ThePopTort

Juries: The Pendulum Swings Back

It wasn’t too long ago – 2 and a half years to be exact - that we analogized what seemed to be growing disrespect for civil jurors, to a Rodney Dangerfield routine.  (“People who serve on civil juries can’t get no respect from anyone this week,” we exclaimed.) But lately it’s been a bit of a different story.

On June 14, the Kansas Supreme Court did something both extraordinary and something it should have done a long time ago: provide real meaning to Section 5 of the Kansas Bill of Rights, which states, “The right of trial by jury shall be inviolate.” 

You see, back in the 1980s, Kansas politicians took a direct swipe at Section 5 by severely and broadly capping non-economic damages for injury victims. Non-economic damages are for very real injuries, such as brain damage, loss of limb, loss of reproductive ability, blindness, and other kinds of suffering and lost quality of life. Caps on compensation apply regardless of what jurors, who make decisions based on evidence they hear in a case, say compensation should be.

And in 2012, the Kansas Supreme Court decided Section 5's authors didn’t really mean “inviolate.” Instead, it “transform[ed] what the people made inviolate into something violable at will” and upheld the cap even though it directly infringed on the power and authority of juries to decide cases. This decision made no sense to many – and now, it appears, it also made no sense to the 2019 Kansas Supreme Court. So joining perhaps another unexpected court decision striking down Oklahoma’s equally-problematic cap in April, the Kansas court struck down the Kansas cap in June. 

As a result of these two 2019 decisions, less than half the states (24) now cap non-economic damages in medical malpractice cases. And only nine cap non-economic damages generally. The momentum is definitely in the “no-cap” direction. 

We’re so glad that judges are weighing-in on the correct side of this issue. It should be known that judges, who have more intimate knowledge of the system than anyone, generally have a high level of day-to-day confidence in civil juries. This year, the National Judicial College asked judges “About how often do you disagree with the jury’s verdict?” Among the findings from the just released survey:

Eighty-two percent of the 446 judges who responded said they disagree less than 25 percent of the time. The majority who left comments said the jury usually gets it right, and it is not a judge’s job to second guess their decision.”

Wrote one judge (anonymously, as was most often the case with the comments): “When you hear the voice of a dozen people speak in unison, it is rare that they get it wrong.”

Juries rule, as they say. And as they should.

Oh Yeah, it's PopTort Quiz Time Again!

OK kids, outta the pool now! Summer school is here, and that means it’s PopTort PopQuiz time! Thanks to the Center for Justice & Democracy's new updated medical malpractice briefing book, we have all kinds of new info about what’s going on in the world of medical malpractice litigation, patient safety, and more. And it comes just in time for the new Oxygen TV series on med mal, called "License to Kill." Yikes! So let's get going!

1. Between 2007-2016, the number (frequency) of medical malpractice cases:

1. Increased 70%
2. Increased 25%
3. Stayed flat
4. Decreased more than 25%

The answer is “d.” According to CRICO, during those 10 years, case frequency dropped 27%, “with an especially compelling trend for obstetricians-gynecologists.” Specifically,  “For ob/gyns (whose rate is historically higher than the average for all MDs), the risk of having an MPL case filed against them dropped 44% from 2007–2016.”  What’s more, the average payment grew at a rate that is below medical inflation,

2. What percentage of doctors with at least five medical malpractice claims are still in practice?

1. 5%
2. 25%
3. 50%
4. 90%

That would be “d.” Researchers who examined data on paid claims between 2003-2015 found not only that 90% are still practicing, but that the “overwhelming majority of doctors who had five or more paid claims…moved to solo practice and small groups more often, where there’s even less oversight, so those problematic doctors may produce even worse outcomes.” 

3. True or false: There is no “quality of care” information available for about 50% of doctors treating Medicare patients.

False, although it’s kind of a trick questions. The actual number of 75%. Researchers trying to find data on 1 million U.S. doctors made available online by the U.S. Centers for Medicare and Medicaid Services found, “Three quarters of clinicians have no information about their quality of care.” Moreover, “99 percent of those in the online system have no data tied to their individual job performance, “making it hard for patients to know who might be a better or worse choice among several physicians at one clinic.”

4. On a similar note, true or false: data about maternal deaths or severe childbirth complications at hospitals are readily available to patients.

False. As USA Today found, “Even though pregnancy and childbirth is the No. 2 reason for hospitalization in this country, the federal government doesn’t require hospitals to tell the public how often mothers die or suffer from childbirth complications…  USA TODAY’s investigation for the first time published rates of severe childbirth complications at hundreds of hospitals.  It’s a number that many hospitals and experts use privately – but don’t think should be shared publicly.”

5. After Texas enacted severe “tort reform” measures in 2003 (in fact asking residents to change their own state constitution to do so), threatening that without these Draconian laws doctors would leave the state, access to medical care grew:

1. 75%
2. 50%
3. 25%
4. Zero

Yup, the answer is “d.”  Researchers found, “HB 4 [the “tort reforms” laws enacted in Texas in 2003] had no measurable effect on the size of Texas’ physician population. The impact of HB 4 on Texans’ access to medical treatments is best described as both close to zero, and precisely estimated.” 

6. True or false.  When a state caps damages, rates for cardiac stress tests and other imaging tests, Medicare Part B lab and radiology spending, all rise.

That is true. Researchers say, “[A] core message from our findings is that, writ large, the ‘adopt damage caps, reduce spending’ story lacks empirical support. “

8. During surgery, which of these random factors can lead to serious errors:

1. A negative thought passing through the surgeon’s mind
2. A loud noise in the operating room
3. Both things
4. Neither thing

The answer is “c”.  According to researchers, either of these random things makes surgeons “prone to make mistakes that can cause bleeding, torn tissue, or burns.”

9. When it comes to preventing deaths from medical errors, out of 195 countries in the world, the U.S. ranks:

1. At the top
2. In the top 10
3. In the top 50
4. Below the top 50

You guessed it. The answer is “d.” The United States, the health care of which is supposedly the "envy of the world," isn't even in the top 50. More specifically, “After analyzing how well the United States fared at preventing deaths from medical errors, Global health researchers gave the U.S. a 70 out of 100. More than 55 countries exceeded that score.”

Ok that enough depressing information for the day. Back in the pool kids!

Whistleblowers Round Out the Week

It’s been awhile since we last covered the ancient practice of whistleblowing. (Ok maybe not ancient but it’s at least Ben Franklin-old.)

Some whistleblowing stories this week were very newsy, like the one involving Chelsea Manning and (according to the government), her Wikileaks co-conspirator Julian Assange. You may have heard that Assange was indicted this week for obtaining and publishing military documents in 2010. We’ll be transfixed to see how the courts handle the First Amendment conflicts on that one.  

For those who may pay no attention to the news but still watch network TV, there’s the return of The Whistleblowers series on CBS, about “people who put everything on the line to stop illegal and often dangerous wrongdoing when major corporations or individuals rip off the government and U.S. taxpayers.”

From the CBS announcement: “Additional cases that will be examined this season include a medical system where midwives are in charge of high-risk pregnancies; kickbacks at a crematorium; a scam allegedly involving counterfeit healthcare hardware being used in back surgery, which may have defrauded Medicare; and, for the first time on national television, two whistleblowers discuss how they brought suspicions of massive fraud by members of a polygamous cult to the FBI.”

Alarming stuff, right? Oh, you haven’t heard anything. Check out the rest of this week’s news, like the CBS story on FAA whistleblowers. The network spoke to “roughly a dozen FAA inspectors from across the country. Some risked their jobs to blow the whistle on how they say they are told to overlook important problems.” 

They say managers at the FAA pressure inspectors like them to ignore critical safety issues like corrosion or making sure vendors were FAA compliant and retaliated if inspectors refused to back off.

"I've been flat out told to back off," one inspector said. "I've had airlines contact my management and ask them not to assign me any inspections to that airline."

The other inspector said they've "repeatedly" been punished for finding a problem and reporting it and they're not alone: "It's very widespread."…

One of the inspectors said, "We're on the verge of an issue happening …. we're talking about a crash inside the United States borders."

They both pointed to incidents like the Lion Air and Ethiopian Airlines crashes – both related to U.S. manufacturer Boeing whose own relationship with the FAA is under scrutiny as indicators of what could happen. They hope that what they told CBS News will be a wake-up call.

And if that’s not enough to make your blood boil, consider this story about the abuse and neglect of children in facilities run by US Immigration and Customs Enforcement (ICE). As reported by CNN,

For years, [Dr. Scott Allen’s and Dr. Pamela McPherson’s] expert opinions, like the facilities they inspected, remained out of the spotlight -- unseen by most lawmakers and unheard by members of the public.

That changed, they say, when the Trump administration's policies left them no choice. The doctors became whistleblowers, speaking out with a dire warning. Family detention isn't safe, they said, and children's lives are at stake.

"We are writing to you, members of Congress with oversight responsibility, because we have a duty to raise our concerns about the ongoing and future threat of harm to children posed by the current and proposed expansion of the family detention program," the doctors said in a letter to the leaders of the Senate Whistleblower Protection Caucus.…

That letter was sent nearly a year ago.

For the doctors, “what started with one letter to Congress has become a quest with no end in sight.” Yet this story isn’t the only whistleblowing story about ICE abuse, or even the only one this week. As The Intercept also reported, 

Ellen Gallagher was stunned when she first learned that immigrants detained by Immigration and Customs Enforcement were sometimes placed in isolation with no human contact for 22 hours a day. …

“I could not believe that so many people who were listed as suffering with serious mental illness, for example, were being assigned extended periods in solitary confinement,” said Gallagher, who worked as an advocate for mentally disabled school children in New York before joining the federal government in 1995. …

Gallagher, whose first job in the federal government was as a lawyer working to deport immigrants, embarked on a yearslong process to raise the alarm about what was taking place in ICE detention centers. …

Her concerns about the use of segregation in ICE detention centers are consistent with findings of a monthslong investigation by The Intercept and the International Consortium of Investigative Journalists. Our review of more than 8,400 solitary confinement incident reports spanning 2012 to early 2017 show that in nearly a third of the cases, detained immigrants were described as having a mental illness. The records show at least 373 instances of individuals being placed in isolation because they were potentially suicidal, and another 200-plus cases of people already in solitary confinement being moved to “suicide watch” or another form of observation — in many cases another solitary cell.…

Gallagher has now decided to tell her story, she said, because “until there are enough people that do that, then this same set of circumstances will not stop, and I think it’ll actually get worse.”

Story ideas for next season, perhaps?

 

Generic Drug Industry: “Catch Me If You Can”

These days when you are prescribed a drug, about 90 percent of the time you end up with the generic version. Most people don’t know that the generic drug industry has complete immunity for marketing drugs it knows to be unsafe. This is thanks to recent U.S. Supreme Court decisions (beginning in 2011), followed by the 2018 Trump FDA withdraw of an Obama administration proposed regulation that would have fixed the problem.  

This regulation would have allowed consumers harmed or killed by a generic drug due to the drug’s inadequate labeling or defective design, to hold the manufacturer accountable in court. It would have restored rights to injured patients that were taken away by the U.S. Supreme Court in 2011.

Incredibly, we were almost there with a rule change. Obama’s FDA proposed the rule change, had a powerful public hearing about what these Supreme Court decisions had done to people (here’s our testimony) and received many comments in support of the change. (This from us and other consumer groups.) But generic drug industry lobbyists were already swarming the agency, guns ablazin’. Don’t do this, they screamed. Generic drug prices will skyrocket if you make us accountable.

We all knew this was bogus. But that’s not the shocking part.

At the same time these companies were jumping up and down about the rule change, they were illegally raising prices on drugs to such an extent (e.g., “1,215 generics, many of them the most prescribed drugs, jumped on average more than 400 percent in a single year”), that their activities are now considered perhaps “the biggest price-fixing scheme in U.S. history.” In fact, the Attorney General of Connecticut, William Tong, is calling the generic drug industry “the largest private sector corporate cartel in history.”

Shame on the generic drug industry.

As reported last night on 60 Minutes,Tong’s office has been examining the generic drug industry for almost five years. On Friday, with massive evidence of fraud, more than 40 other states joined Connecticut in filing a 500-page price-fixing lawsuit against the generic drug industry. (At least state AG’s still have the right to sue these companies.) Tong’s office found evidence of price-fixing involving “every kind of drug that touches our everyday lives.” (The drugs include “treatments for diabetes, cancer, arthritis and other medical conditions.” ) And they are putting “Americans' lives at risk.”

His office was able to catch the fraud with some stealth and tedious law enforcement techniques, leading them to “hard evidence, in the form of text messages, emails, documents, witnesses that demonstrate clearly that [the price hikes weren't] about product shortages. It was about profit. It was about cold, hard greed.” As far as the average consumer, said Tong, “It's devastating. it affects health insurance premiums and health insurance plans. It impacts Medicare and Medicaid. And it is a chain reaction that drives up the price of American healthcare to unnatural heights.”

The lawsuit, “also names 15 individual senior executives responsible for sales, marketing and pricing.” It says that by 2012, for example, “Teva and its co-conspirators embarked on one of the most egregious and damaging price-fixing conspiracies in the history of the United States” as they sought to “significantly raise prices on as many drugs as possible.” They picked companies with which it already had “very profitable collusive relationships,” and developed understandings to lead and follow each other’s price increases,” which “resulted in many billions of dollars of harm to the national economy over a period of several years.”

Kelley Dougherty, a Teva vice president, said, “The allegations in this new complaint, and in the litigation more generally, are just that — allegations … The company delivers high-quality medicines to patients around the world and is committed to complying with all applicable laws and regulations in doing so.”

High-quality medicine. So that’s another thing. NBC is coincidently running a frightening story (featured on this morning’s Today Show) about tainted generic drugs manufactured oversees, where most are made. As the Center for Justice & Democracy noted in its 2013 report, “America's Unaccountable Generic Drug Industry; How Legal Immunity Could Be Making You Sick,” generic drugs are manufactured in countries like India and China, to supposedly “keep prices low." (Sound familiar?) In these countries, the FDA rarely inspects factories or the supply chain. History shows that generic drugs or ingredients can be manufactured in dilapidated, dirty factories. And now, one former FDA inspector is ringing an alarm.

The main NBC story focused on the recent recall of the very popular blood pressure generic drug, valsartan, which apparently contained a carcinogenic “contaminant formerly used in the production of rocket fuel.”

The valsartan recall came as little surprise to Massoud Motamed, a former inspector with the U.S. Food and Drug Administration (FDA). More than a year before the notices went out, Motamed had tried to sound the alarm on what he flagged as potential systemic problems at two facilities in China and India that produce the active ingredients in generic valsartan and other blood pressure medications.

Speaking out publicly for the first time, Motamed told NBC News that the FDA ultimately overruled his recommendation to crack down on one of the plants. Perhaps more alarming, he says the issues at the two overseas drug production facilities are hardly unique.

"This is only the tip of the iceberg," Motamed said in an exclusive interview.

Blomberg wrote about some of this earlier this year, noting,

Data integrity was also at the heart of FDA inspector concerns at a plant halfway across the world, where Zhejiang Huahai Pharmaceutical Co. Ltd. was supplying the active ingredient valsartan—a widely used treatment for high blood pressure that is taken alone, as well as sold in combination with other cardiovascular drugs—for major pharmaceutical companies such as Teva Pharmaceutical Industries Ltd., the largest generic drug maker in the world. 

The inspection in May 2017 found that the Chinese ingredient maker ignored quality checks that showed unnamed drugs didn’t meet U.S. standards. Four months later, higher-ups at the FDA once again overrode the concerns of those on the ground who wanted to slap Zhejiang Huahai with harsher penalties. Instead, the agency gave the company a chance to fix its problems.

Motamed says “a more systemic issue has largely gone unreported: FDA inspectors struggling to keep up with foreign drug manufacturers that may bury or hide problems in their production. Last year, the FDA inspected only one in five registered human drug manufacturing facilities abroad, according to agency data.”

Catch ‘em if you can.

Law Day: Out of the Mouths of Jurors

Many judges and scholars have written eloquently in defense of the civil jury, warning against even limited intrusions into the right to civil jury trial. Take the late conservative Supreme Court Chief Justice William H. Rehnquist, who once wrote, “The right of trial by jury in civil cases at common law is fundamental to our history and jurisprudence....  A right so fundamental and sacred to the citizen, whether guaranteed by the Constitution or provided by statute, should be jealously guarded....” 

So true. Yet some of the most powerful sentiments about civil juries come not from judges or scholars, but from jurors themselves. Jurors are just ordinary people randomly chosen from the community, making decisions about society’s tolerance (or intolerance) for certain types of behavior, deliberating and rendering verdicts, and then fading anonymously back into the community. It’s an incredible system.

Despite being enshrined in the Seventh Amendment to the U.S. Constitution and nearly every state constitution, the civil jury system has been under siege for several decades now. The power and authority of civil jurors, who cannot be bought-off by special interests, represent a tremendous threat to the power structure in this country. Today, between so-called “tort reform” laws in most states, the recent proliferation of forced arbitration, and the dramatic decrease in civil jury trials, the entire system is on shaky ground. So what to do?

Here's one thing we might try. In all the political fighting around these issues, sometimes we forget to listen to those at the core of this debate - jurors themselves. Why do civil juries do what they do, and how do they feel when their power is taken away? There are two main reasons juries render verdicts for plaintiffs. One is to provide fair and adequate compensation to the injured.  Second is to hold wrongdoers accountable. Here are just a few examples – in their own words.

Compensation to the injured

1. The case of James Todd Beason 

James Todd Beason, an Texas oilfield worker, was severely injured when a crane fell on him, leading to two amputations on his left arm. He now “lives daily with severe nerve pain and has several other health complications as a result.” When he sued the company in Oklahoma, he and his wife were awarded $9 million in economic damages and $6 million in noneconomic damages. Little did the jury know, however (because they were not told), that Oklahoma’s state lawmakers had capped noneconomic damages at $350,000. So the judge was forced to drastically reduce this verdict.

As recently reported in Tulsa World,

Beason said he will never forget the reaction of the jury when they were told about the cap.

“Grown men and women came outside and were in tears,” he said. “I remember a gentleman came up and he was bawling. He was crying. He said, ‘We thought we were doing the right thing. We thought we were taking care of you and your family.’”

Fortunately, the Oklahoma Supreme Court was listening, and just recently invalidated the $350,000 cap, finding it unconstitutional.  Chalk one up for those jurors!

2. The case of Stephen Olsen

Steven Olsen is blind and brain damaged because, as a jury ruled, he was a victim of medical malpractice when he was two years old.  He fell on a stick in the woods while hiking. The family’s HMO refused to do an $800 CAT scan, which would have detected a growing brain mass caused by the stick.  

When they sued the HMO, a jury awarded $7.1 million in noneconomic damages for Steven’s avoidable life of suffering. But the judge was forced to cut this award to $250,000, the amount of California’s noneconomic compensation cap. This outraged the jury. Jury foreman Thomas Kearns then wrote a letter published in the San Diego Union Tribune, in which he described how they had reached their verdict:

“We viewed video of Steven, age 2, shortly before the accident. This beautiful child talked and shrieked with laughter as any other child at play. Later, Steven was brought to the court and we watched as he groped, stumbled and felt his way along the front of the jury box.  There was no chatter or happy laughter.  Steven is doomed to a life of darkness, loneliness and pain. He is blind, brain damaged and physically retarded.  He will never play sports, work, or enjoy normal relationships with his peers.  His will be a lifetime of treatment, therapy, prosthesis fitting and supervision around the clock.”

This anti-jury cap is still the law in California.

Accountability

1. Whirlpool

Some years ago, an Alabama jury reached a $581 million verdict against Whirlpool, which had dealers all over the state soliciting — door-to-door — poor, unsophisticated and elderly customers to purchase satellite-TV dishes for $1,100 plus 22 percent interest.  The same equipment could be bought at an electronics store for $199, amounting to an effective interest rate of 300 percent.  One witness who was sold a satellite dish was legally blind. Another had less than a 5th grade education.  A former agent who later quit testified that Whirlpool specifically targeted illiterate and unsophisticated people, and that he had trained others to lie about the terms of the financing which included a deceptive credit card scheme.

Why $581 million? A juror who spoke to one of the lawyers in the case said that the jury was “sick” at how Whirlpool treated poor, uneducated people, misrepresenting to them from the very start.  The juror also said the jury was “inflamed” that there were still “thousands of people out there” who were victims of the scheme, but that Whirlpool had not helped those people.  They felt their verdict was important “to get their Whirlpool’s attention.”  (See more here.)

The verdict was eventually cut nearly in half – to $300 million – and the parties later settled for an undisclosed sum. Within a couple weeks of that case the Alabama legislature passed a law capping punitive damages.

2. McDonald’s Coffee Case.

In the documentary film, Hot Coffee, which tells the story of the often unfairly-maligned McDonald’s coffee case, two jurors described why the jury decided to hit the company with $2.7 million in punitive damages (later reduced by the judge). An article in Reader’s Digest explains:

The trial revealed that [plaintiff Stella] Liebeck was not alone. McDonald’s had received more than 700 complaints about burns from hot beverages over the previous ten-year period.… “There was a person behind every number, and I don’t think the corporation was attaching enough importance to that,” juror Betty Farnham told the Wall Street Journal.

After seven days of testimony and four hours of deliberation, the jurors sided with Liebeck. They awarded her $200,000 in compensatory damages. But because she caused the spill, they reduced the amount to $160,000. The jurors then awarded her $2.7 million in punitive damages, which, they reasoned, was equivalent to about two days’ worth of McDonald’s coffee sales. The total was $2,735,000 more than Liebeck’s lawsuit had requested.

“The only way you can get the attention of a big company [is] to make punitive damages against them,” said juror Marjorie Getman. “And we thought this was a very small punitive damage.”

Jurors are understandably angry when they find out that their efforts to be fair and just are cheapened and devalued.  As we celebrate Law Day today, it is important to be aware that we are reaching a new level of disrespect for the civil jury system in this country. The nation’s founders would clearly be angry too.

Frontier Justice II: Forced Arbitration that Shocks the Conscience

Yesterday, the Center for Justice & Democracy released its newly-updated “Cases Tossed Out of Court Because of Forced Arbitration Clauses and Class Action Bans.” We thought we’d highlight some of the newer cases. If you thought forced arbitration clauses and class action bans couldn’t possibly, legally be used in cases like these, think again. They could. And they were:

• A 90-year-old nursing home resident was thrown against a wall by a nurse’s assistant, dying from injuries. Her death was ruled a homicide and the assistant was criminally charged.  Yet her family’s wrongful death suit was thrown out of court.  A forced arbitration clause had been buried in the nursing home’s admission agreement, which was signed by her daughter.  
• A 12-year-old boy was sexually assaulted and stalked at his boarding school. When his father sued the school, the case was forced into secret arbitration because he had signed a student enrollment agreement containing an arbitration clause.
• An employee suffered repeated sexual harassment and retaliation at a consumer goods refurbishing company. During this time, each employee was told to sign a new employment agreement containing a forced arbitration clause. This employee refused to do so, both orally and in writing. Nonetheless, a court forced her into arbitration.
• Video-game giant Valve allowed underage gambling through its online Steam Marketplace platform and video games like “Counter-Strike: Global Offensive.” A court agreed with the company that children had agreed to arbitrate any disputes when they created their accounts and that their parents, though non-signatories, were also bound by those terms.
• Wells Fargo, the scandal-plagued bank, continues to use forced arbitration clauses and class action bans in customer agreements, and to strong-arm its customers into arbitration.  For example, since 2009, it has been litigating against - and forcing into arbitration - customers that it defrauded, specifically by charging them illegal overdraft fees. . 
• Hertz, which also operates Dollar and Thrifty, uses shady debt-collector Viking Credit Services to bill customers for costly car damage months after they had returned undamaged rental cars.  The court said customers has “agreed” to arbitration because in order to rent the cars, they selected ‘I Agree’ at the automated airport kiosk.
• Washington, D.C.’s Aveda Institute, which charged cosmetology students $26,000 tuition, used students to sell products instead of providing them necessary coursework to prepare for the state board exam. A forced arbitration clause, buried in their enrollment agreement, led a court to throw out their class action, compelling them to privately arbitrate.
• Approximately 57 million customers and 600,000 drivers of Uber, who were victims of the company’s personal identification data breach that the company waited a full year to reveal, were forced to arbitrate all claims because they “agreed to” forced arbitration when signing up with Uber.
• Employees at Fiat Chrysler, including the company’s diversity manager, brought a class action alleging systemic discrimination and retaliation. Six claims were dismissed because of forced arbitration clauses in employment contracts. Two other employees, who joined the company before these clauses were included, were allowed to proceed with a much smaller class action.
• A Red Robin employee brought a class action for illegal wage theft. A class of over 18,500 workers was certified, yet months later more than 2,600 new hires were thrown out of the case because they had “agreed” to arbitration. The court said they could “scroll up or down to review the two arbitration documents before signing,” were able to “download the unsigned Arbitration Agreement as a Word document,” were sent a PDF copy of the signed agreement to their personal email, and then failed to "opt out."

These last two cases show how splitting victims in two can lead to terribly unfair, bizarre results, where victims experiencing the exact same type of wrongdoing but are forced to arbitrate would be unable to benefit from any larger settlement and in fact, could be left with nothing.

It is time for Congress to do something about this!

Forced Arbitration: Frontier Justice in America’s Legal System

Next time you’re talking to a corporate CEO, ask them this: Suppose the company found itself in court for one reason or another.  The judge had no legal training. The process had no real rules. The judge was neither required to follow law nor issue a written legal opinion. Once the judge ruled, their decision was enforceable with the full weight of the law even though it might be legally incorrect. And it all happened in secret. No legal precedent could ever be established to guide the company’s – or any other company’s – future conduct. Would you consider this a system that promotes legal predictability and certainty for businesses, or not?

I think we all know the answer. Yet what I just described are critical elements of “forced arbitration.” We usually talk about forced arbitration as a corporate-designed private, secretive process of dispute resolution rigged against consumers, employees, and small businesses. But for corporations who must rely on a strong, stable civil justice system for guidance on how to act, it’s unpredictable, uncertain, and mostly useless. And that’s exactly the point Rep. Katie Porter made in her questioning last week of the U.S. Chamber of Commerce’s Tom Quaadman, at a U.S. House hearing called, “Putting Investors First: Reviewing Proposals to Hold Executives Accountable.”

The context of her questioning was the concern that the Securities and Exchange Commission might be willing to succumb to extremist pressure and, for the first time, allow public companies to force defrauded investors into private arbitration to resolve securities disputes. Such a process would not only harm investors, but also would undermine “the crucial role shareholder lawsuits play in deterring financial fraud and protecting the integrity of U.S. capital markets.” 

Getting directly at the arbitration problems described above, Rep. Porter asked Mr. Quaadman, “Do you think the certainty of law is important to companies?” and “Is legal uncertainty positive?” Immediately he knew where she was going. As she tried to nail him, he did his best to slither out of it, ultimately pivoting the discussion to a completely different system, called FINRA (the Financial Industry Regulatory Authority). She wasn’t asking about FINRA. FINRA rules would not apply to shareholder arbitration. But she let it go.  

Huge props to her, however, for starting this conversation. Clarity. Predictability. Certainty. These are recurrent themes coursing through the business community’s arguments for “tort reform.” “Business certainty” is the reason states cap punitive damages and enact a myriad of liability limits. It’s the reason Congress sometimes considers federalizing state tort laws. It’s the reason corporate groups seek to establish uniform legal standards, curtail federal agency power, preempt state tort remedies, or otherwise block plaintiffs’ access to the courts. Corporations make this argument to legislators. They argue it to judges. They argue it to federal agencies. No branch or level of government has been exempt.

Please, take their word for it:

• Sponsors of 2011 Tennessee legislation capping damages: “This new law will provide certainty and predictability for businesses.”
• The American Legislative Exchange Council’s Civil Justice Task Force:  [We] are at the fore-front of efforts to restore fairness and predictability to state civil justice systems … that treats defendants in a consistent manner.”
• U.S. Chamber of Commerce: “[A]bsence of uniformity [in the law] creates damaging uncertainty for businesses in this sector.… [U]ncertainty about the scope of a federal statute has harmful consequences for any national business whose conduct is regulated by that statute.” 
• National Association of Manufacturers: State tort claims should be preempted because they subject businesses to “uncertain, unpredictable” liability. 
• U.S. Chamber of Commerce and the National Association of Manufacturers: Venue and personal jurisdiction rules “give[] a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.…" This “[p]redictability is valuable to corporations making business and investment decisions.”
• Coalition to Save Local Businesses (U.S. Chamber of Commerce, the National Retail Federation, and the International Franchise Association): Expanding liability under labor laws “would cause uncertainty for businesses.”
• National Small Business Association: State by state products liability laws “create uncertainty for businesses selling in a national marketplace.”
• George Mason University School of Law: Competition is harmed “[i]f businesses are unsure about where the line between legal and illegal behavior is drawn.”

Even when it comes to investor protection, they make the argument.  Here’s the U.S. Chamber, again: To foreign investors, the legal system can be “a source of significant investor uncertainty” and “international investors are not alone in that concern. It is a concern that is shared by U.S. businesses in general.” And while we generally agree with none of that, one thing is clearly true: the last thing the U.S. Chamber should support now is a legal system for investors that’s secret, with no trained judges, no rules, no record, no decisions with any precedential value and which actually might be legally wrong, and provide basically nothing to help companies establish what’s legal and what’s not. 

Big business lobbyists like to complain about the unpredictability of jury awards even though data show them to be generally consistent and conservative. But when it comes to unqualified legal uncertainty for defendants, forced arbitration wins that contest by orders of magnitude. It’s about as uncertain, unpredictable and unclear as a legal system could be.  

Purdue and Sackler’s Rat Pack

I hesitate to rely on “rat” analogies because, as PopTort fans know, we’re based in New York City and no one here likes to be reminded of that little problem. But when I think of the creators of the opioid epidemic and their “tort reform” apologists – including OxyContin makers Purdue Pharma and its generic cousin Rhodes, the Sackler family which controls Purdue, and groups like the American Tort Reform Association (ATRA) and the U.S. Chamber of Commerce – “cornered rat” is one image that seems appropriate. 

First to refresh, evidence gathered from state opioid litigation and recently reported in the New York Times can be summarized as follows:

• As the country’s addiction crisis worsened, the billionaire Sackler family decided to “increase their profits by selling treatments for the very problem their company had helped to create: addiction to opioids.” It was “named Project Tango.”
• By then, the company had already pled “guilty to a federal felony and paying more than $600 million in criminal and civil penalties.”
• The pharmaceutical industry developed “a multipronged approach” to “reshape public perceptions about pain and chip away at physicians’ reluctance to prescribe opioids, long known to be addictive, by describing an 'epidemic' of untreated pain affecting 100 million Americans.”
• Manufacturers funded “front groups” that were “disguised as ‘unbiased’ sources of cutting-edge medical research and information” and trained “sales representatives focused on doctors who were high-volume opioid prescribers, as well as inexperienced providers and primary care physicians who knew little about pain management, encouraging them to prescribe higher and higher doses for longer stretches of time.” These “sales representatives could earn tens of thousands of dollars in bonuses and were rewarded with trips to tropical islands.”
• As reports of overdoses grew, Richard Sackler urged the company to blame the patients. “We have to hammer on abusers in every way possible,” he wrote in a 2001 email disclosed in documents filed in the Massachusetts case. “They are the culprits and the problem. They are reckless criminals.”

Like all cornered rats, Purdue and the Sackler’s are trying to fight their way out of this, and “tort reform” groups are right by their side, lashing out at the principal way the industry is now being held to account – litigation. Importantly, this is public enforcement litigation brought by state and local public officials, who in addition to trying to uncover the truth (all the above information comes from evidence in state AG lawsuits), are trying to re-coup the extraordinary costs of responding to a crisis that was deliberately dumped in their lap.

In December 2018, 60 Minutes did a feature story on Mississippi’s former Attorney General Mike Moore, one of the attorneys who “engineered the historic 1998 settlement under which Big Tobacco paid billions to address smoking-related health issues.” He happens now to be one of the attorneys suing opioid manufacturers and distributors, “coordinating with 30-plus states that have filed suit, and with many of the local governments, nearly 1,500 cities and counties that also are suing.”

Back in 2017, a PR firm that works with ATRA pitched the following campaign strategy to Purdue (information uncovered in the Oklahoma AG’s lawsuit against the company):

CAMPAIGN GOALS AND OBJECTIVES

Our goal is to make state attorneys general think twice about joining the litigation and establish a credible watch-dog organization to monitor the use of contingency fee counsel should other state attorneys general join the suit. While specific strategies and tactics would be tailored to each Individual state attorney general, our initial program recommendations include the following objectives:

Leverage existing legal reform platforms-especially groups focused on outside use of contingency fee counsel-to promote our message and apply pressure.

Shine a spotlight on the plaintiff's attorneys involved in the cases to call into question their credibility and personal profit motive.

STRATEGY

To accomplish these goals and objectives, we recommend a three-track strategy:

Track One: Identify and conduct research on the primary plaintiff's attorneys involved in the suits, including Mike Moore, and demonstrate their methods and personal monetary motivations.

It goes on. The campaign was partly successful, taking credit for at least one early Wall Street Journal editorial attacking Moore and these lawsuits, bragging that “team ATRA worked with this writer over the last couple of weeks on this using research we produced.”

No doubt. But what they couldn’t do is stop state and local governments from moving forward, and not only against Purdue, but also against the Sackler's. Right now, the Attorneys General of New York, Massachusetts, Connecticut, Rhode Island and Utah “have filed suit against members of the [Sackler] family [while] last month, a coalition of more than 500 counties, cities and Native American tribes named the Sackler’s in a case in the Southern District of New York, bringing the family into a bundle of 1,600 opioids cases being overseen by a federal court judge in Cleveland.”

So now there’s a new corporate strategy brewing. The U.S. Chamber of Commerce – the nation’s largest lobby force which represents the drug industry among many others - has stepped in. The Chamber wants new state-based legislation with a very targeted goal: wiping out all the city and county lawsuits.  And just like ATRA, the Chamber is starting this by planting stories in major publications. In this case, it has produced a “study” fabricating urgent reasons to end these lawsuits, and trying to get reporters to bite.  Bloomberg unfortunately did, for one.

This effort is boosting at least a couple different Chamber goals. The first is obviously to try to weaken the opioid litigation.  The Chamber can’t defend the reprehensible conduct of Purdue and other opioid manufacturers, so it is trying to weaken the litigation against them. Pretty classic.

The second strategy, which seems also part of a larger one, was revealed in today’s extraordinary new investigation by USA TODAY, The Arizona Republic and the Center for Public Integrity. The articles discuss, among many things, how corporate and conservative interests are lobbying for state "preemption" bills. Writes the investigative team:

These laws, in effect, allow state legislators to dictate to city councils and county governing boards what they can and cannot do within their jurisdiction….  

USA TODAY’s algorithm found more than 100 such bills had been introduced on an expanding array of topics.

Because preemption bills have almost exclusively been advanced by Republicans, many of whom rail against the excessive mandates of Washington, D.C., critics see such legislation as the height of hypocrisy.

"There's real ... hypocrisy in many of these so-called conservative legislators trying to rip away local control when they preached for years that a government that's closest to you ... is most responsive to you," said Dawn Penich-Thacker, who campaigned to overturn Arizona's school-voucher expansion with a public vote.

All I know is, the Bloomberg headline “U.S. Chamber Warns Cities are Litigating Too Much” makes a whole lot more sense now.

Ring around the nosey, a pocketful of cozy

When one set of commercial pilots is unable to stop a Boeing jet’s fatal nose dive, “difficult questions” are raised about the safety of these planes. When a second set of commercial pilots is unable to stop another fatal nose dive of that same model plane, the FBI is called in. Suddenly, it becomes obvious to everyone that the “cozy relationship” that has long infected the relationship between regulators and corporations – not just in aviation but in many areas - can have catastrophic consequences and might be criminal. But it shouldn’t take a catastrophe.

Regulatory capture. Revolving door. These concepts are nothing new. Back in 2005 during the George W. Bush administration, for example, a study from the Revolving Door Working Group showed how federal agencies were then captured by the very industries they were supposed to regulate, and were led by a revolving door of industry figures. According to the study, the appointment of corporate executives and business lobbyists to key posts in federal agencies was a rampant problem. Under Obama, things were maybe a bit better but still not good. Under Trump, it’s a calamity. 

Shortly after he took office, Trump “signed an executive order that bars former lobbyists, lawyers and others from participating in any matter they worked on for private clients within two years of going to work for the government.” But by last year, according to the Associated Press, Trump had already “issued at least 37 ethics waivers to key administration officials at the White House and executive branch agencies.” For example, “[o]f 59 EPA hires tracked by the AP over the last year, about a third worked as registered lobbyists or lawyers for chemical manufacturers, fossil fuel producers or other corporate clients.” Here are some other examples:

Health and Human Services asked for waivers for senior counselor to the secretary Keagan Lenihan, a registered lobbyist who recently worked for a pharmaceutical and health services company, and for HHS chief of staff Lance Leggitt, who recently lobbied on behalf of his law firm’s health law practice group.

Agriculture Department policy adviser Kailee Tzacz is allowed to “participate personally and substantially in matters regarding the Dietary Guidelines for Americans,” a guide that offers nutritional information and recommendations.…

Although [Craig Holman of Public Citizen] was initially optimistic when Trump issued his executive order, Holman said Wednesday, “It is now quite evident that the pledge was little more than campaign rhetoric. Not only are key provisions simply ignored and not enforced, when in cases where obvious conflicts of interest are brought into the limelight, the administration readily issues waivers from the ethics rules.”

Which brings us back to aviation.  To be honest, I naively thought this was one area where the safety interests of regulators, manufacturers and airlines were generally aligned. It couldn’t possibly be in any of their interests to facilitate plane crashes. Airline safety regulation has even been propped up as a model for other industries, like health care.  About a decade ago, Health Affairs wrote: 

The movement to improve quality of care and patient safety has grown, but examples of measurable and sustained progress are rare. The slow progress made in health care contrasts with the success of aviation safety. After a tragic 1995 plane crash, the aviation industry and government created the Commercial Aviation Safety Team [CAST] to reduce fatal accidents. This public-private partnership of safety officials and technical experts is responsible for the decreased average rate of fatal aviation accidents. We propose a similar partnership in the health care community to coordinate national efforts and move patient safety and quality forward.

CAST includes the FAA, airline groups, manufacturers and pilots' associations.  and yup, it still exists. 

Silly us, I guess. As explained by Stephen Mihm, associate professor of history at the University of Georgia, in a Bloomberg piece called “The FAA Has Always Played Cozy With the Aviation Industry”:

The FAA is unusual among federal agencies because it was originally established to regulate and promote an industry. This fostered the unusually cozy relationship between regulators and business that has persisted to the present, even as the agency’s official mandate became exclusively focused on safety beginning in the 1990s.

Yet even then, actual fixes to the law and to the FAA’s mandate were largely cosmetic, with the “FAA’s reluctance to act until planes fell from the sky earned it an unfortunate nickname: the ‘tombstone agency’.… [T]he House Transportation and Infrastructure Committee described in 2008 a 'culture of coziness' between industry and regulators that had led to 'malfeasance, bordering on corruption.'"

For example, in the case of Boeing,

[T]he FAA began allowing Boeing and other manufacturers to certify that their systems comply with federal safety regulations. In effect, Boeing employees assumed the role that FAA regulators had once performed. This has undoubtedly lightened the regulatory load on companies, and it certainly comports with the FAA’s original mandate to encourage domestic aviation. But the recent crashes suggest that this ambition may ultimately undercut the safety of airline passengers.

“Miracle on the Hudson” hero-pilot, Captain Chelsey "Sully" Sullenberger was more blunt In a scathing op ed. He first explained that some of the problems are budgetary:  

For too many years, the FAA has not been provided budgets sufficient to ensure appropriate oversight of a rapidly growing global aviation industry. Staffing has not been adequate for FAA employees to oversee much of the critically important work of validating and approving aircraft certification. Instead, much of the work has been outsourced by designating aircraft manufacturer employees to do the work on behalf of the FAA. This, of course, has created inherent conflicts of interest, when employees working for the company whose products must be certified to meet safety standards are the ones doing much of the work of certifying them. There simply are not nearly enough FAA employees to do this important work in-house.…

To make matters worse, there is too cozy a relationship between the industry and the regulators. And in too many cases, FAA employees who rightly called for stricter compliance with safety standards and more rigorous design choices have been overruled by FAA management, often under corporate or political pressure.

In the case of the Boeing 737 Max, in 2015, “Boeing was particularly eager to get the plane into service quickly, so it could compete with Airbus’s new A320neo,” writes John Cassidy at the New Yorker:

Early on, employees of the F.A.A. and Boeing decided how to divide up the certification work. But, partway through the process, a former F.A.A. safety engineer told the Seattle Times, “we were asked by management to re-evaluate what would be delegated. Management thought we had retained too much at the FAA.” The engineer said that “there was constant pressure to re-evaluate our initial decisions,” and “even after we had reassessed it … there was continued discussion by management about delegating even more items down to the Boeing Company.”

Even the work that was retained, such as reviewing technical documents provided by Boeing, was sometimes curtailed. “There wasn’t a complete and proper review of the documents,” the former engineer added. “Review was rushed to reach certain certification dates.”

The new revelations don’t stop there. “Federal prosecutors and Department of Transportation officials are scrutinizing the development of Boeing Co.’s 737 MAX jetliners,” the Wall Street Journal reported on Monday. “A grand jury in Washington, D.C., issued a broad subpoena dated March 11 to at least one person involved in the 737 MAX’s development, seeking related documents, including correspondence, emails and other messages,” a source told the paper. (The Justice Department and Department of Transportation declined to comment on the Journal’s reporting.)

Sully concludes his op ed by making what seems like an utterly obvious point: “there is a strong business case for quality and safety, that it is always better and cheaper to do it right instead of doing it wrong and trying to repair the damage after the fact, and when lives are lost, there is no way to repair the damage.”

Sexual Assault and Civil Justice, Except for Servicemembers

In the Center for Justice & Democracy’s new report, The Importance of Civil Justice to Sexual Assault Survivors and the Devastating Consequences of “Tort Reform,” you will learn about recent civil cases filed after sexual violence by all types of assailants: Boy Scout leaders, clergy and religious instructors, doctors, Uber drivers, entertainment moguls, massage therapists, restaurant employees, school employees and students, security guards, and sports coaches.

But here’s what you won’t find in that 50-page report: a single case brought by a servicemember. That would include the nearly 15,000 (women and men) members of the military who are sexually assaulted each year, sometimes more than once. 

In every other instance of sexual violence, civil cases can be filed to help ease the financial burdens of an assault, expose abusers and provide a forum to hold perpetrators directly accountable. But if you are a servicemember, who pledged to die for your country and was raped while doing so, there is almost nothing you can do about it.

We have written about this before, but there are good reasons to remind us of the issue again, not the least of which is the change in Congress. It is up to Congress to fix this, and by “this,” we mean the Feres doctrine.

Feres is a 69-year-old policy – created out of whole cloth by the U.S. Supreme Court in 1950 – which bars U.S. military personnel from suing the government for personal injuries suffered while they are in the armed forces. It applies even in the case of a sexual assault. Read more about Feres here and in this great new article, Rethinking Feres, by Professor Andrew F. Popper of American University’s Washington College of Law. 

Dwight Stirling, the CEO of the Center for Law and Military Policy (CLMP) wrote about the injustice of this law shortly after Senator Martha McSally (AZ-R), the first female pilot to see combat, recently said she had been raped by her commanding officer. Noted Stirling,

Fearing career retaliation, some estimates say 90 percent of sex assault victims, like McSally, don't even bother to report.…

It is outrageous that sexual assault is characterized as an occupational hazard of military service. …The only way to fix the system is to empower the victims of military sexual assault to hold their assailants accountable in civil court …It is absolutely the only way.

In January, Rep. Jackie Speier, D-Calif., new chair of the House Armed Services personnel subcommittee, said this would be a priority issue for her. Writes Military Times,

[T]he panel’s guiding focus will be to tackle “critical issues that impact not only our service members but their families who also bear the burden of sacrifice and commitment to our country.”…

[T]he Feres Doctrine debate could lead to some of the most dramatic military policy changes to come out of Congress this year. Speier has been following a handful of court challenges to the legal precedent in recent months, and is planning a hearing on the issue early this session.

This couldn’t come soon enough!