ThePopTort

Montana’s "Tort Reform" Hypocrite – Caught!

Well well well, as the Church Lady would say, isn’t that special.  A big class action lawsuit has just been filed by 38,000 Montana wheat farmers, cattle ranchers and others against former New Jersey governor Jon Corzine, claiming that “the failed financial firm run by Corzine stole millions from their accounts to pay off its spiraling debts, and that Corzine's ‘single-minded obsession’ with making MF Global a big player on Wall Street led to the firm's collapse.”

Seems like the farmers had “’hedged’ their crop prices by placing millions in MF Global accounts but MF Global made a series of bad investments -- notably in European debt – [and] it began ‘siphoning funds withdrawn from segregated client accounts’ to cover its debts.”

Now that’s what we like to see!  No matter the outcome, it’s a great example of the civil justice system providing a level playing field so that farmers and small business owners can pool together and take on a big Wall Street fat cat!  In fact, who wouldn’t agree that everyday people, farmers and small business should have a level playing field when it comes to taking on Big Corporate America?

Their lawyer.  Apparently.

Mark Baker represents plaintiffs in this case (see him quoted here), and I don’t doubt that he’s all for this lawsuit.  But Mark Baker is also a Montana lobbyist and not just any lobbyist. He’s a lobbyist for the American Tort Reform Association, the DC trade association funded by large corporations that seeks to limit liability for its members, which we’ve covered many times, like here.

Not only that, Mr. Baker specifically lobbied for laws in 2011 written nationally by the corporate-backed American Legislative Exchange Counsel (ALEC), (we’ve covered ALEC quite a bit, like here), which would have placed new burdens on injured Montana victims who bring and win lawsuits, as well as make it more difficult for the state of Montana to hire outside counsel, allowing it to recoup money from corporate wrongdoers for its taxpayers.

According to lobby report, Mr. Baker supported three bills for ATRA: HB 341, HB 342, HB 585:

HB 341 would limit the interest on judgments for injured victims, but not for corporations.  Here’s the ALEC model bill. 

HB 342 lowers appeal bond amounts.  Here’s the ALEC model bill.  This issue has been a huge one for ALEC as far back as we can remember.

HB 585 deals with contracts between state AG's and outside counsel.  It is based on the ALEC model bill.

This final bill, which ALEC has pushed hard, would interfere with the contractual arrangement between outside counsel and the state Attorney General office, which are generally underfunded and understaffed and can't hope to take on big industries without outside counsels' help. Their work often results in states recovering billions of dollars from corporate wrongdoers.  (We've covered this issue a bit here.)

So what exactly did Mr. Baker say when lobbying for these bills?  That he would like his clients to have their day in court but not anyone else?  That he wants his clients’ legal rights protected but would like to weaken everyone else’s?  Did he complain about people suing – except when he's the attorney?  Did he complain about trial lawyers – except himself? 

Well, nothing new here.  Move along.

The Foreclosure Blues (with Some Purple Tint)

We were a bit taken aback by the news that Prince, now on tour and in the midst of 21-dates in LA, happens also to be “singing the same tune as millions of American homeowners: The Foreclosure Blues.”  Apparently, the 20 acres that he owns in Minnesota, where his home once stood, has been scheduled for auction to satisfy his mortage, althought the Star-Tribune reports “Prince contended Thursday afternoon that the ‘payment has been made’ for the full amount and was sent to the Bank of New York Mellon Trust Co. ‘about four or five days ago.’”  

So the big question is, will the bank even care?  Clearly for most Americans, they could care less.

For example, JPMorgan Chase just settled for $56 million a class action brought by 6,000 active-duty miliatary families, “who were overcharged on their mortgages.  [The bank also] cut interest rates on soldiers’ home loans and return homes that were wrongfully foreclosed upon.”

There is also an investigation by all 50 state Attorneys General of foreclosure scandals like “robo-signing,” where banks hired people to forge official names on documents so they could take away people’s homes without verifying any facts.  Iowa AG Tom Miller, who is in the midst of crafting a major settlement with the banks, has gotten into a bit of a campaign finance mess due to donations to him from “out-of-state lawyers who make a living representing big banks” but Miller objects strongly to the implication of a conflict.  At least he's trying to hold the banks accountable, so much so that “Oklahoma’s attorney general said he is prepared to break ranks” with the settlement that Miller and the Justice Department are crafting.  He doesn't like banks being forced “to pay at least $20 billion in fines and use the money to reduce the principal on mortgages of ‘underwater’ borrowers, who owe more on their loans than their homes are worth.  ‘I have asked my attorneys to prepare me for an option that does not require that,' he says."  Hope his constituents remember that.

And then there’s the heartwarming story of South Carolina’s Keith Gamble.  As the Richmond Post-Dispatch reports, what started as a hobby “is now a risky, exciting, full-time job: buying properties at the monthly foreclosure sale and flipping them."  He says, "Some people's bad fortune is other people's opportunity.  I know that sounds callous.” 

Honestly, when it comes to the foreclosure business, who isn’t?

Steven Rattner’s Karma Comes Home to Roost

Last year, American financier Steven Rattner was appointed by President Obama to oversee the GM and Chrysler bankruptcies.  Among his ideas was to recommend complete immunity for both companies, covering all product liability lawsuits involving the millions of cars then on the road.

In fact, both companies would have received this unprecedented and unjust benefit had it not been for considerable pressure from consumer groups and car crash victims.  Here is an excerpt from one consumer group letter:

Respectfully, the Obama Administration’s backed Chrysler and GM bankruptcy plans are unsafe at their current speed because they contain legal loopholes that will shield Chrysler and GM from being held accountable for defective cars and take away a critical public safety protection that has been used to reduce the number of Americans hurt or killed from defective Chrysler and GM vehicles.  This means that a time bomb is now ticking for many families driving these cars.

No thanks to Mr. Ratter, the companies eventually gave in – but only partially.  Both GM and Chrysler decided to accept responsibility for the accidents caused by its defective cars, but only if the accident occurred after the date of the bankruptcy.  In other words, they continued to thumb their nose at hundreds of loyal customers with injury suits already pending, like: Jeremy Warriner, whose legs were so badly burned by a fire in a Chrysler vehicle that they had to be amputated, or Brian and Christina Catalano,  whose mother was killed by a Chrysler minivan that “self-shifted” into reverse, dragging her under the car, or Patrick James, whose daughter was killed in a dangerous Chrysler van that flipped over.  Many of these victims traveled from great distances to Washington DC to plead with their members of Congress.  See some of their stories here.

So, we do find it rather ironic that today, New York Attorney General (and Governor-elect) Andrew Cuomo, filed two lawsuits against Mr. Rattner, seeking $26 million and lifetime ban from the New York’s securities industry, for “paying kickbacks in order to get a $150 million investment from a New York pension fund for his private equity firm....’Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks, orchestrating a movie deal, and funneling campaign contributions,’ said Cuomo in a release. ‘Through these lawsuits, we will recover his ill gotten gains and hold Rattner accountable.’”

Clearly, there’s enough irony to go around (given that today is GM's big public offering day), although we like to look at it this way: "Karma can be a real a b*#tch!!!"

Sprinkles of Civil Justice (With a Post Election Flavor)

So what do the civil courts have in store for us, post mid-term elections?  Looks like a dash of new state hurdles here, a pinch of federal obstruction there.  Let’s take a look at a few smidgens!

First, Oklahoma's new Attorney General-elect, Scott Pruitt, apparently accepted thousands of dollars in campaign donations from poultry industry employees, for which he was heavily criticized – and for good reason.  As soon as he was elected, he announced that he would consider stopping the state’s lawsuit against the poultry industry for causing “widespread pollution” even though the state “has spent millions of dollars arguing the case, and it is awaiting a judge's ruling.”

Also, in an article earlier this week, New York Times reports that the new Governor-elect of Wisconsin, Scott Walker, said “he planned to remove all ‘litigation, regulation, excessive cost’ barriers to businesses (declaring Wisconsin, on election night, ‘open for business!’)."  In other words, no accountability for wrongdoing whatsoever!  How attractive!  (Hope you’re paying attention toxic polluters, makers of unsafe children’s products, dangerous commercial truckers and hazardous equipment manufacturers.)

On the federal judiciary front, Ann Woolner writes for Bloomberg, 

Republicans have managed to stall more than a score of President Obama’s nominees to the bench so far, although they number only 41 senators, barely enough to keep a filibuster going.

With six more Republican senators narrowing the gap in January, the minority party in the Senate will have more muscle to use against the president’s choices...

Republicans have been loading the federal bench with as many conservatives as they can, while blocking as many Democratic nominees as possible.

Yes, I said Democratic nominees instead of liberal. The current list of 23 stalled Obama nominees includes 17 approved by the Senate Judiciary Committee without a whiff of controversy or even a no vote against them.

And when it comes to one of the hottest environmental issues today – greenhouse gases - a new study by “DB Climate Change Advisors (DBCCA), a New York-based eco-investment advisory unit of Deutsche Bank Group” concluded that:

The failure of federal cap and trade, the return of Republican control in the U.S. House and California's plans to move forward on that state's greenhouse gas law will probably inspire a new wave of lawsuits moving the climate change battle to the courts,

"It is probably inevitable that people are turning to litigation to fill the void left by the lack of legislation, and it is possible that the threat of court action will in some cases galvanize legislators to take action where before they had simply avoided the issue," DBCCA analysts say in the report, titled "Growth of U.S. Climate Change Litigation: Trends and Consequences."

And finally, the decision as to who will be Alaska's next Senator moves to the courts, with Tea Party trial lawyer Joe Miller now suing to invalidate a lot of Sen. Lisa Murkowski’s write-in ballots. 

Whoa, back up a minute.  Did we say "Tea Party trial lawyer"?  You betcha we did!  Specializing in all kinds of accidents including medical malpractice cases, Mr. Miller writes on his web site:

Have you been injured? If you have suffered serious injury as a result of an accident, you have probably been contacted by an insurance adjustor. Remember, insurance adjustors are in the business of saving insurance companies money, not helping you. Insurance adjustors are very skilled in what they do...

Every day, Insurance Companies convince accident victims that their injuries are insignificant and deserve little compensation. You should always contact an attorney before resolving your case.

Couldn't have said it better ourselves, Joe.

State Attorneys General Come Out Swingin’

Super duper shout out today to the New York Times and their knockout front page business section story called (in the print edition, at least), The States vs. Wall St. 

It’s all about how state Attorneys General, like Ohio’s Richard Cordray, are squaring off against Wall Street.  They are using the civil justice system to help people when federal regulators, well, throw in the towel.  Noting his “willingness to sue early and often,” the article talks about the hundreds of millions, even billions of dollars, Cordray has recovered for “investors, pension funds, schools and cities” in cases “against global financial houses, rating agencies, subprime lenders and foreclosure scammers."

And he’s not alone.  Martha Coakley of Massachusetts, Lisa Madigan of Illinois, Andrew Cuomo of New York, Tom Miller of Iowa and Roy Cooper of North Carolina, are doing equally great work and are mentioned in the article.  We’ve covered some of this before (like here, here).

Said Coakley, “We were the first to go after predatory loans — we’re not waiting for federal agencies to act.”

Thank goodness.  It's The States vs. Wall St. – and the gloves are off!

Financial Reform Gives State Attorneys General New “Kick Butt” Powers –CJ&D Interns Discuss!

One of the financial reform stories not receiving all that much attention (except, we imagine, at U.S. Chamber of Commerce headquarters) is the grant of new authority to state Attorneys General to enforce parts of the new financial protection law.  (House Report 111-517, Section 1042 of the bill.) 

Of course, what Congress giveth, it also sometimes taketh away, adding, “Except as permitted under subparagraph(B), the attorney general (or equivalent thereof) of any State may not bring a civil action in the name of such State against a national bank or Federal savings association to enforce a provision of this title.”  And so on.)

But generally, the new enforcement powers are a great thing, and AGs think so too.   And we’re lucky to have anything, given that Sen. Tom Carper (D-DE) originally tried to wipe out these AG powers altogether.

Today, the Center for Justice & Democracy’s three summer interns talk about this whole deal – and more- with CJ&D’s Communications Director Alicia Young.  The interns are working on a groundbreaking new study examining federal consumer protection laws that grant state AGs enforcement power. They also discuss the importance of private counsel to aide the work of AG offices.  Check it out!

(Photo, L to R: Allie Curreri, Alicia Young, Warren Allen, Jacob Agron)

Huff Post Repost: America Wakes Up to the Importance of Liability and the Stupidity of “Caps”

Teachable moments can come almost anytime, from anywhere. The recent history of corporate and professional breakdowns and mess-ups should provide a number of them. Bob Herbert raised the issue in a stinging New York Times column recently when he asked, "Will we learn anything from this disaster ...?" BP was his focus but also on his mind was "how the giant financial firms almost destroyed the American economy" and the "devastating mine explosion in West Virginia -- at a mine run by a company with its own hideous safety record ..."

We'll add to that list the Toyota debacle, drug companies marketing contaminated childrens' medications, builders who pushed defective Chinese drywall into thousands of homes, Delaware doctors who covered-up a pedophile pediatrician who raped children, not to mention more and more dangerous hospitals everywhere. What a couple of months.

Keep reading.

Paint Companies Try to Squeeze Rhode Island for Lead Paint Costs – Judge Says No Way

Though much was known about the dangers of lead in paint (which causes irreversible brain damage in children) as early as the 1930s, the United States did not ban lead paint until 1978.   Paint manufacturers, knowing of the danger, marketed themselves as kid-friendly and safe in America, while providing Europe with lead-free paint and protecting farm animals from the effects of lead poisoning. 

The paint companies, fully aware of the health effects, profited immensely from their deadly paint.  Moreover, most of these companies still exist in some form and continue to profit from their past misdeeds.   At the same time, many children live in pre-1978 housing and are therefore tragically at risk for lead poisoning.  State and local governments have borne substantial costs enforcing safety measures that protect children from being poisoned.

Things were worse than usual in Providence, Rhode Island. It was known as “the lead-paint capital of the country because so many children were poisoned.”

Enter former Rhode Island Attorney General Sheldon Whitehouse and later his successor, Patrick Lynch.  These pioneering AG’s sued Sherwin-Williams and two other companies, seeking to hold them responsible for some of the overwhelming health care and housing costs associated with lead-poisoned children.  They knew that, as with the tobacco cases, the state would be swamped with delay tactics if they attempted such large-scale litigation without help.  Such tactics had already squashed smaller private plaintiff lawsuits in cases involving lead paint poisoning.  So the AG’s office hired outside counsel to aid them in the massive lawsuit, the Motley Rice firm.  And they won!

In February 2006, a jury returned a multibillion-dollar verdict against the three companies - the first state lead paint verdict ever!  The verdict mandated that the companies fund the removal of lead paint from more than 300,000 Rhode Island homes.   When the case moved to the state Supreme Court on appeal, 16 states supported Rhode Island.

But much to the dismay of child safety advocates and the state, the Court reversed the verdict two years ago.  Since then, the paint companies have been trying to force the state and Motley Rice to pay their legal costs. And luckily, yesterday the judge's response was the right one: NO WAY!

He ruled that the case ‘“brought significant attention to the serious harms of lead poisoning in Rhode Island, leading to an increased awareness in both the public and state officials.’ As a result, he said, the rate of lead poisoning declined by 76 percent from 1995 to 2004, and the General Assembly passed a new law designed to further reduce the poisonings.” In other words, “the state’s claims were ‘neither frivolous, nor made in bad faith.’”  Moreover, “The judge said ordering the companies to be reimbursed could deter the state from bringing public health lawsuits in the future.” AP reports:

Attorney General Patrick Lynch called the judge's decision "courageous" and said the companies' request for reimbursement was about more than just costs.

"It was meant to intimidate and silence any attorney or jurisdiction that would dare to demand that they be accountable for the products they put into the marketplace," Lynch said in a written statement.

Sherwin-Williams attorney Charles Moellenberg said the company will appeal the judge's decision to the state Supreme Court.

Wonder how many homes the paint companies could have cleaned up by now with the time and money being spent on this effort.  Stay tuned.

Florida Needs Terminator Lawyers Against BP

Honestly, we don’t mean to repeat ourselves.  But there’s another weird converging of topics going on, which like yesterday’s BP/Law Clinic post, also involves BP.  I guess when corporate wrongdoing becomes this huge, it spills over into all kinds of areas. 

Question.  What happens when a legislature caps a plaintiff's (i.e. an injured victim, like you perhaps) lawyers’ fees?  

Answer.  A defendant (corporate bad guy) can hire the best lawyers around to fight you.  You, on the other hand, can’t.  Which, of course, is the point of all misguided and one-sided legislation to cap plaintiff's “contingency fees”

Under a contingency fee arrangement, a lawyer can take a case without expecting any money up front.  In return, the lawyer is entitled to a percentage of money collected if the case is successful – usually one-third.  If they are not successful, the attorney receives no fee at all.  Without such a system, injured people could never find attorneys to fight insurance companies. Most injured people lack funds to pay next week's rent, let alone hourly attorney's fee.

Some states limit contingency fees by capping them way below one-third, or sometimes drastically as judgments increase.  Obviously with caps in place, it is far less likely attorneys can afford to risk bringing the more costly and complex cases, providing practical immunity for many wrongdoers, especially large corporations and institutions like unsafe hospitals, or the drug or tobacco industries.  

Fee caps also handcuff state Attorneys General, many of whom are underfunded and understaffed and/or can't hope to take on big industries without hiring outside counsel under a contingency arrangement.  As we noted in the context of financial reform, remember that these lawyers are hired at no cost to the taxpayer – fees are paid by the wrongdoer if the state is successful - and their work often results in states recovering billions of dollars from corporate wrongdoers.

In the BP case, states need “terminator litigators,” as one Florida columnist put it.  But Florida won’t get one now.  That’s because, “[s]ix days before the Deepwater Horizon rig exploded and the wellhead a mile beneath it began gushing oil, [Florida Governor] Crist signed into law [Attorney General] McCollum's chief legislative priority. The law that goes into effect July 1 caps contingency fees at $50 million on contract work for the Office of the Attorney General.”

This is almost as shortsighted as the $75 million liability cap for economic damage caused by oil spills that Congress put in place in 1990. 

Business groups have set up entire organizations dedicated to undermining AG's consumer protection role, and often, their main tactic is to make it financially impossible for states to bring on the best attorneys, who must front millions of dollars to bring a case – money that states don’t have. 

But BP sure does. 

Heroes and Losers in Congress Yesterday (Party? Irrelevant)

We will start with the bad news.  Delaware Senator Tom “I am a former governor of Delaware and I care a lot about states rights as a recovering governor” Carper (D-DE), apparently cares a lot more about the Big Banks in his state, because he is trying now to force an amendment into the financial reform bill to wipe out state Attorney General enforcement of financial fraud committed by Big Banks.  (I am sure his own AG, Beau Biden, must appreciate this as he recovers from a mild stroke in Philadelphia hospital.  Get well soon, AG Biden.) 

We had heard this might be coming, but really, tone deaf doesn’t begin to describe this proposal.  We’ve written many times about the importance of state AG’s work in financial fraud, consumer protection and many other areas. (Follow links here.) Here’s is the lead, front page article in the New York Times today, about a new investigation started by New York attorney general Andrew Cuomo againt Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch, which is owned by Bank of America, “to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities.”  Unlike the fed’s investigation, “this one expands the scope of scrutiny to the interplay between banks and the agencies that rate their securities.” 

And not to leave out that other party, Senator John Cornyn (R-TX) is going to try prevent understaffed and underfunded state AGs from hiring outside private counsel to help them enforce consumer protection laws.  These counsel, by the way, are hired at no cost to the taxpayer and their work often results in states recovering billions of dollars from corporate wrongdoers.  (See more in Center for Justice & Democracy's report, The People's Champion.)

Now for the heroes.  Watch Rep. Bruce Braley (D-IA) in action yesterday ripping apart the executive from Transocean whose company apparently coerced traumatized workers at the Deepwater Horizon rig explosion into signing legal statements that they never witnessed anything.  (See video below, questioning about a minute in.)

Why aren’t there more in Congress like Bruce Braley?  Just askin’.