qualified doctor that the injured person actually has an asbestos-related disease, (iv) prohibits the infamous “bundling” of plain-tiffs into massive lawsuits that intimidated defendants into unjustified settlements, (v) limits or prevents the use of questionable diagnostic materials, (vi) moves the cases of persons having a malignant asbestos-related disease to the front of the line and guarantees these claimants a quick trial, and (vii) extends the statute of limitations to allow claims to be filed within two years after diagnosis of actual impairment or the death of the person exposed to asbestos so that truly injured Texans can have their day in court, without regard to how long it took for that person to contract the disease. This legislation ended the flood of non-meritorious asbestos cases into Texas and served as a model for other states struggling with their own avalanche of asbestos cases. Currently in Texas, there are thousands of claims by unimpaired persons that have been on the “inactive docket” since 2005, and TLR advocates a fair process to dismiss those pending, inactive claims.

ILR SUGGESTION NO. 18: Stop Unwarranted Expansion of Liability to Trespassers.
Texas Status: Accomplished in 2011.
For over 100 years, Texas law has recognized that a landowner does not owe a duty of care to a person trespassing on his or her property. In 2011, the Legislature enacted a law (SB 1160) governing the liability of landowners to people who trespass on their property to counter an insidious recommendation by the American Law Institute to replace historic trespass law with a new duty to exercise reasonable care as to all entrants on land, including trespassers other than “flagrant trespassers.”

ILR SUGGESTION NO. 19: Restore Common Sense in Consumer Protection Laws.
Texas Status: Accomplished in 1995 and 2011.
In 1995, TLR advocated the reform of the Texas Deceptive Trade Practices Act, and the Legislature enacted a series of amendments to that Act which restored it to its original purpose of a consumer protection statute to allow a consumer to have adequate processes and remedies against product sellers and service providers (HB 668). The reform eliminated or amended aspects of the Act that had led to many abusive lawsuits. In addition, certain trial lawyers manipulated “prompt pay” provisions in the Insurance Code to raid the Texas Windstorm Insurance Association (TWIA) following Hurricanes Rita and Ike. TWIA is a quasi-governmental body providing windstorm coverage to coastal property owners. In 2011, the Legislature reformed TWIA to establish a fair claims process with reasonable time tables, which should end the kind of manipulation that previously resulted in this insolvent insurer paying hundreds of millions of dollars in legal fees to a few lawyers.

ILR SUGGESTION NO. 20: Create Transparency as to When Legislatures Create New Ways to Sue.
Texas Status: Accomplished in part by case law.
In the seventies and eighties, the Texas Supreme Court was dominated by politicians-turned-jurists who were supported by the personal injury trial lawyers. When the business and professional community started paying attention to judicial elections and after Governor George W. Bush and Governor Rick Perry appointed excellent judges to fill vacancies on the Supreme Court, the Court moved from being one of the worst state high courts to one of the best – perhaps, the best. The Texas Supreme Court now is a strict constructionist court that does not create new causes of action (i.e., new ways to file lawsuits) by interpreting legislation. Nevertheless, Texas would benefit from a statute that instructs state courts that they are not to interpret a statute to imply a private right of action or affirmative duty in the absence of express language in the statute.

ILR SUGGESTIONS NO. 21 AND NO. 22: Comparative Fault: Fairly Allocate Fault Between Plaintiff and Defendant. Joint and Several Liability: Fairly and Proportionately Allocate Liability Among Parties.
Texas Status: Accomplished in 1995 and 2003.
The tort reforms advocated by TLR have established a clear and effective system of proportionate responsibility in Texas. A defendant is liable for only its own percentage of fault unless it is more than 50% responsible, in which case that defendant may be required to pay the entire judgment. Conversely, a plaintiff found more than 50% responsible for its own injury is barred from any recovery (SB 28, 1995). The fact finder in a trial (judge or jury, as the case may be) must assign percentages of fault to each potentially responsible person (or entity), whether or not that person is actually before the court as a litigant and whether or not that party can pay its share of responsibility (HB 4, 2003). This assures that if a jury assigns only, say, 25% of fault to a defendant, that defendant is responsible for no more than 25% of the judgment. A defendant found to be more than 50% responsible who pays the entire judgment may obtain contributions from co-defendants for their respective shares of the judgment.

ILR SUGGESTION NO. 23: Place Reasonable Bounds on Subjective Noneconomic Damage Awards.
Texas Status: Accomplished in healthcare cases in 2003.
In 2003, in medical liability lawsuits, Texas placed a cap on non-economic damages, such as pain and suffering and mental anguish, which has encouraged thousands of doctors – especially much-needed specialists – to come to our state (HB 4). A state constitutional amendment was passed in 2003 to assure that the statute would withstand constitutional review by the courts; the constitutional amendment allows the Legislature to cap non-economic damages in all lawsuits.

ILR SUGGESTIONS NO. 24 & NO. 25: Prevent Excessive Punitive Damage Awards. Protect Due Process in Punitive Damages Determinations.
Texas Status: Accomplished in 1995 and 2003.
Texas took care of these issues in the first wave of TLRadvocated reforms in 1995 (SB 25), which were enhanced in 2003 (HB 4). Now, punitive damages are limited to the greater of: (i) $200,000 or (ii) two times economic damages plus an amount not to exceed $750,000 for non-economic damages. Punitive damages are permitted only upon a showing of “clear and convincing evidence” rather than merely a “preponderance of the evidence.” Punitive damages can be awarded only if the plaintiff proves the defendant committed fraud, acted with malice, or was “grossly negligent” (a rigorous standard that is conceptually similar to a stringent “reckless disregard” standard). A unanimous jury verdict is required for the award of punitive damages.

ILR SUGGESTION NO. 26: Provide Juries with Full Information on the Plaintiff’s Actual Losses.
Texas Status: Mixed.
The “collateral source rule” prohibits admission of evidence that all or some of plaintiff’s damages will be or have been paid by a source other than defendant, such as through insurance or previous settlements. As a result, the plaintiff may receive double recovery. Texas has employed the collateral source rule since it joined the Union. But, importantly, Texas does allow judgments for plaintiffs to be offset by settlements and payments from some other sources, such as a workers’ compensation award. Since 2003, Texas has required claims for “lost earnings,” “lost earning capacity” and “loss of inheritance” to be reduced by the amount of taxes that would have been paid on those lost amounts. Prior to 2003, a plaintiff could present a cost estimate for future medical loss and recover that estimate in a judgment even if the future medical loss was never incurred because the service was not needed or the plaintiff died before the time the service would have been provided. In medical negligence cases after the enactment of HB 4 in 2003, future medical losses as found by the jury are to be paid as the loss is actually incurred. Future medical losses included in a jury award that are not actually paid are not owed by the defendant.

ILR SUGGESTION NO. 27: Protect Access to Health Care Through Medical Liability Reform.
Texas Status: Accomplished in 1995 and 2003.
Texas enacted comprehensive, historic medical liability reform in 2003 (HB 4), building on what was accomplished in 1995 (HB 971). These reforms have allowed hospitals to put savings from lower insurance premiums into enhanced facilities and patient care. Texas’s medical liability reforms have improved access to health care to all Texans because doctors are staying in Texas, doctors from other states are moving to Texas, and emergency facilities – which were closing because of liability issues – are now plentiful in Texas.

TLR Advocate: February 2015

manager — Fri, 20 Feb 2015 17:30:48 +0000

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A Corruption of the Rule of Law
U.S. Judge Reveals Pattern of Deception by Asbestos Plaintiff Lawyers
Giants of Tort Reform Moving On

A Corruption of the Rule of Law

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In law as in life, there is right – and there is wrong. Once again, the mass tort lawyers who travel the gold road of asbestos litigation have been revealed by a federal judge as manipulating litigation for self-enrichment, without regard for the integrity of our civil justice system.

Several years ago, U.S. District Judge Janis Jack discovered that many plaintiff asbestos and silica lawyers were “manufacturing lawsuits for money.” Last year, U.S. Bankruptcy Judge George Hodges found that certain plaintiff lawyers, including two notorious plaintiff firms in Texas, suppressed evidence in asbestos litigation by failing to honestly report their client’s full history of exposure to asbestos. Specifically, those lawyers would state one history of exposure in lawsuits against a solvent defendant but, separately, file claims with a different exposure history in seeking payments from the many bankruptcy trusts that have been established by certain companies to dispose of their liabilities in asbestos litigation.

If the rule of law is to prevail in our nation – if our litigation system is going to work as a fair and legitimate way to resolve disputes – then it is imperative that the rules and procedures governing lawsuits be transparent and designed to get to the truth. Judge Hodges has shown what has long been suspected – there are asbestos plaintiff lawyers who deliberately conceal the true and full asbestos exposure history of their clients in lawsuits. Their pattern is to state one exposure history in a lawsuit that seeks to maximize the defendant’s role in causing their claimant’s illness, while stating a different exposure history in claims filed with various bankruptcy trusts – a history that, if revealed, would seriously diminish the defendant’s liability to the plaintiff.

This must stop. Once again, Texas has the opportunity to be a leader in resolving asbestos litigation abuses, just as we did a decade ago when our state passed comprehensive asbestos litigation reform – SB 15 has proven effective in eliminating bogus claims while allowing the truly sick to have their lawsuits resolved in a timely and efficient manner.

Our courts should be forums for the honest resolution of disputes, not a field of dreams in which mass tort lawyers play games to enrich themselves at the expense of the integrity of the rule of law.

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U.S. Judge Reveals Pattern of Deception by Asbestos Plaintiff Lawyers

U.S. Bankruptcy Judge George Hodges has exposed the practice of methodical evidence manipulation by certain asbestos plaintiff lawyers, including two Texas law firms. In a case styled In Re Garlock Sealing Technologies, LLC (hereinafter “Garlock”), the Judge found that Garlock Sealing Techonologies, LLC (hereinafter “Garlock”) had shown that “its participation in the tort system was infected by the manipulation of exposure evidence by plaintiffs and their lawyers.” Judge Hodges stated that the plaintiff lawyers had engaged in a “startling pattern of misrepresentation…”

The pattern of misrepresentation by the plaintiff lawyers was essentially a shell game whereby the plaintiff lawyers, in lawsuits against Garlock, would claim that their clients were exposed to certain asbestos or asbestos-containing products while hiding their clients’ exposure to other, more-dangerous products. Garlock manufactured gaskets; asbestos was sealed within those gaskets. If a jury was not informed of all of the products in addition to Garlock’s gaskets to which a plaintiff had been exposed in his work history, the jury could not factually and accurately allocate the percentage that Garlock’s gaskets contributed to the plaintiff’s illness, thereby increasing Garlock’s potential liability.

About one hundred American companies, by filing bankruptcy, have created trusts to offload their asbestos related liability (hereinafter “asbestos trusts”). When a person claims to have an illness related to asbestos exposure, he or she will file a lawsuit against solvent defendants and also file a claim with one or more of the asbestos trusts. The trusts are controlled by asbestos plaintiff lawyers. Filing a claim with an asbestos trust is a simple matter of submitting a form.

The Garlock case has revealed that certain plaintiff lawyers will file claims with asbestos trusts without informing a solvent defendant in a lawsuit. They do so either by filing a claim before trial and not revealing that claim to the defendant in the lawsuit, or they wait until after the trial against the solvent defendant to file claims with asbestos trusts. In the Garlock proceeding, Judge Hodges allowed discovery in fifteen lawsuits that had been pursued against Garlock and the evidence revealed that in each and every one of them, plaintiff lawyers had hidden their clients’ true asbestos exposure histories from Garlock.

A few of Judge Hodges’ findings are summarized:

• A leading Texas plaintiffs’ firm published a 23-page set of instructions for their clients on how to testify when being deposed.

• It was a regular practice by plaintiffs’ firms to delay filing claims against asbestos trusts for their clients to prevent tort system defendants from having that information. • In litigation against Garlock, on average plaintiff lawyers disclosed only about two exposures to bankrupt companies’ products, but after settling with Garlock, those lawyers made claims against about 19 such companies’ asbestos trusts.

• In one case, plaintiff lawyers argued to a jury that their client had no exposure to an asbestos product known as Unibestos insulation, but the same lawyers filed a claim with the trust set up by the company that manufactured Unibestos, stating that their client had been exposed to that product.

• In a separate case, plaintiff lawyers stated in written interrogatories in the lawsuit against solvent defendants that their client had “no personal knowledge” of exposure to any bankrupt companies’ asbestos product. But those lawyers also filed claims for their client with asbestos trusts, stating that their client had been exposed to 20 different asbestos products.

• In still another case, the plaintiff denied any exposure to insulation products, but after the case was settled, the plaintiff ’s lawyers filed 11 asbestos trust claims for him. Seven of the plaintiff ’s trust claims were based on declarations that he personally removed and replaced insulation; and he identified, by name, the insulation products to which he was exposed. Many insulation products contained the kind of asbestos fibers most associated with the deadly disease of mesothelioma.

The litigation abuse perpetrated by plaintiff lawyers against Garlock Sealing Technologies spurred Garlock to file lawsuits in a North Carolina federal court against four groups of personal injury trial lawyers, asserting claims for fraud and violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act. Two of the groups of lawyers sued by Garlock are based in Texas – Waters & Kraus, LLP, and Simon Greenstone Panatier Bartlett, PC. In each of its complaints, Garlock asserts: Defendants are well-organized and fully resourced asbestos personal injury law firms ... [that] have since at least 2000 engaged in a deliberate and ongoing scheme to defraud solvent manufacturers and distributors of asbestos-containing equipment and components. In particular, ... Defendants have conspired over a period of years to conceal evidence and misrepresent facts in order to maximize settlement offers by, and verdicts entered against, solvent defendants (the “Scheme”). The Scheme has allowed Defendants to maximize settlements and jury verdicts from solvent defendants in the tort system, while—sometimes simultaneously—taking full advantage of recovery available against insolvent manufacturers and distributors in the bankruptcy system. Garlock and its codefendants have been targets of this Scheme, which is ongoing.

It is notable that in 2010 and 2011, Jeffrey Simon (a named partner in the Simon Greenstone law firm) and Charles Siegel (a partner in the Waters & Krause law firm) both appeared in Texas legislative committee hearings and testified against bills requiring asbestos plaintiffs to disclose their trust claims to solvent defendants, asserting in part that legislation on the topic was unnecessary.

• For the fifteen plaintiffs represented by five plaintiff firms, including two Texas firms, here is the pattern of non-disclosure:

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• The five plaintiff firms engaged in a “startling pattern of misrepresentation.”

• While “it is not suppression of evidence for a plaintiff to be unable to identify exposures, it is suppression of evidence for a plaintiff to be unable to identify exposure in the tort case, but then later (and in some cases previously) to be able to identify it in Trust claims.”

Texas should not allow this kind of manipulation of evidence and degradation of our legal system.

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Giants of Tort Reform Moving On
By Richard J. Trabulsi, Jr.
President of TLR

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This is the start of the eleventh session in which TLR is advocating for a fair, balanced and predictable civil justice system. It is fitting to reflect on major contributors to Texas civil justice reform who won’t be present in this year’s legislative process. All Texans should be deeply grateful to these public servants for their roles in tort reform and their broader impact on Texas. I am.

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Rick Perry is the nation’s greatest tort reform governor. With his active involvement, Texas passed HB 4, the most comprehensive civil justice reform in history. It has been a major contributor to Texas’ spectacular job growth (the best in the nation for over a decade), the flow of thousands of new doctors to Texas and the expansion of quality health care throughout our state. There were additional notable reforms, including a much-needed cure to many of the rampant abuses in asbestos litigation and the establishment of a motion to dismiss practice in Texas, which introduces a “loser pays” rule designed to discourage non-meritorious lawsuits. In addition, Governor Perry has a stellar record of filling vacancies in the Texas judiciary with men and women of outstanding ability and integrity.

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It is fair to say that none of the major tort reforms of the past decade would have become law without the active involvement of former lieutenant governor David Dewhurst, who intervened at critical times in the legislative process to make sure first, that the legislation was necessary, fair and reasonable, and second, to remove roadblocks that were obstructing passage of tort bills. In his typical methodical style, David drilled down on the details of each bill and was instrumental in making sure that the statutes were carefully drafted to meet the desired goals without undesired consequences.

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Former state representative and senator Bob Duncan of Lubbock has been instrumental in tort reform from the very first session of TLR’s involvement (1995), when he carried the venue reform bill in the House of Representatives. In recent years, Bob served as Chairman of the Senate State Affairs Committee, where most tort reform bills were considered. Because of Bob’s ability and stature as lawyer and legislator, it would have been near impossible to pass tort reform bills without his approval.

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Tryon Lewis served for two decades as a respected trial judge in Odessa before coming to the Texas House, from which he retired after six years of service. Last session, he was Chair of the House Judiciary and Civil Jurisprudence Committee. Tryon sets the standard for dedication, thoughtfulness, civility and integrity in a public official. During his tenure in the Legislature, he was instrumental in important civil justice reforms, including Governor Perry’s Omnibus Tort Reform Bill of 2011. More importantly, Tryon was an exemplar of a servant-leader.

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In Honor Of Abraham Lincoln

manager — Thu, 12 Feb 2015 20:54:48 +0000

FOR IMMEDIATE RELEASE
February 12, 2015
Contact: Lucy Nashed
lucy@tortreform.com
512-478-0200

16th President took strong stand against lawsuit abuse

(Houston, TX) On this President’s Day, Texans for Lawsuit Reform again honors the 16th President of the United States, Abraham Lincoln, for his strong stand against lawsuit abuse and his expressed belief that meritless lawsuits waste time and money and are rooted in greed. Always counted among our greatest and most visionary presidents, Lincoln saw more than a hundred-fifty years ago that lawsuit abuse was detrimental, not only to the legal profession, but to society as a whole.

In his “Notes on a Law Lecture, written on July 1, 1850, Lincoln said:

Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser -- in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough.

Lincoln’s complete “Notes on a Law Lecture” can be found at: http://showcase.netins.net/web/creative/lincoln/speeches/lawlect.htm

The Effect of Malpractice Reform on Emergency Department Care

manager — Thu, 15 Jan 2015 15:53:48 +0000

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The New England Journal of Medicine, January 8, 2015

Waxman et al. (Oct. 16 issue)1 state that malpractice reform has had little effect on the ordering practices of emergency department physicians, and they speculate that physicians may perceive the effects of potential litigation on ordering practices to be far greater than they actually are. An alternative explanation of their findings may be that, once the custom of ordering tests that may be marginally indicated but performed because of malpractice considerations has become ingrained, it is difficult to break the habit of such ordering practices, even when litigation is no longer a consideration. The reflex of ordering computed tomography or magnetic resonance imaging may still be active under many circumstances. Certainly, habits can become very difficult to break regardless of the original stimulus.

Murray L. Levin, M.D.
Northwestern University Feinberg School of Medicine, Highland Park, IL
m-levin@northwestern.edu

Waxman et al.'s study of the intensity of emergency care received by Medicare beneficiaries in states that have passed tort reform is interesting but not particularly enlightening. The authors draw broad conclusions about the effectiveness of medical-lawsuit reform solely by examining treatment provided to Medicare patients. Typically, such patients are more fragile, have more complications, and take more medicine than the general population. Therefore, they require more care. For a Medicare beneficiary who arrives at the emergency department, there is not a great deal of variation regionally or nationally in the appropriate workup and standard of care. This is true regardless of whether the care is being rendered in a state that has passed tort reform or in one that has not. Better access to care was the promise that Texas tort reformers made. We said that medical liability reforms would bring doctors back to the emergency department, ensuring that more patients could get the timely and specialized care they needed. That promise has been kept. Fifty Texas counties that lacked an emergency department physician in 2004 have one today.1

J. Bruce Moskow, M.D., J.D.
Texas College of Emergency Physicians, Austin, TX
bruce@eddocs.com

The authors reply: Our study addresses a very specific question: Do physicians change their behavior in response to changes in the legal environment? We provide strong evidence that, for emergency physicians at least, the answer is no. Although it is possible that changes in tort law can change practice over a time frame measured in generations rather than years, we saw no trend suggesting that a delayed effect exists. In any case, the time frame of our study (which included data that extended >7 years after reform) is one that is relevant to policy.

Contrary to Moskow's assertion, there is substantial evidence that Medicare beneficiaries receive care that varies markedly across regions and across providers.1 In fact, the Congressional Budget Office has suggested that tort reform has a greater potential to decrease the utilization of health care services for Medicare beneficiaries than for others.2

Although those who wrote the Texas, Georgia, or South Carolina laws may very well have been motivated by factors other than a desire to reduce defensive practice, that outcome is frequently cited as a justification for changing tort law. We did not study the effect of reform on regional physician supply, nor did we address issues of fairness to physicians or other members of society. We agree that the tort system does a poor job of distinguishing between good physicians and those who are incompetent or careless and a poor job of motivating diligent behavior.3 Indeed, one possible interpretation of our findings is that even when the threat of being sued for malpractice is substantially reduced, physicians are just as careful. Perhaps it is time to abandon the term “defensive medicine,” in recognition that the complex set of motivations that inform clinical decision making is really just the practice of medicine, imperfect as it is.

Daniel A. Waxman, M.D., Ph.D.
M. Susan Ridgely, J.D.
RAND Health, Santa Monica, CA
dwaxman@rand.org

Paul Heaton, Ph.D.
RAND Institute for Civil Justice, Santa Monica, CA

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Joe Nocera: Behind the Chevron Case

manager — Mon, 29 Sep 2014 18:20:01 +0000

“I am the target of what is probably the most well-funded corporate retaliation campaign in U.S. history,” Steven Donziger emailed me early Monday afternoon.

Donziger, 53, is the sort of attorney they make movies about. Tall, handsome, and charismatic, he has spent the bulk of his legal career on one case: trying to get Chevron to clean up an environmental mess that he says its predecessor left behind in the Ecuadorian rain forest. His clients are poor Ecuadorians who have allegedly been living with the land’s degradation ever since Texaco pulled out of the country in the early 1990s. (Chevron bought Texaco — and acquired its legal liabilities — in 2001). He has worked tirelessly on the case for more than two decades, finally gaining a $19 billion judgment against the company in an Ecuadorian court in 2011. Though a higher court later cut the damages in half, it would still seem to be a fantastic victory by David over Goliath.

But there is another, darker narrative about Donziger, told most recently by Paul Barrett, a Bloomberg Businessweek writer whose book about the Chevron-Ecuador case, “Law of the Jungle,” is being published this week. According to Barrett, Donziger may have begun his quest with the best of intentions, but somewhere along the way, he lost his bearings. To get the judgment he wanted from the Ecuadorian courts, Donziger allegedly committed multiple acts of fraud, including having members of his team ghostwrite a crucial report for the court that was supposed to be authored by an independent expert. Donziger has responded by accusing Barrett of working hand-in-glove with Chevron, in effect being part of the “retaliation campaign.”

I know Donziger slightly. I’ve always liked him. But I have to say that I find Barrett’s account far more persuasive than Donziger’s. Without question, Chevron has gone after him. But Donziger is the one who supplied the ammunition.

One reason Barrett’s account is credible is that he began his reporting witha Bloomberg Businessweek cover story in 2011 that was decidedly pro-Donziger. But once he got the book contract and began digging deeper into the case, he started to have his doubts about Donziger and the plaintiffs’ team. How could the plaintiffs know for sure that Chevron was at fault when the Ecuadorian government’s oil company had continued to extract oil from the rain forest for years after Texaco left? Where was the epidemiology that connected the oil waste to disease? What about the ghostwritten expert’s report? And the ex parte communications with judges? And even an alleged attempt to bribe the judge to rule in the plaintiffs’ favor?

Barrett isn’t the only one to come to view Donziger as a rogue lawyer willing to do virtually anything to win. So has Roger Parloff, Fortune magazine’s legal writer, who has covered the case for years. And so has the highly respected human right lawyer — and Notre Dame law professor — Doug Cassel.

With every critic, Donziger and his allies have replied the same way: The critics have been corrupted by the evil Chevron. But there is one critic who is not so easy to brush aside: the federal judge Lewis Kaplan of the Southern District of New York. Chevron brought a civil RICO case against Donziger, claiming that his actions had so tainted any Ecuadorian verdict that it should be unenforceable in the United States. (Because Chevron has no assets in Ecuador, the judgment would have to be enforced in countries like the U.S. where it did have assets.)

After a six-week trial, Kaplan essentially agreed, writing an astonishing 485-page decision in which he concluded that Donziger and his team had “corrupted” the trial. (Donziger described Kaplan’s decision as “deeply flawed.”) Donziger had once thought his case against Chevron would show public interest lawyers how to bring big, complex foreign cases against multinational corporations. Instead, it is more likely to show corporations that there is more merit in fighting back than settling.

What’s worse is that the Ecuadorians who live in the affected areas have still not seen any help, 20 years later. A lawyer with a more realistic view of the case might have been able to get a reasonable settlement early on. A lawyer who had played by the rules might have even won a judgment that would now be enforceable in an American court. “Donziger disserved his clients and his cause” by the way he conducted himself during the trial, Cassel now says.

When I spoke to Donziger on Monday, he conceded that he may have made some mistakes, but nothing as egregious as Chevron’s “horrendous actions in Ecuador.” He told me that he was proud of the way he had acted, and that he still stands by the ghostwritten expert’s report.

“I am a big boy,” Donziger said. “I can take responsibility for what I did or did not do.” But that’s just the problem. He can’t. And he hasn’t.

Texas SC rejects ‘every exposure’ theory in asbestos case

manager — Wed, 16 Jul 2014 17:49:06 +0000

AUSTIN (Legal Newsline) – The Texas Supreme Court has ruled that an asbestos claimant failed to offer legally sufficient causation evidence, denying the “every exposure” theory on the grounds that simply offering evidence of exposure regarding a dose-related disease should not imply automatic liability.

Justice Don R. Willett delivered the Friday opinion of the court, with Chief Justice Nathan L. Hecht and justices Paul W. Green, Phil Johnson and Jeff Brown joining.

Justice Debra H. Lehrmann dissented with the majority and wrote a separate dissenting opinion. Justices Jeffrey S. Boyd and John Phillip Devine joined.

Plaintiffs Susan Elaine Bostic, individually and as personal representative of the heirs and estate of Timothy Shawn Bostic, Helen Donnahoe and Kyle Anthony Bostic alleged negligence and products liability for the decedent’s development of mesothelioma and resulting death.

Defendant Georgia Pacific Corp. appealed the trial court’s decision to the Court of Appeals for the Fifth District of Texas.

The Supreme Court affirmed the court of appeals’ decision reversing the trial court’s verdict and rendered a take-nothing judgment, but did not agree with the language of the lower court’s decision.

According to the complaint, Bostic assisted his father Harold Bostic in remodeling projects for friends and family as a child and teenager in the 1960s and ’70s. The two allegedly used Georgia Pacific drywall joint compound when performing the construction work.

Bostic alleged he was exposed to asbestos when he mixed the dry compound with water and then sanded the drywall material.

Bostic’s father testified at trial that he used Georgia Pacific drywall compound roughly 98 percent of the time.

The decedent also alleged that he was exposed to asbestos from the Knox Glass Co., where he was employed during the summers from 1980-1982. He was required to cut asbestos cloth without respiratory protection. Additionally, he alleged take-home exposure from his father’s clothing while his father worked at Knox Glass from 1962 until 1984.

Bostic also claimed he was exposed to asbestos while employed at Palestine Contractors in 1977 and 1978, where he worked with brake pads and other vehicle parts containing asbestos.

Bostic was diagnosed with mesothelioma when he was 40 years old in 2002. He died as a result of the injury in 2003.

Bostic’s family filed the lawsuit against Georgia Pacific and several other defendants, alleging the decedent was injured as a result of asbestos exposure from the defendants’ products.

The case went to trial in 2006 where the jury found that the defendant was liable under claims of negligence and marketing defect theories. It assessed 25 percent of the causation to Knox Glass and 75 percent to Georgia Pacific.

The trial court awarded the Bostics approximately $6.8 million in compensatory damages and about $4.8 million in punitive damages.

Georgia Pacific appealed.

The court of appeals concluded that the evidence of causation was legally insufficient and rendered a take-nothing judgment.

The Bostics appealed to the Texas Supreme Court, arguing that the court of appeals erred when it concluded that the evidence was insufficient.

Agreeing with the lower court, the Supreme Court cited the Flores decision to support its decision.

In Flores, the court concluded that the causation evidence was legally insufficient, holding that the plaintiffs needed to provide defendant-specific evidence relating to the approximate exposure dose and that the dose was a substantial factor in causing the injury, adding that the exposure must be of sufficient magnitude to exceed the threshold before the likelihood of causation can be inferred.

Relating to this case, Flores raises the issue of the “every exposure” theory. Willett explained that when dealing with dose-related diseases, including mesothelioma, any exposure alone will not suffice to establish causation because the likelihood of developing a disease increases with the dose.

“If any exposure at all were sufficient to cause mesothelioma, everyone would suffer from it or at least be at risk of contracting the disease,” Willett wrote.

Willett explained that the every exposure theory negates the plaintiff’s burden to prove causation by a preponderance of evidence because it accepts that the failure to find a safe dose means that every exposure causes the illness, even background exposure.

Furthermore, Willett stated that proof of exposure from a defendant alone “should not end the inquiry and result in automatic liability.”

“[E]ven in mesothelioma cases, liability cannot be imposed on every conceivable defendant whose product exposed the plaintiff to some unquantified amount of asbestos, without proof of something more,” he added.

Willett further explained that the any exposure theory is illogical in such cases where any exposure to a defendant’s product above background levels impose liability while the background level itself has a range of contamination varying from location to location and should still be ignored.

“We fail to see how the theory can, as a matter of logic, exclude higher than normal background levels as the cause of the plaintiff’s disease, but accept that any exposure from an individual defendant, no matter how small, should be accepted as a cause in face of the disease,” he wrote.

However, Lehrmann wrote in his dissent that the plaintiffs weren’t relying on the every exposure theory to begin with, stating that the majority simply misunderstood expert testimony.

“I agree with the court that evidence that the plaintiff was exposed to any quantity of the defendant’s asbestos, without more, is insufficient by itself to prove the causal link between a particular defendant’s product and the plaintiff’s injury,” he wrote. “But this is not a controversial stance – no one argues that it should.”

Beyond the questionable every exposure allegation, the Bostics argued that the court of appeals erred when it required them to prove “but for causation” in addition to substantial factor causation. Attempting to clarify, the Supreme Court assumed that the appeals court required the plaintiff to satisfy a proof of requirement that but for Bostic’s exposure to Georgia Pacific’s products, he would not have contracted mesothelioma.

While the court agreed that a “but for causation” test is a recognized standard when proving causation in fact, it held that this case does not require such proof.

Citing Flores, the court held that proving but for causation can be humanly impossible, as it is difficult to establish which fibers from which defendant actually caused the injury.

The court concluded that while the Bostics were required to establish substantial factor causation, the Restatements addressing the “but for causation” issue do not require the plaintiffs to meet a strict “but for causation” test in this case.

Lehrmann agreed, stating that although the plaintiffs’ evidence is not exact, “we do not require a plaintiff to reduce the quantity of exposure ‘to mathematical precision.’”

However, Willett still held that the plaintiffs failed to establish substantial factor causation.

Citing the Havner decision, Willett explained when providing evidence of causation, the expert testimony of causation must be scientifically reliable.

Furthermore, where direct evidence of causation is lacking, the plaintiff must prove the claims by a preponderance of the evidence and epidemiological studies showing the product more than doubled the plaintiff’s risk of injury.

“We think the plaintiff should be required to establish more than a doubling of the risk attributable to the defendant’s product …,” Willett wrote, “but do not think it necessary or fair to require a plaintiff to track down every possible source of asbestos exposure and disprove that those other exposures caused the disease.”

In Lehrmann’s dissent, she disagreed with the majority, saying Havner is not useful for resolving the question of whether exposure to the product was a substantial cause of the injury.

“By disregarding this avenue of proof, the court turns substantial-factor causation on its head, requiring a toxic tort plaintiff to prove that exposure to a particular defendant’s product was, by itself, the cause of his injury,” she wrote.

The majority disagreed, stating that Havner was also concerned with specific causation as well as general causation.

During trial, Bostic claimed that he had used drywall compounds from seven different manufacturers but failed to indicate the duration or intensity of exposure.

In fact, Bostic’s experts developed their opinions on the every exposure theory without considering the decedent’s dose.

“An expert’s testimony that brings no more than ‘his credentials and a subjective opinion’ will not support a judgment,” Willett wrote.

Justice Eva M. Guzman joined in all but two parts, writing a separate concurring opinion.

She argues that the majority arrived at the correct conclusion but set the evidence bar too high and the dissent reached its “implausible” conclusion by neglecting the preponderance standard when proving causation.

In Guzman’s concurring opinion, she agrees the court correctly ruled that the evidence of causation was legally insufficient. But she explains that both the majority opinion and the dissenting opinion miss the mark, arguing that the majority demands too much and the dissent “misconstrues our precedents to require too little.”

“In short, I am concerned that both writings do not faithfully interpret the preponderance of the evidence standard that stands as the lodestar of civil liability in Texas,” Guzman wrote. “A plaintiff must always prove his toxic tort claim by this standard: nothing less will suffice, but nothing more is required.”

Guzman argues that it is not impossible to prove an occasional exposure case regarding mesothelioma with epidemiological studies as long as the litigation framework adheres to the court’s “well settled precedents” as they relate to the preponderance of evidence standard.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

Letter: Frivolous lawsuits help lawyers, hurt rest of us

manager — Thu, 22 May 2014 18:26:52 +0000

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The Buffalo News, May 19, 2014

The recent $3 million settlement by the Buffalo Bills for sending too many texts illustrates everything that is wrong with our justice system. This case makes the infamous hot coffee case look meritorious. Who are the victims here? Who truly believes that sending too many texts is a $3 million offense?

It is clear who the winners are: the lawyers. The lawyer in this case will get more than $500,000, while the “victims” will get a coupon at the Bills store. But for casual observers, this splashy $3 million settlement sounds like winning the lottery.

My job is to help people save for retirement, but when they read about lawsuits like this, they may believe that they have better odds in the court system than in the stock market. That is a great tragedy. The only winner here is the lawyer. The loser is the rest of us – and the companies and organizations we hold dear. Consider for a moment the financial drain these lawsuits draw on the companies of the stock exchange, and the effect that has on jobs, our economy and retirement savings.

Financial services companies have come under a lot of fire for their fees. Perhaps Albany and Washington should look at the outrageous 33 percent fees lawyers charge. We should reduce those fees and end this perverse lottery once and for all.

Thomas H. Waring Jr.

Hamburg

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Delaware: Losing a Shareholder Lawsuit Could Soon Become More Expensive

manager — Tue, 20 May 2014 14:49:07 +0000

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Wall Street Journal, May 19, 2014

By Jacob Gershman

A Delaware Supreme Court ruling could make it easier for Delaware-incorporated companies to deter shareholder lawsuits by adopting “loser pays” bylaws.

Reports WSJ’s Liz Hoffman:

The Delaware Supreme Court recently upheld a corporate bylaw that requires the losing party in litigation against the company to pay the winner’s legal fees. These setups aren’t the norm with such suits in the U.S., as each side typically covers its own legal costs.

The May 8 ruling came in a little-noticed dispute involving a private company, but lawyers say it might apply to any company incorporated in Delaware, home to about two-thirds of the Fortune FT.T -1.43% 500 and more than half of U.S. public companies.

Bylaws govern companies’ dealings with their shareholders. Lawyers say the ruling opens the door for Delaware companies to adopt “loser pays” bylaws of their own in an effort to deter shareholder lawsuits. These cases, which generally accuse boards of failing to act in shareholders’ best interests, have risen sharply in recent years; investors challenged 94% of corporate mergers in 2013, compared with 44% in 2007, according to Cornerstone Research.

The lion’s share of these cases are settled quickly, with companies agreeing to give shareholders more information about the deal, but no more money. The companies, though, typically pay plaintiffs’ attorneys fees, which averaged about $500,000 last year.

If widely adopted, fee-shifting bylaws would raise the risk associated with filing these lawsuits. Sean Griffith, a professor at Fordham University’s law school, says the higher risks could weed out the weakest ones.

“This could be a gut check for plaintiffs’ lawyers,” Mr. Griffith said. “They would have to ask—for the first time, really—how good is my case?”

The decision, which stems from a dispute involving ATP Tour Inc., the organization that oversees men’s professional tennis, hasn’t gone over well among plaintiffs’ lawyers.

They worry that corporate misconduct could go unchallenged if investors think they could be forced to pay companies’ legal fees:

A shareholder owning 1% of a company’s stock who agrees to be a plaintiff stands to get only 1% of any damages awarded in a win for all shareholders, but if unsuccessful would bear 100% of the costs, said Stuart Grant, who represents shareholders in class actions.

“What rational plaintiff is going to bring that case?” Mr. Grant said. “This may be a nice way to eliminate nuisance suits, but the baby’s going to go out with the bath water.”

Some warned that such bylaws could hamper activist hedge funds, which sometimes use litigation as a lever in their efforts to influence boards.

“This could have a potentially devastating impact on shareholders’ rights broadly,” said Randall Baron of Robbins Geller Rudman & Dowd LLP, which represents shareholders in class actions.

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S.A.-based Dem stalwart sued over purported fraud

manager — Mon, 19 May 2014 13:46:34 +0000

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San Antonio Express-News, May 18, 2014

By Guillermo Contreras

SAN ANTONIO — Nationally recognized plaintiffs' attorney and Democratic megadonor Mikal C. Watts has been sued in Bexar County by a group of Vietnamese-Americans who allege that he listed them as clients without their knowledge or permission in the lucrative litigation stemming from the 2010 BP oil spill in the Gulf of Mexico.

The lawsuit, filed on behalf of three Texas residents and two from Louisiana, alleges that Watts and his San Antonio firm misappropriated the names and identities of the plaintiffs. It also suggests there are many others.

“On information and belief, the scope of the misappropriation exceeds 44,000 individuals and/or entities,” the lawsuit said. “Defendants undertook the misappropriation in the context of handling Deepwater Horizon oil spill claims. But they actually did not ever represent the (plaintiffs) in this case. To the contrary, defendants simply claimed to represent plaintiffs even though they were never retained by plaintiffs.”

The lawsuit was filed last week by the Tammy Tran law firm of Houston. Junior lawyers in the firm referred questions to Tran, who was unavailable for comment.

Watts' lawyers directed a reporter to a court-filed response in which Watts denies misappropriating anyone's name or committing fraud. It also says Watts may file a counterclaim.

The lawsuit seeks certification by a judge as a class-action, which would open the door for others with similar complaints to join. Many of those whose identities were misappropriated, the lawsuit says, were Gulf Coast Vietnamese-American fishermen and other Vietnamese-Americans whose livelihoods were impacted by the oil spill and who had never heard of Watts or his firm.

None authorized Watts to represent him, the lawsuit said.

The lawsuit claims that Watts fraudulently bolstered the number of clients he had with claims against BP to get a seat on the steering committee, an elite group of lawyers appointed to manage their side of the litigation.

Lawyers on such committees typically reap a financial bonanza for their efforts. Watts helped negotiate a $2.3 billion settlement against BP, a chunk of that for fishermen and deckhands that he purported to represent.

The lawsuit's allegations are similar to those in an ongoing federal criminal investigation into the legitimacy of Watts' client list by the U.S. Secret Service, which besides protecting the president also investigates crimes that include identity theft. Agents raided Watts' San Antonio law offices last year.

Watts resigned from the committee after the criminal investigation became public, saying he did not want the matter to be a distraction.

Watts was also sued in December by BP, which filed suit in New Orleans over allegations that more than half the Social Security numbers on his client list in the oil spill matter were fake. The company described his listed clients as “phantoms.”

In February, attorneys for Watts successfully persuaded a federal judge in New Orleans overseeing the oil-spill case to delay BP's lawsuit against Watts, at least while the criminal investigation is ongoing. The Secret Service inquiry is being managed by the U.S. attorney's office in Jackson, Mississippi, which has indicated that it is investigating whether there is sufficient evidence to charge Watts or anyone connected to him. A decision could come by this summer.

“They've not excluded him. They have not dropped the investigation,” said Mike McCrum of San Antonio, a former federal prosecutor and one of Watts' defense attorneys. “It's still ongoing.”

More than $1 billion of the $2.3 billion settlement fund has been distributed in an initial round of payouts. BP wanted a second round of payments suspended, claiming Watts' alleged fraud tainted the settlement.

However, U.S. District Court Judge Carl Barbier of New Orleans said a suspension was unnecessary, according to media reports.

Barbier added that the people Watts claimed to represent were deckhands and other workers who usually worked temporary jobs with little or no documentation of past employment and scant means of proving losses. Such clients would likely not account for a large percentage of the $1 billion-plus left in the fund, he said.

“They were at best the tail wagging the dog. Maybe the flea on the tail wagging the dog,” Barbier said.

Watts has poured more than $7 million into Democratic campaigns in statewide, local and nationwide races. In 2012, he held a $35,800-a-plate fundraiser at his mansion in the Dominion for President Barack Obama, who was in attendance.

Since the criminal investigation was revealed, some Democratic candidates — including Texas gubernatorial hopeful Wendy Davis — have steered clear of his fundraising events.

In 2007, Watts sought the Democratic nomination to run against Republican U.S. Sen. John Cornyn. But he later pulled out of the race, he said, to spend time with his family.

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Texans for Lawsuit Reform

ABRAHAM LINCOLN: TORT REFORM CHAMPION

Texas Tort Reforms are National Model: A Look at the Institute for Legal Reform’s Recommendations

TLR Advocate: February 2015

A Corruption of the Rule of Law

U.S. Judge Reveals Pattern of Deception by Asbestos Plaintiff Lawyers

Giants of Tort Reform Moving On By Richard J. Trabulsi, Jr. President of TLR

In Honor Of Abraham Lincoln

16th President took strong stand against lawsuit abuse

The Effect of Malpractice Reform on Emergency Department Care

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Joe Nocera: Behind the Chevron Case

Texas SC rejects ‘every exposure’ theory in asbestos case

Letter: Frivolous lawsuits help lawyers, hurt rest of us

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Delaware: Losing a Shareholder Lawsuit Could Soon Become More Expensive

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S.A.-based Dem stalwart sued over purported fraud

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Giants of Tort Reform Moving On
By Richard J. Trabulsi, Jr.
President of TLR