Call for Ag Reform Growing

By Scott Sabatini
Legal News Line.com
August 15, 2008

CHARLESTON, W.Va. (Legal Newsline) -- First came the class-action lawsuit, followed by state attorneys general using the power of their office in connection with private plaintiff lawyers to pursue such lawsuits. Millions of dollars from ensuring settlements poured into state coffers.

Now, many say it's time for reform.

But trial lawyers, bar associations and many of the attorneys general say there is nothing to reform, that those multi-million -- or in some cases multi-billion -- dollar lawsuits are an act of reform itself.

When an attorney general sues a drug maker or mortgage company or even a software giant, they say they do so to reform those businesses that have made their billions in unethical or fraudulent ways.

Paying millions to settle huge lawsuits has a way of getting a major corporation's attention.
But the house is clearly divided when it comes to attorneys general.

Some of the most aggressive attorneys general past and present -- prominent names such as Florida's Bill McCollum, New York's Eliot Spitzer, California's Bill Lockyer and West Virginia's Darrell McGraw -- are the ones facing the most criticism for their twitchy litigious trigger-fingers and the class-action lawsuits they file.

"The fundamental concern for taxpayers," tort reform lawyer Amber Taylor said, "if the contracts are not subject to an open, public bidding process, is that the state is potentially getting a poor price for legal services. In cases in which the attorneys are paid on a non-competitive contingent-fee basis, less money ends up in the state treasury."

The pendulum appears to be swinging. State legislators are increasingly adopting restrictions upon their attorney general hiring outside counsel for large class-action lawsuits.

The legal system is now involved as well with challenges in West Virginia, California and Rhode Island reaching the state's highest court. Attorneys general also are beginning to change their methods, particularly as upstart new candidates seek to win voters with vows of reform, legal observers say.

Former Virginia Attorney General Jerry Kilgore said these concerns have brought increased scrutiny.

"The practice of appointing outside counsel has been given increased scrutiny both inside and outside an attorney general's office," he said.

While the debate may continue for years, the push for reform has gained traction and is changing the way attorneys general throughout the country do business.

"It appears AGs around the country," Kilgore said, "are less and less likely to hire firms ... without some policies and procedures."

While that may be true in many places, it rings hollow in the Mountain State.

Legislative reform has mostly failed over the years and Attorney General Darrell McGraw continues to appoint special assistant attorneys general and hire outside counsel -- most of whom are consistent contributors to his campaigns -- with little public oversight.

What's the problem?

The American Tort Reform Association, based in Washington, D.C., is among several groups pushing for change. In its Tort Reform Record of June 2008, it highlights the problems, which include plaintiffs failing to receive a fair portion of the settlements and campaign contributors being awarded these lucrative contracts without public scrutiny.
Class-action suits take cases with similar complaints and combines them into a single case. But the ATRA asserts, "class actions are now considered a means of defendant extortion. Today, some class actions are meritless cases in which thousands, or millions, of plaintiffs are granted class status."

Critics say the actual plaintiffs in these cases rarely receive compensation while attorneys earn millions in legal fees and settlements.

Such was the case in West Virginia, when outside counsel was paid $3.3 million in fees and expenses from a $10 million Oxycontin settlement, while the actual plaintiffs, three state agencies, received nothing.

Now the state's Department of Health and Human Resources has had federal funds held back because the federal government's Medicaid program did not receive its share of the settlement, thus potentially costing the DHHR millions for a suit the attorney general's office won on its behalf.

A second hot-button issue currently under the spotlight of reform is the cozy relationships between private attorneys and their state attorneys general.

Large campaign donors in states such as West Virginia and California have later been hired as outside counsel in multi-million dollar class action lawsuits.

"Contracts that are contingent-fee based on the size of recovery sets up a conflict of interest between the state's law-enforcement interests and the financial interests of the outside attorneys," said Theodore Frank, resident fellow of the American Enterprise Institute for public policy research.

"We would be very concerned if the state delegated criminal enforcement to outside officials who were paid for each fine collected or sentence imposed; there is no reason that the same principle and problem is not at issue in civil enforcement," Frank said.

Again, people around the country point to the contracts McGraw has given to his campaign contributors, a list West Virginia Citizens Against Lawsuit Abuse claims continues to grow despite increased public scrutiny.

"The attorney general's office has hired private attorneys to serve as Special Assistant AGs more than 25 times in the last three years," states a report issued by West Virginia's CALA in June 2007. "A vast majority of these appointments involve lawyers who have made large contributions to Darrell McGraw's campaigns."

McGraw is not alone. The San Francisco Examiner reported that then-New Mexico Attorney General Patricia Madrid "received more than a quarter of all her 2002 campaign donations from liabilities lawyers, some of whom received significant state contracts. Similar controversies have surrounded Oklahoma Attorney General Drew Edmondson and Missouri Attorney General Jay Nixon."
But the ATRA said these practices are not widespread across the country.

"Problems with activist or populist attorneys general are, thankfully, confined to several states and do not plague the nation as a whole," ATRA Spokesman Darren McKinney said this week. "Those states with attorneys general who have occasionally put their political interests and the interests of their trial lawyer supporters above the public interest include, among others, West Virginia, Mississippi, Alabama, Connecticut, Rhode Island and California."

All of this litigation is not without cost. According to a 2004 report, the cost of the U.S. tort system was $246 billion, or $845 per citizen. Costs increased by 35 percent from 2003 to 2004.

Types of reform

Though the wheels of change turn slowly in these matters, tort reform experts believe progress is being made.

While Virginia's attorney general, Kilgore supported legislation passed by the General Assembly that required the attorney general to competitively bid contingency-fee litigation, "to ensure the Commonwealth was obtaining the best deal," he said.

Connecticut passed similar legislation in 2005.

Nine states have enacted laws to better govern class actions, according to the ATRA. Some of these include procedures for certifying class actions, ensuring defendants receive adequate notice prior to a class-action certification and providing for an appeal of a class action certification.

Florida established a venue reform to prohibit out-of-state residents from filing class action lawsuits in Florida courts unless the claim occurred or emanated from the state. They also require that actual damages be proved to maintain certain class action suits.

Colorado passed legislation that requires monthly reports by outside counsel to include the number of hours worked and court costs in outside counsel relationships.

"In recent months," said a 2007 report in the National Law Review, "attorneys general in Ohio, New Jersey and California have instituted new policies that would require law firms to bid publicly for work or reduce confidentiality in hiring process."

Legislation in Kansas and Nevada is aimed at reducing the use of outside counsel, the report states.

West Virginia's first step of control over McGraw's use of outside counsel came during this year's first ordinary session when legislators passed House Bill 104, which requires the attorney general to notify the governor and legislator when filing a lawsuit and when entering into settlement agreements.

The step was admittedly a small one, according to Rep. Vic Sprouse, an outspoken critic of McGraw.
"I don't think this is progress because it is strictly a reporting requirement after the fact," Sprouse said. "I guess it's better than nothing, but it does show how scared the Legislative leadership is of \pard softlineDarrell McGraw that they only require him to tell them after he settles."

In 2007, the ATRA issued a voluntary transparency code in the hopes that attorneys general would adopt it to better police themselves. Kilgore supports the code and would like to see it become more widespread.

The transparency code calls for five standards in relationship to outside counsel contracts:

* all legal contracts to be publicly disclosed,

* contracts whenever possible to be open for competitive bidding,

* contingency-fee contracts to be subject to review by the state Legislatures,

* private attorneys hired by the state to disclose actual hours worked and fees incurred and

* funds obtained through settlements to be deposited to state treasury, not the attorney general's office budget.

The adoption of these standards as a uniform code would bring greater fairness and consistency among state attorneys general offices, ATRA President Sherman Joyce said.

Fighting back

In response to the call for reform, many attorneys general remain unmoved, claiming that the ATRA and other organizations are simply shilling for the major corporations stung by lawsuits in the past.

"Plaintiffs lawyers said the moves toward transparency are assaults by business groups on attorneys general who bring damaging cases against them," said a 2007 National Law Review story.

"Jack McConnell, partner in the Providence, R.I., office of Motley Rice, which represents the state of Rhode Island in a high-profile public nuisance case against several lead paint manufacturers, said the U.S. Chamber of Commerce and other business groups 'have worked very hard to convince the public that attorneys general's hands should be tied in their ability to take on bad actors in the business community."

McGraw's campaign Web site is similarly dismissive of the ATRA and other organizations pushing for reform.

"In reality, the American Tort Reform Association, The Competitive Enterprise Institute, and Citizens Against Lawsuit Abuse are the sophisticated lobbying tool of the National Chamber of Commerce, whose members are regulated by the Attorney General's Office under the laws of West Virginia," the Web site states. "Big tobacco and the insurance and pharmaceutical industries fund bogus studies, which spew misinformation with the intent to influence West Virginia's political process."

Similar charges have been made by Teresa Toriseva, head of the West Virginia Association for Justice, who is also both a campaign contributor of McGraw's and a lawyer appointed special assistant attorney general by him.

Toriseva called the ATRA "a front for billion-dollar organizations that issue bogus reports that attack our West Virginia courts."

Kilgore said he disagrees.

"ATRA is a front for open government and has gained a lot of support from state AGs and candidates for its openness agenda," he said. "The agenda is viable because it is the right agenda for taxpayers and transparent government."

The ATRA's McKinney said the attacks don't add up in light of the organization's agenda.

"Opponents of reform -- those with a vested interest in a corrupt status quo -- invariably resort to attacking ATRA, the messenger, because our message is unassailable," he said. "How can any reasonable, credible person be opposed to competitive bidding, public disclosure and scrupulous record keeping when it comes to government contracts of any sort? And how can anyone with respect for the constitutional separation of powers argue that an attorney general should usurp the legislature's exclusive authority to appropriate state funds?"

The battle continues within state legislatures as well, according to Joyce, the head of the ATRA.

Joyce issued a report in March documenting legislation throughout the country intended to scale back reform. He said more than 100 bills have been introduced in the last two years "seeking repeals or gains made in sunshine legislation."

It surely can be a challenge for the typical American voter to empathize with either side in a battle between millionaire trial lawyers and billionaire corporations.

But as Kilgore, Frank and others not tied to either side assert, issues of reform have less to do with the money, the lawsuits or the political gains, but more to do with the simple principle that public business should be done in the public eye.

To the Trenches: The Tort War Is Raging On

Beyond the Ambulance

By Daniel Ostrovsky
Daily Business Review
July 6, 2007

So why is he representing a client in a dispute over a brokerage commission and launching a consulting business to help large corporations reduce their commercial litigation costs?

"With the lessening of medical malpractice cases because of limited insurance coverage [carried by physicians], we’ve branched out into commercial litigation," said Babbitt, of Babbitt Johnson Osborne & LeClainche in West Palm Beach. "We are now actively seeking that kind of business."

He’s not alone. Other prominent South Florida personal injury lawyers also are looking to broaden their litigation practices beyond staples like medical malpractice, auto negligence, and product liability.

They are offering to represent clients in business disputes on a contingency fee basis, in contrast to the typical hourly billing approach. They argue they have far more trial experience than the average business litigator. "Very few commercial litigators have the jury-trial experience that we do because businesses tend to settle their cases," Babbitt said.

Prominent Miami personal injury attorney Stuart Grossman said some corporate clients are starting to realize the value of hiring top personal injury plaintiff lawyers to handle their cases.

"Aggressive companies that really feel they were wounded and aren’t happy with just the exchange of papers that take place with typical commercial litigators, those companies that have had it with the usual way of doing business, are turning more to trial lawyers," said Grossman, of Grossman & Roth in Miami.

South Florida personal injury lawyers cite a number of factors for seeking new fields of practice. In recent years, state and federal lawmakers have eliminated joint and several liability, imposed caps on noneconomic damages, made it harder to bring class actions in state court, and capped punitive damages. Meanwhile, a growing number of Florida physicians have stopped carrying medical malpractice insurance. So it’s tougher to collect judgments against them.

West Palm Beach litigator Gerald F. Richman is another successful plaintiff lawyer seeking to move beyond personal injury. "Our firm several years ago made the decision to not have any significant part of its practice being personal injury work, and put more emphasis on commercial litigation," said Richman, of Richman Greer Weil Brumbaugh Mirabito & Christensen.

The majority of commercial litigation cases handled by personal injury lawyers are plaintiff cases. But these litigators are also venturing into defense work, too.

In defense cases, they sit down with the client and assess the client’s exposure in the lawsuit. They then draw up a contingency arrangement where the firm gets a percentage of what the client saved by winning the litigation.

Mark Raymond, managing partner of the Miami office of Broad and Cassel, a 180-lawyer firm that handles many commercial litigation cases, said large corporations that hire large corporate law firms and pay by the hour will take notice if personal injury lawyers rack up big wins in commercial litigation.

"If these exceptional trial lawyers in the personal injury field have initial success in the commercial arena, it most certainly will cause sophisticated users of commercial trial lawyers to consider contingency when they may have never had considered contingency and [will cause clients to] go to nontraditional lawyers as opposed to the thousand-lawyer law firms," he said.

The idea of personal injury lawyers handling commercial litigation cases on a contingency basis is not new. In 1995, Willie Gary, who heads personal injury firm Gary Williams Parenti Finney Lewis McManus Watson & Sperando in Stuart, won a $500 million verdict in Mississippi on behalf of a local funeral home operator against a large Canadian funeral home chain.

In 2002, Gary filed a $10 billion trade secrets suit against Motorola in Broward Circuit Court. While a deadlocked jury led to a mistrial in the case, Gary recently was awarded nearly $23 million in attorney fees.

In 2005, Jack Scarola, of Searcy Denney Scarola Barnhart & Shipley in West Palm Beach, won a $1.6 billion fraud verdict for billionaire financer Ronald O. Perelman in Palm Beach Circuit Court against New York-based Morgan Stanley. That verdict was reversed in March by the 4th District Court of Appeal.

Scarola declined to discuss his fee arrangement in the Morgan Stanley case, but he said the "standard arrangement for this law firm is to work on at least a partial contingency fee basis."

His firm, too, is moving away from personal injury cases.

"The firm in general is doing more nonpersonal injury work than we have in the past and my own practice — including those attorneys who work directly under my supervision — is focusing increasingly more on nonpersonal injury litigation," he said.

In 2004, Grossman filed a $30 million legal malpractice suit in Broward Circuit Court on behalf of Lloyd’s of London against the law firms Carlton Fields and Cozen O’Connor. He sought to recover a $30 million settlement the insurance giant paid in a 2003 swimming pool negligence case. The parties recently reached a confidential settlement in the case.

Grossman said Lloyd’s hired him under an unusual contingency arrangement — his contingency percentage would rise as the amount of the recovery rose. He wouldn’t discuss the actual percentages or amounts. Typically, under Florida Supreme Court rules, plaintiff lawyers receive a declining sliding fee scale as the recovery increases.
"They retained us on a contingency fee basis and we were paid different percentages depending on the amount of the recovery," Grossman said. "I know that that’s happening more often."

Grossman added that while his law firm has not abandoned personal injury litigation, he and his colleagues have discovered their skills "translate elegantly" into commercial litigation work.

"I am result-oriented," he said. "I am used to working on a contingency fee basis. And I win, and that’s what keeps me going. For those who want to win, they know who the best trial lawyers are. Real trial lawyers prepare cases for trial — they don’t prepare them to settle after 65 dinners."

Kenneth J. Sobel, a plaintiff lawyer at Greenspoon Marder in Fort Lauderdale, said he and his colleagues are well-qualified to handle commercial cases and are seeking such work on a contingency fee basis.

"Litigation is litigation," said Sobel, who handles a significant amount of medical malpractice work. "The rules that we operate by in a medical malpractice case or the wrongful death case are the same rules that commercial litigators operate under. And in many cases when we are talking about damages, the theories are the same."

Personal injury lawyers say their experience with complicated medical malpractice and product liability cases has given them the intellectual and research skills to delve into complex commercial cases.

"In medical malpractice, you have to learn from scratch the same medicine that the doctor knows," Babbitt said. "So learning a commercial problem is less taxing, in my opinion, than trying to learn medicine as a nondoctor or learn engineering for a product liability case."

Grossman said commercial cases are different from personal injury cases in at least one way: "The big difference going into a tort case is you don’t know what your eventual outcome is going to be. When you have a commercial case, generally speaking, you have a pretty good idea as to what was lost."

The growing entry of personal injury lawyers into the commercial litigation field isn’t necessarily a threat to commercial litigators who bill by the hour.

That’s because the two sets of lawyers may appeal to different types of clients. Those who hire personal injury lawyers to represent them in such matters on a contingency basis typically cannot afford to pay by the hour, or they are eager to have their attorney share in the risk of litigation.

"Historically, commercial litigators have been loath to accept cases on a contingency basis," Sobel said. "There are [many] businessmen and corporations involved in legal disputes that can’t afford or don’t want to spend a large amount on attorneys in order to be able to make a recovery that they think they are entitled to."

But large commercial litigation firms seemingly do not see personal injury lawyers as a threat.

Babbitt said his firm’s marketing effort to score commercial litigation cases relies in part on asking large commercial litigation law firms for referrals of these types of clients and cases.

"I’ve met with several commercial or large firms and talked to them about referring contingency commercial litigation cases," he said. "A lot of large firms that do commercial litigation don’t do it on a contingent basis. They are just not set up for it. So we are looking for them to send us that kind of business."

Babbitt said his firm is also considering running TV ads targeted to small businesses. In addition, he and an accountant friend, David Ellrich, are starting a consulting business to help large corporations analyze the litigation they face.

Babbitt said he and Ellrich soon will send letters to chief executives and chief financial officers of every major corporation in the country touting his firm’s services.

He can offer corporate clients an insider’s perspective on the thinking of the plaintiff lawyers who are suing them. "We can sit down and look at the cases, evaluate them, and give them our advice about settling these, not settling those, what cases have value, what cases don’t have value," he said.

"We can say this is what we would want as a plaintiff lawyers on the other side in order to get this resolved, or we can say this is a case you shouldn’t pay on, this is something worth fighting on."

Babbitt said his firm is pushing into commercial litigation because, in the current legal environment, "there are just easier ways to make money" than litigating personal injury cases.

Torts Lawyers Sing the Blues . . . in Vegas, Baby

By Susan Beck
New York Lawyer
The American Lawyer
May 3, 2007

In late March the ground floor of Caesars Palace in Las Vegas buzzed, clicked and warbled like the money-making turbine it is. On the fourth floor, in a convention room, another once-vaunted money machine was on display, creaking and groaning. A couple of hundred members of the mass torts plaintiff bar had convened for the 14th edition of "Mass Torts Made Perfect," seeking some way, any way, to replace the gusher of mass tort work that has largely evaporated.

The seminar is the brainchild of plaintiff lawyer Mike Papantonio of Pensacola, Fla. The name partner of Levin, Papantonio, Thomas, Mitchell, Echsner & Proctor made his fortune in the heyday of mass torts litigation in the 1990s, largely by representing asbestos victims. For the price of $1,395, which included lawyer jokes delivered by Cedric the Entertainer and luncheon speeches from Al Sharpton Jr., and Robert Kennedy Jr., Papantonio showed how you, too, can make money from mass torts (and get continuing legal education credits at the same time).

Gone are the days when a swaggering plaintiff bar routinely took aim at targets like Big Tobacco, Big Alcohol and Big Guns. This year's seminar had the feel of a survivors support group and might have been better called "Mass Torts Made Barely Okay."

Papantonio led a parade of speakers who decried the legal and political forces that have slowed mass torts litigation. For Papantonio, who co-hosts with Kennedy the "Ring of Fire" show on Air America Radio, this is nothing less than a crusade against the forces of evil. Standing before a banner depicting Saint George slaying a dragon, Papantonio castigated his enemies, whose ranks include ABC News personality John Stossel ("a sociopath," claimed Papantonio), NBC Nightly News anchor Brian Williams ("a Republican lapdog"), and Vice President Dick Cheney ("We're going to hang Dick Cheney around the Chamber of Commerce's neck").

"You've heard the doom and gloom this morning. It's true," thundered Joseph Cotchett, from Burlingame, who spoke on the future of mass torts litigation. Securities litigation? Forget about it. "If you're doing securities work now, in 90 days you won't be," he darkly predicted, noting the discouraging recent oral arguments before the U.S. Supreme Court in Tellabs v. Makor, which addressed federal pleading requirements.

Geoffrey Fieger from Southfield, Mich., beat more drums of alarm: "The courthouse doors are shutting every day across the country! The Huns are at the gate! They're coming for us!"

Throughout the two-day event, these warriors for the people," as Fieger called the assembled, were shown how to strike back. Fieger has been running ads in Michigan decrying the attack on plaintiffs litigation. John Morgan, from Orlando, a co-presenter of the event, advised firms to abolish casual dress days to impress clients: "People want to see the lawyers they see on TV."

While plenty of sessions focused on mainstream issues like medical device litigation, Cotchett offered tips on growth areas, such as representing cities in lawsuits to collect billboard fees. Jan Schlichtmann, the hero of the book and movie "A Civil Action," has branched out to protect shade trees. With a picture of a dying gingho behind him, he described the creation of the Massachusetts Public Shade Tree Trust, which wants gas companies to compensate communities for trees damaged by poisoned groundwater.

Papantonio took the opportunity to unveil a new weapon aimed at turning the tide of big-business media domination: an Internet news network called GoLeft.tv. This site, which is scheduled to launch May 15, will show scripted studio interviews with plaintiff lawyers. "Killer Foods: Are You at Risk?" was the title of a segment he previewed, featuring a salmonella-tainted peanut butter sandwich.

One seminar, however, sent participants fleeing from the room. When Professor Lynn Baker of the University of Texas School of Law took the stage to lecture on ethics in group settlements, including new rules on fee disclosure, roughly half the audience swept through the doors.

Some dared to speak the unspeakable. James Arnold of Columbus, Ohio's Clark, Perdue, Arnold & Scott described how he had diversified his practice with some hourly rate commercial work, which now makes up 25 percent of his revenue. You won't make as much money, and you have to keep diaries, he stated as a sobering disclaimer. Most shocking, he gave the audience this piece of advice: Hire Republicans lawyers for their firms, because they can be smart and hardworking, despite their political leanings.

"You have to get past that," said Arnold, who admitted that he actually employs an associate who attended the 2004 Republican National Convention. Desperate times call for desperate measures.

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NY's State of Mind on Litigation Balmier, Survey Says

New York Lawyer
May 3, 2007
By Beth Bar
New York Law Journal

New York state courts are offering a more comfortable environment for businesses, according to a recent survey of corporate attorneys.

New York ranks 19th among the 50 states for court fairness in the latest study of "lawsuit climate" by the U.S. Chamber Institute for Legal Reform. That is an improvement from placing 21st in 2006 and 27th in 2005.

Respondents to the survey concluded, for the sixth year in a row, that Delaware had the fairest court system. West Virginia came in last.

Trial lawyers immediately attacked the survey as "propaganda," but the Institute for Legal Reform insisted it was an accurate reflection of business perceptions of the courts.

The pro-business organization attributed New York's improvement to the better marks it received for its treatment of class action and mass-consolidation lawsuits, as well an improvement in its treatment of punitive damages.

Harris Interactive asked 1,599 in-house general counsel or other senior corporate litigators to assign grades to 12 different factors shaping a state's lawsuit climate.

In addition to treatment of class action and mass-consolidation lawsuits and punitive damages, attorneys graded states on: having and enforcing meaningful venue requirements, overall treatment of tort and contract litigation, timeliness of summary judgment or dismissal, discovery, scientific and technical evidence, non-economic damages, judges' impartiality and competence and juries' predictability and fairness.

New York courts received their best ranking - third among the states - for their handling of class actions suits. Their worst ranking was a 31 for the timeliness of summary judgment motions.

But the American Association for Justice, a nationwide group of trial attorneys, accused the Institute for Legal Reform of using the survey to advance its agenda of gutting state tort laws.

"The latest propaganda is a made-up survey primarily of corporate lawyers earning millions of dollars defending their CEOs from being held accountable," Jon Haber, the association's chief executive, said in a statement. "The [Institute for Legal Reform] will stop at nothing to destroy the civil justice system in America."
The trial lawyers released a list of the 10 "worst states to be sick in." New York was not on that list.

Larry Akey, a spokesperson for the Institute for Legal Reform, countered that the survey was an accurate reflection of the business community's perception of the legal system.

"We believe it is an accurate representation of how America's largest employers view the court system in which they operate on a day-to-day basis," Mr. Akey said in an interview.

Matthew Maguire, director of communications at The Business Council of New York State, said his organization could not comment specifically on the value of the study.

Mr. Maguire said, however, that New York businesses consider the state's litigation climate to be a "competitive disadvantage."

"Many laws . . . that are friendly to the plaintiffs bar place too heavy a burden on businesses," he said.

In particular, Mr. Maguire cited Labor Law §240, the state's "Scaffold Law," under which building owners and general contractors are held liable for failing to provide proper safety equipment.

Mr. Maguire said this law drives up the cost of construction and makes it "excruciatingly difficult" for companies to find affordable general liability insurance.

The New York State Trial Lawyers Association, however, has said that the law is an essential protection for immigrant construction workers.

"Workers who speak little or no English, who may be in the country illegally are in no position to complain to their employer, a labor union or the government about work site safety lapses," the organization said in a 2004 release. "If the Scaffold Law is eviscerated, one of their few remaining protections would be gone."

In an interview, Gene DeSantis, a spokesman for the trial lawyers association, was critical of the Institute for Legal Reform findings.

"It isn't a study," Mr. DeSantis said. "It is a popularity poll, and the only ones that are being invited to participate are corporate counsel for $100 million corporations and up."

Mr. DeSantis said, however, that it is "probably true" that the litigation climate in New York generally ranks well when compared to other states.

"The quality of justice rendered by New York courts is pretty good, with the caveat that judges are constrained by laws that are woefully out of date," he said.
For example, Mr. DeSantis said New York is one of only seven states that measures wrongful death damages by the decedent's W-2 tax form. As a result, if a child or senior citizen is killed, he or she is of little or no economic value.

Mr. DeSantis also said that at least 40 states award prejudgment interest in tort claims, but that New York is one of a handful which does not. His organization would like this to change.

Additionally, New York does not allow plaintiffs suing in connection with bad faith insurance practices the right to recovery their attorney's fees or punitive damages. They are only able to recover contract damages.

Joseph P. Awad, president of the state association, said his organization would like these tort laws to be "modernized."

"New York should join the 21st century," said Mr. Awad, a partner at Silberstein Awad & Miklos.

Mark C. Zauderer, a partner at Flemming Zulack Williamson Zauderer, attributed much of New York's success with the business community to the Commercial Division of the Supreme Court.

"Since the Commercial Division was established a dozen years ago, it has produced a change in attitude among the business community about litigating in state court," Mr. Zauderer said. "A decade ago, businesses often avoided New York state courts whenever possible. But today, the state courts are viewed positively by in-house counsel. They recognize that it is a system that [is capable of handling] complex cases."

C. Evan Stewart, a partner at Zuckerman Spaeder, said the survey sounded "impressionistic," but said that from his experience he is not surprised that New York would receive a high ranking.

Mr. Stewart said New York has a "progressive, intelligent system."

Businesses Seek Protection on Legal Front

By Stephen Labaton
The New York Times
October 28, 2006

WASHINGTON, Oct. 28 — Frustrated with laws and regulations that have made companies and accounting firms more open to lawsuits from investors and the government, corporate America with the encouragement of the Bush administration is preparing to fight back.

Now that corruption cases like Enron and WorldCom are falling out of the news, two influential industry groups with close ties to administration officials are hoping to swing the regulatory pendulum in the opposite direction. The groups are drafting proposals to provide broad new protections to corporations and accounting firms from criminal cases brought by federal and state prosecutors as well as a stronger shield against civil lawsuits from investors.

Although the details are still being worked out, the groups’ proposals aim to limit the liability of accounting firms for the work they do on behalf of clients, to force prosecutors to target individual wrongdoers rather than entire companies, and to scale back shareholder lawsuits.

The groups hope to reduce what they see as some burdens imposed by the Sarbanes-Oxley Act, landmark post-Enron legislation adopted in 2002. The law, which placed significant new auditing and governance requirements on companies, gave broad discretion for interpretation to the Securities and Exchange Commission. The groups are also interested in rolling back rules and policies that have been on the books for decades.

To alleviate concerns that the new Congress may not adopt the proposals regardless of which party holds power in the legislative branch next year many are being tailored so that they could be adopted through rulemaking by the S.E.C. and enforcement policy changes at the Justice Department.

The proposals will begin to be laid out in public shortly after Election Day, members of the groups said in recent interviews. One of the committees was formed by the United States Chamber of Commerce and until recently was headed by Robert K. Steel.

Mr. Steel was sworn in last Friday as the new Treasury undersecretary for domestic finance, and he is the senior official in the department who will be formulating the Treasury’s views on the issues being studied by the two groups.

The second committee was formed by the Harvard Law professor Hal S. Scott, along with R. Glenn Hubbard, a former chairman of the Council of Economic Advisers for President Bush, and John L. Thornton, a former president of Goldman Sachs, where he worked with Treasury Secretary Henry M. Paulson Jr.

That group has colloquially become known around Washington as the Paulson Committee because the relatively new Treasury secretary issued an encouraging statement when it was formed last month. But administration officials said Friday that he was not playing a role in the group’s deliberations.

Its members include Donald L. Evans, a former commerce secretary who remains a close friend of President Bush; Samuel A. DiPiazza Jr., chief executive of PricewaterhouseCoopers, the accounting giant; Robert R. Glauber, former chairman and chief executive of the National Association of Securities Dealers, the private group that oversees the securities industry; and the chief executives of DuPont, Office Depot and the CIT Group.

Jennifer Zuccarelli, a spokeswoman at the Treasury Department, said on Friday that no decision had been made about which recommendations would be supported by the administration.

"While the department always wants to hear new ideas from academic and industry thought leaders, especially to encourage the strength of the U.S. capital markets, Treasury is not a member of these committees and is not collaborating on any findings," Ms. Zuccarelli said.

But another official and committee members noted that Mr. Paulson had recently pressed the groups in private discussions to complete their work so it could be rolled out quickly after the November elections.

Moreover, committee members say that they expect many of their recommendations will be used as part of an overall administration effort to limit what they see as overzealous state prosecutions by such figures as the New York State attorney general Elliot Spitzer and abusive class action lawsuits by investors. The groups will also attempt to lower what they see as the excessive costs associated with the Sarbanes-Oxley Act.

Their critics, however, see the effort as part of a plan to cater to the most well-heeled constituents of the administration and insulate politically connected companies from prosecution at the expense of investors.

One consideration in drafting the proposals has been the chain of events at Arthur Andersen, the accounting firm that was convicted in 2002 of obstruction of justice for shredding Enron-related documents; the conviction was overturned in 2005 by the Supreme Court. The proposals being drafted would aim to limit the liability of auditing firms and include a policy shift to make it harder for prosecutors to bring cases against individuals and companies.

Even though Arthur Andersen played a prominent role in various corporate scandals, some business and legal experts have criticized the decision by the Bush administration to bring a criminal case that had the effect of shutting the firm down.

The proposed policies would emphasize the prosecution of culpable individuals rather than corporations and auditing firms. That shift could prove difficult for prosecutors because it is often harder to find sufficient evidence to show that specific people at a company were the ones who knowingly violated a law.

One proposal would recommend that the Justice Department sharply curtail its policy of forcing companies under investigation to withhold paying the legal fees of executives suspected of violating the law. Another one would require some investor lawsuits to be handled by arbitration panels, which are traditionally friendlier to defendants.

In an interview last week with Bloomberg News, Mr. Paulson repeated his criticism of the Sarbanes-Oxley law. While it had done some good, he said, it had contributed to "an atmosphere that has made it more burdensome for companies to operate."

Mr. Paulson also repeated a line from his first speech, given at Columbia Business School last August, where he said, "Often the pendulum swings too far and we need to go through a period of readjustment."

Some experts see Mr. Paulson’s complaint as a step backward.

"This is an escalation of the culture war against regulation," said James D. Cox, a securities and corporate law professor at Duke Law School. He said many of the proposals, if adopted, "would be a dark day for investors."

Professor Cox, who has studied 600 class action lawsuits over the last decade, said it was difficult to find "abusive or malicious" cases, particularly in light of new laws and court decisions that had made it more difficult to file such suits.

The number of securities class action lawsuits has dropped substantially in each of the last two years, he noted, arguing that the impact of the proposals from the business groups would be that "very few people would be prosecuted."

People involved in the committees said that the timing of the proposals was being dictated by the political calendar: closely following Election Day and as far away as possible from the 2008 elections.

Mr. Hubbard, who is now dean of Columbia Business School, said the committee he helps lead would focus on the lack of proper economic foundation for a number of regulations. Most changes will be proposed through regulation, he said, because "the current political environment is simply not ripe for legislation."

But the politics of changing the rules do not break cleanly along party lines. While some prominent Democrats would surely attack the pro-business efforts, there are others who in the past have been sympathetic.

People involved in the committees’ work said that their objective was to improve the attractiveness of American capital-raising markets by scaling back rules whose costs outweigh their benefits.

"We think the legal liability issues are the most serious ones," said Professor Scott, the director of the committee singled out by Mr. Paulson. "Companies don’t want to use our markets because of what they see as the substantial, and in their view excessive, liability."

Committee officials disputed the notion that they were simply catering to powerful business interests seeking to benefit from loosening regulations that could wind up hurting investors.

"It’s unfortunate to the extent that this has been politicized," said Robert E. Litan, a former Justice Department official and senior fellow at the Brookings Institution who is overseeing the committee’s legal liability subgroup. "The objectives are clearly not to gut such reforms as Sarbanes-Oxley. I’m for cost-effective regulation."

The main Sarbanes-Oxley provision that both committees are focusing on is a part that is commonly called Section 404, which requires audits of companies’ internal financial controls. Some business experts praise this section as having made companies more transparent and better managed, but many smaller companies call the section too costly and unnecessary.

Members of the two committees said that they had reached a consensus that Section 404, along with greater threat of investor lawsuits and government prosecutions, had discouraged foreign companies from issuing new stock on exchanges in the United States in recent months.

The committee members said that an increase in stock offerings abroad was evidence that the American liability system and tougher auditing standards were taking a toll on the competitiveness of American markets. But others see different reasons for the trend and few links to liability and accounting rules.

Bill Daley, a former commerce secretary in the Clinton administration who is the co-chairman of the Chamber of Commerce group, expects proposed changes to liability standards for accounting firms and corporations to draw the most flak. But he said that the changes affecting accounting firms are of paramount importance to prevent the further decline in competition. Only four major firms were left after Andersen’s collapse.

Another contentious issue concerns a proposal to eliminate the use of a broadly written and long-established anti-fraud rule, known as Rule 10b-5, that allows shareholders to sue companies for fraud. The change could be accomplished by a vote of the S.E.C.

John C. Coffee, a professor of securities law at Columbia Law School and an adviser to the Paulson Committee, said that he had recommended that the S.E.C. adopt the exception to Rule 10b-5 so that only the commission could bring such lawsuits against corporations.

But other securities law experts warned that such a move would extinguish a fundamental check on corporate malfeasance.

"It would be a shocking turning back to say only the commission can bring fraud cases," said Harvey J. Goldschmid, a former S.E.C. commissioner and law professor at Columbia University. "Private enforcement is a necessary supplement to the work that the S.E.C. does. It is also a safety valve against the potential capture of the agency by industry."

                   Bush Wins War to Curb Big Lawsuits

By Vince Morris
New York Post
February 19, 2005

WASHINGTON - President Bush, savoring his first big legislative win since his re-election, yesterday signed a bill he says will end the "lawsuit culture" in America.

Bush said the class-action-reform measure discourages lawsuits by forcing people filing actions that seek more than $5 million to file in federal courts instead of state courts, which tend to be more generous.

"The bill will ease the needless burden of litigation on every American worker, business and family," said Bush, before signing the bill into law at a White House ceremony where he was joined by a bipartisan group of lawmakers.

The president noted some lawyers have in the past shopped around for sympathetic state court districts to file broad class-action suits.

This bill ends that and also puts new restrictions on how lawyers can profit from cases cutting back on outcomes when the plaintiff gets just pennies out of a million-dollar verdict.

"Victims can count on true compensation for their injuries," Bush noted. This bill "marks a critical step toward ending the lawsuit culture in our country."

Democrats, joined by a range of labor and environmental groups, claimed the legislation is skewed to help big corporations.

The bill was opposed by most Democrats, including Sen. Hillary Clinton (D-N.Y.), although Sen. Charles Schumer sided with the GOP in voting for it. After passing the Senate, it easily cleared the House earlier this week.

Congress OKs Law on Class Action Suits

By Jesse J. Holland
Associated Press
February 17, 2005

WASHINGTON - Congress sent President Bush legislation Thursday aimed at discouraging multimillion-dollar class-action lawsuits by having federal judges take them away from state courts, a victory for conservatives who hope it will lead to other lawsuit limits.

The legislation the House passed, 279-149, is the first of Bush's 2005 legislative priorities to win congressional approval. The Senate voted 72-26 for the bill Feb. 10. The president has described class-action suits as often frivolous, and businesses complain that state judges and juries have been too generous to plaintiffs.

"This bill is an important step forward in our efforts to reform the litigation system and to continue creating jobs and growing our economy,'' said Bush, who is expected to sign the bill Friday.

But Democrats say the legislation is aimed at protecting GOP business donors and hurting trial lawyers, a traditional part of their base. They also warn that Republican changes to the legal system will only make it harder for people to sue over injuries caused by corporations.

The legislation is "a payback to big business at the expense of consumers,'' said House Minority Leader Nancy Pelosi, D-Calif.

Changing the legal system - including class-action, medical malpractice and asbestos injury lawsuits - has been a priority of Bush, the GOP and the business community. They have criticized what they see as a litigation crisis that enables lawyers to reap huge profits while businesses and consumers are stuck with the bill.

"This is the beginning of meaningful efforts by the Congress to curb lawsuit abuse,'' said House Judiciary Committee Chairman James Sensenbrenner, R-Wis.

Under the legislation, class-action suits seeking $5 million or more would be heard in state court only if the primary defendant and more than one-third of the plaintiffs are from the same state. But if fewer than one-third of the plaintiffs are from the same state as the primary defendant, and more than $5 million is at stake, the case would go to federal court.

State courts have been known to issue multimillion-dollar verdicts like they did against tobacco companies. Critics of the current situation have said federal jurists are not as likely to let multimillion dollar class action lawsuits move forward.

Bush and other Republicans say greedy lawyers have taken advantage of the state class-action lawsuit system by filing frivolous lawsuits in certain states where they know they can win big dollar verdicts. Meanwhile, those lawyers' clients get only small sums or coupons giving them discounts for products of the company they just sued, GOP lawmakers contend.

In response, Republicans said, companies have had to raise prices on products to recoup their costs.

House Majority Whip Roy Blunt, R-Mo., said that moving those cases to federal court will ensure that state judges will no longer "routinely approve settlements in which the lawyers receive large fees and the class members receive virtually nothing.''

But Democrats say Republicans just want to protect corporations from taking responsibility for their wrongdoing by keeping them clear of state courts that might issue multimillion-dollar verdicts against them.

"It's the final payback to the tobacco industry, to the asbestos industry, to the oil industry, to the chemical industry at the expense of ordinary families who need to be able go to court to protect their loved ones when their health has been compromised,'' said Rep. Ed Markey, D-Mass.

Democrats warned that Republicans will try the same thing with other types of lawsuits.

"Today we will attempt to pre-empt state class action,'' said Rep. John Conyers, D-Mich. "Next month we will take up a bankruptcy bill that massively tilts the playing field in favor of credit card companies and against ordinary consumers and workers alike. On deck are equally one-sided medical malpractice bills and asbestos bills that both cap damages and eliminate liability to protect some of the most egregious wrongdoing in America.''

The legislation is not retroactive, and cases already in court will go forward in their current courts.

The bill also would limit lawyers' fees in so-called coupon settlements - when plaintiffs get discounts on products instead of financial settlements - by linking the fees to the coupon's redemption rate or the actual hours spent working on a case

                        Senators Give Bush Victory
                In Vote to Limit Class Action Lawsuits

Jesse J. Holland
The Associated Press
February 11, 2005

The Senate approved a measure Thursday to help shield businesses from major class action lawsuits like the ones that have been brought against tobacco companies, giving President Bush the first legislative victory of his second term.

Under the legislation, long sought by big business, large multistate class action lawsuits could no longer be heard in small state courts. Such courts have handed out multimillion-dollar verdicts.

Instead, the cases would be heard by federal judges, who have not proven as open to those type of lawsuits.

The Senate passed the bill 72-26, and it now goes to the House.

Bush called the bill a strong step forward.

"Our country depends on a fair legal system that protects people who have been harmed without encouraging junk lawsuits that undermine confidence in our courts while hurting our economy," Bush said in a statement released in Pennsylvania, where he was promoting his Social Security proposals.

Thomas Donohue, president of the U.S. Chamber of Commerce, said, "Now it's time for the House to finish the job and take back our civil justice system from plaintiffs' lawyers seeking jackpot justice."

But Todd A. Smith, president of the Association of Trial Lawyers of America, said, "Every American's legal rights are diminished by this anti-consumer legislation." The association said insurance, tobacco, drug, chemical and other companies had financed the push to get the legislation through the Senate.

Bush and other bill supporters -- who have pushed for the legislation for almost six years -- say it is needed because greedy lawyers have taken advantage of the state system by filing frivolous lawsuits in state courts where they know they can get big verdicts.

Senators who back the bill say that lawyers make more money from such cases than do the actual victims, and that lawyers sometimes threaten companies with class action lawsuits just to get quick financial settlements. Regular people, they assure, will not lose their day in court.

Opponents say Bush and other bill supporters are trying to help businesses escape proper judgments for their wrongdoing -- and also to hurt the trial lawyers who litigate the cases, some of whom are big Democratic contributors.

"Are there bad lawyers that bring meritless cases? Sure there are, and we should crack down on them," said Senate Democratic leader Harry Reid of Nevada, a former trial lawyer. "But this bill is not about punishing bad lawyers. It is about hurting consumers and helping corporations avoid liability for misconduct."

Eight Democrats were sponsors of the bill, leaving the rest with no way to block it.

The bill's aim "is to make sure when companies are called on the carpet, when they are involved in a class action litigation, they're in a court, in a courthouse with a judge where the companies have a fair shake, where the odds, the decks aren't stacked against them," Sen. Tom Carper, D-

Del., said.

Changing the legal system -- including class action lawsuits, medical malpractice lawsuits and asbestos injury lawsuits -- has been a priority of Bush and the business community.

"The reason why this bill is the highest priority of the Bush administration and the Republican leadership in Congress is because of one simple fact: Class action suits moved from state courts to federal court are less likely to go forward, to be tried, and they are less likely to reach a verdict where someone wins or loses," said Senate Democratic Whip Richard Durbin of Illinois. And if the plaintiffs win, businesses are "less likely to pay a reasonable amount of money in federal court than in state court."

The GOP-controlled Senate struck a deal with the House saying if senators passed the bill unchanged, representatives would approve the bill as-is and send it to the White House to be signed into law.

Senators fought off several Democratic amendments, including changes that would have blocked federal judges from throwing out complicated multistate class action lawsuits or would have exempted state attorneys general actions and civil rights cases from the bill's provisions.

Under the compromise legislation, class action suits would be heard in state court if the primary defendant and more than one-third of the plaintiffs are from the same state. But if less than one-

third of the plaintiffs are from the same state as the primary defendant, the case would go to federal court.

At least $5 million would have to be at stake for a federal court to hear a class action suit.

The bill also would limit lawyers' fees in so-called coupon settlements -- when plaintiffs get discounts on products instead of financial settlements -- by linking the fees to the coupon's redemption rate or the actual hours spent working on a case.

     Senate Approves Measure to Curb Big Class Actions

By Stephen Labaton
The New York Times
February 11, 2005

WASHINGTON, Feb. 10 - Handing President Bush a significant victory, the Senate overwhelmingly approved a measure on Thursday that would sharply limit the ability of people to file class-action lawsuits against companies.

The measure, adopted 72 to 26, now heads to the House of Representatives, where Republican leaders say it will be approved next week and sent to the White House for Mr. Bush's signature.

The measure would prohibit state courts from hearing many kinds of cases they now consider, transferring them to federal courts. Experts say many cases will wind up not being brought because federal judges have been constrained by a series of legal precedents from considering large class actions that involve varying laws of different states.

The legislation also makes it more difficult for class-action lawsuits to be settled by payments of coupons for goods and services instead of cash by the defendants, a practice that has been heavily criticized by Democrats and Republicans.

The measure does not affect pending cases.

Mr. Bush issued a statement praising the vote, his first legislative victory of his second term.

"Our country depends on a fair legal system that protects people who have been harmed without encouraging junk lawsuits that undermine confidence in our courts while hurting our economy, costing jobs and threatening small businesses," the president said. "The class-action bill is a strong step forward in our efforts to reform the litigation system and keep America the best place in the world to do business."

The legislation has long been promoted by large and small businesses, particularly manufacturers and insurance companies, and failed by a single vote in the Senate in 2003. It could have an especially significant effect on cases involving accusations of defective products, like drugs and cars; plaintiffs in such cases have had success in bringing large class actions in state courts. Automakers and drug makers have worked for years with manufacturers and insurers to press Congress to adopt the bill.

The business groups have asserted that the legislation is necessary to curtail frivolous litigation that benefits lawyers more than plaintiffs. They have said it is important to eliminate the unfair practice of lawyers' shopping for state courts that were more favorable to plaintiffs.

"This is a modest bill which will help reform a class-action regime that many times serves no one but the lawyers who bring these class-action lawsuits," said Senator Charles E. Grassley, Republican of Iowa, who was the chief sponsor of the measure and who introduced a version of it eight years ago. "Out-of-control frivolous filings are a real drag on the economy. Many a good business is being hurt by these frivolous claims."

But the measure has been attacked by civil rights organizations, labor groups, consumer organizations, many state prosecutors and environmental groups, who say it would sharply curtail important cases and provide new protections for unscrupulous companies. Many federal and state judges and state lawmakers have also criticized the bill, saying it would strip states of an important role in judging such contests and could add a considerable number of cases to already burdened federal dockets.

"This bill is one of the most unfair, anticonsumer proposals to come before the Senate in years," said Senator Harry Reid of Nevada, the minority leader. "It slams the courthouse doors on a wide range of injured plaintiffs. It turns federalism upside down by preventing state courts from hearing state law claims. And it limits corporate accountability at a time of rampant corporate scandals."

In the vote on Thursday, 18 Democrats joined 53 Republicans and the lone Senate independent, James M. Jeffords of Vermont, in supporting the measure. Democrats cast all 26 dissenting votes. Two Republicans, Rick Santorum of Pennsylvania and John Sununu of New Hampshire, did not vote.

Republicans say they hope the vote will provide momentum for two other major bills overhauling the tort law system, one on asbestos litigation, the other on curbs on medical malpractice lawsuits. Critics of these bills say that part of the effort by the White House is to attack trial lawyers, a vital financial base of support for the Democratic Party. They have also said that like Social Security and the war in Iraq, tort law problems have been exaggerated by the Bush administration, and that proposed solutions go much further than necessary.

The legislation approved by the Senate would prohibit state courts from hearing most of the kinds of class actions that have most troubled corporate America - those in which the class consists of many consumers or employees from around the nation who assert significant injuries of one sort or another. It precludes state courts from considering cases involving claims of more than $5 million and having a member of the class living in a state different from the defendant's.

Critics of the legislation say that since the Supreme Court and several appeals courts have imposed limits on the ability of federal district judges to consider cases involving the varying laws of multiple states, the legislation will deter the filing of meritorious lawsuits.

Some experts in civil procedure and class actions said they believed that the fight would now move to federal courts and that some federal judges might become more receptive to hearing such claims now that they know that their dismissal would mean that no one else would hear them.

"The assumption of business interests was that federal courts will continue to dismiss them blindly, ignorant of the fact that there is nowhere else for these cases to go," said Samuel Issacharoff, an expert on civil procedure at Columbia Law School who is the main author of a coming treatise on different kinds of cases involving many parties, including class actions, for the American Law Institute, an influential organization of lawyers, academics and judges. "I think more highly of federal courts," Mr. Issacharoff said, "that they will realize that they stand between justice and the breach."

Stephen B. Burbank, an expert on class actions and civil procedure at the University of Pennsylvania School of Law, also expects federal judges to try to find ways to hear the cases.

"Don't underestimate the ability of federal judges to find ways around this if they can," Professor Burbank said.

But he said lower federal courts would remain constrained by the precedents set by the Supreme Court and appeals courts that sharply limit their ability to hear cases involving the differing laws of multiple states.

Professor Burbank, who recently completed a study on the sharp decline in the trials of all civil cases, said he feared that one impact of the legislation would be a further reduction in such cases, particularly since federal judges must give priority to criminal cases and already have heavy dockets. Class-action lawsuits rarely make it to trial but require considerable time because judges are called upon by lawyers from both sides to rule on a variety of pretrial motions.

Prof. Arthur R. Miller of Harvard Law School, a longtime critic of the legislation who in previous years worked with organizations that tried to soften the measure, said that the legislation could lead to the balkanization of class-action litigation by encouraging plaintiffs' lawyers to file smaller suits in different courts, rather than a single large nationwide action.

"This will clearly have a dampening effect on class actions," Professor Miller said. "But accomplished law firms will figure out how to work with it."

He also said that the vague language of the new legislation was certain to spawn a significant amount of new litigation over the law's terms.

"This is not neat and crisp like the Ten Commandments," he said.

Lawyers at several firms specializing in class actions said they had not begun to think about what legal maneuvers were possible to get their highly profitable class actions heard. One lawyer at a prominent class-action firm said that part of the reason plaintiffs' lawyers had not prepared a strategy yet was that many lawyers had expected the legislation to take longer to adopt as Senate and House members wrangled over terms.

Senate Nears Vote on Limiting Class Action Lawsuits

By Jesse J. Holland
Associated Press
February 10, 2005

WASHINGTON (Feb. 10) - The Senate appears to be nearing a final vote on a bill that would give President George W. Bush one of his top second-term priorities by shifting many class action lawsuits from state to federal courts.

By successfully fighting off Democratic amendments Wednesday, the Republican-controlled Senate has so far preserved an agreement with the Republican-controlled House to move the legislation through unchanged.

If senators can finish the carefully compromised measure Thursday without allowing major change, the House plans to pass it next week and quickly get it to Bush for his signature.

Bush is urging senators to pass the measure without changing the version he is ready to sign.

"They're trying to amend the bill," Bush said Wednesday of the Democratic efforts. "That's code word for they're trying to weaken the bill. They're trying to make the bill not effective."

Bush and other supporters say the bill, which would send most multi-state class action lawsuits to federal court instead of allowing them to be heard in state courts, is needed because lawyers try to file their lawsuits in friendly state court jurisdictions where they are more likely to get large payouts.

Senators who back the bill say greedy lawyers make more money from such cases than do the actual victims, and that lawyers sometimes threaten companies with class action suits just to get quick financial settlements.

"This bill, like most, is not perfect. But I believe that it represents the best that can be done to solve what is a real problem in our legal system," said Sen. Dianne Feinstein, a California Democrat.

Opponents of the bill say it is aimed at helping businesses escape multimillion-dollar judgments for their wrongdoing and would hurt lawyers trying to litigate those cases.

"It is wrong to allow corporations to avoid responsibility simply because they harmed a large number of people in small amounts rather than a small number of people in large amounts," said Nan Aron, president of the liberal Alliance for Justice.

The Senate rejected, 60-39, an amendment by Sen. Mark Pryor, an Arkansas Democrat, that would have made state attorneys general exempt from the legislation's restrictions.

The bill's opponents contend federal judges routinely dismiss class action suits that deal with multistate law, saying that applying more than one state's law to a case makes it too unwieldly. If this legislation passes, those case will have nowhere to be heard, since state courts will be banned from hearing them, they said.

But the Senate, on a 61-38 vote, barred an amendment that would have prevented federal judges from dismissing cases simply because the laws of more than one state would apply.

The Senate also rejected, on a 59-40 vote, an amendment that would have exempted civil rights and labor class action lawsuits.

"This is another example of big business stepping on the rights of workers who are fighting for decent wages on the job," said AFL-CIO President John Sweeney.

       Bush Plan to Limit Class Action Suits Moving Fast

By Jesse J. Holland
The Associated Press
New York Lawyer
February 4, 2005

Efforts to curb class action lawsuits advanced Thursday as backers of legislation pushed by the Bush administration and the business community foiled initial attempts to alter a carefully crafted compromise.

The Senate Judiciary Committee left intact language that would send many class action lawsuits from state courts into federal court, despite an attempt by Democrats to use the bill as a vehicle to raise federal judges' pay.

The committee approved the overall bill on a 13-5 vote, and the Republican-controlled Senate will take it up next week. Supporters will try to get the legislation to a GOP-dominated House that has agreed to support the bill if it is not substantially changed.

"We have a very sensitive agreement with the House of Representatives on this bill, and if there are amendments it may jeopardize the acquiescence of the House on our bill," said Senate Judiciary Chairman Arlen Specter, R-Pa.

Senators who support the bill say greedy lawyers make more money from class action lawsuits than the actual victims and that attorneys sometimes threaten companies with lawsuits just to extort quick financial settlements.

"That system is broken and it needs fixing," said Sen. Tom Carper, D-Del. "There are too many instances where consumers are getting very little or nothing from their settlements, while companies are not being forced to change the way they do business."

Supporters already are pressing senators to leave the bill alone, and Senate Majority Leader Bill Frist, R-Tenn., and Senate Minority Leader Harry Reid, D-Nev., have agreed to not support major amendments. And House Republican leaders will make sure the legislation receives a warm welcome there if it is not substantially changed, lawmakers said Wednesday.

But just in case something happens to the Senate compromise, House Republicans reintroduced their own bill Wednesday, which they say is tougher than the Senate version. "If the Senate compromise agreement falls though, then the House is ready to move forward with its legislation," said Rep. Bob Goodlatte, R-Va.

Opponents of the bill, which would shunt the majority of class action suits to federal instead of state courts, said it was aimed at helping businesses escape multimillion-dollar judgments for their wrongdoing and would hurt lawyers trying to litigate those cases.

"It benefits the special interests, but I don't see how it benefits the citizens of individual states,'' said Sen. Patrick Leahy of Vermont, D-Vt., who tried to get the committee to add the judges' pay provision.

Federal courts are assumed to be less likely to issue multimillion-dollar verdicts against big corporations.

Opponents have acknowledged that the legislation will likely be approved by Congress this year, despite their complaints. "This is a bad idea whose time has apparently come," said Sen. Joseph Biden, D-Del.

Under the Senate proposal, class action lawsuits in which the primary defendant and more than one-third of the plaintiffs were from the same state would still be heard in state court. But if fewer than one-third of the plaintiffs were from the same state as the primary defendant, the case would go to federal court.

Also, at least $5 million would have to be at stake for a class action lawsuit to be heard in federal court.

Under that configuration, it has more than enough support to beat a filibuster in the Senate, with Democrats such as Carper, Charles Schumer of New York and Herb Kohl of Wisconsin serving as sponsors.

The House legislation is retroactive, which means it would knock into federal court every pending case that meets criteria set by the legislation.

Rep. Lamar Smith, R-Texas, said the retroactivity provision would prevent trial lawyers from rushing into court to try to beat the effective date of the legislation.

http://www.nylawyer.com/news/05/02/020405t.html

             Florida Business Lobby Demands Legislators
         Protect Businesses, Extend Caps on Attorney Fees

Julie Kay
Daily Business Review
January 21, 2005

Hoping to capitalize on Republican dominance in Tallahassee, Fla., Florida's most powerful business lobby has drafted a massive tort legislation package that calls for a virtual rewrite of the state's tort system.

Bills proposed by the Associated Industries of Florida would abolish punitive damages, cap attorney fees and non-economic damages in all tort cases and grant immunity from malpractice lawsuits to emergency room doctors.

It also would repeal the Sunshine in Litigation Act, which bars state court judges from sealing judgments that conceal public hazards, further cap damages in patient abuse and neglect lawsuits against nursing homes and allow jail time for those who duck jury duty.

This mother of all tort reform bills was delivered Wednesday to House and Senate leaders and to Gov. Jeb Bush. The lobby group will hold a news conference Tuesday in Tallahassee to announce the bill and the creation of the Florida Coalition for Legal Reform to press for its passage.

Associated Industries president Barney T. Bishop acknowledged in an interview that the 111-page legislation is a wish list consisting of the pre-session requests of nearly 40 business organizations and companies. "You have to stake out extreme issues at the beginning of the session," Bishop said. "Do I think this bill will pass as it is? Of course not."

House Speaker Allan J. Bense, R-Panama City, told the Daily Business Review he hadn't read the bill but that he wants to pass some tort reform this year -- specifically, additional caps on medical malpractice and restrictions on premises liability. But, he acknowledged, the road to tort reform could be tough.

"We need some help," he said. "We need the Florida Chamber of Commerce and Association Industries of Florida and some of these think tanks to all get on the same page and support the same bill. I have an appetite for it, but it's not something I'm going to throw a tantrum over."

Senate President Tom Lee, R-Brandon, told the Miami Herald that he's open to considering tort relief but is "not sure how much appetite the Senate will have"' after the bitter 2003 battle over medical malpractice changes.

Many observers predict a rocky reception for the Associated Industries legislation. "My sense is this bill is dead on arrival in the Senate," said Bob Levy, a longtime Tallahassee lobbyist who represents health care interests. "[Legislators] bit the bullet and passed medical malpractice in 2003 and they got beaten up mercilessly. There is no appetite for this in the Senate."

Still, the Academy of Florida Trial Lawyers and some Democratic legislators who oppose the tort measures are taking the business lobby's package seriously. They see it as a sign that business and industry are preparing to launch their biggest assault ever on the plaintiff bar.

"I'm not against all of the measures, but they may have done themselves more harm than good by making this bill so big," said state Rep. Jack Seiler, D-Pompano Beach, an attorney who serves on the House Judiciary Committee. "You could never tackle all this in a 60-day session. Each one of these proposals is a stand-alone bill."

State Sen. Walter "Skip" Campbell, D-Tamarac, a plaintiffs lawyer, joked about the ultimate goal of GOP leaders and business groups. "I think we just ought to close the courthouse," he said. Campbell speculated that Associated Industries ultimately would focus on limiting bad faith lawsuits and restricting joint and several liability.

Meanwhile, the Florida Medical Association is promising to fight to protect doctors' right to practice without malpractice insurance, to keep the wrongful death exemption that bars family members of single adults from filing lawsuits if their relative is killed, to clamp down on attorney advertising and to pass restrictions on expert witnesses in malpractice cases.

Sponsors Lined up

The Associated Industries' Bishop said he already has both a House and Senate sponsor for the omnibus tort bill. He declined to name them until Tuesday's press conference. State Rep. David Simmons, R-Orlando, a corporate defense lawyer who chairs the House Judiciary Committee, said Wednesday that he had not seen the Associated Industries bill. He would not support any tort law changes without first talking to Bense and meeting with the Academy of Florida Trial Lawyers, the Florida Chamber of Commerce and Associated Industries, he said.

Bishop said the Associated Industries bill is the most comprehensive tort relief package his organization has ever proposed. Among other things, it calls for restrictions on class action litigation, elimination of third-party bad faith lawsuits and proportionate liability for certified public accountants. That last provision would mean that accountants would only pay for the portion of lawsuit damages for which they are responsible.

On nursing home liability, the Legislature passed major nursing home lawsuit changes in 2001, including drastic limits on punitive damages and a tougher burden of proof. But nursing homes and insurers contend that those weren't enough to bring down liability and insurance costs.

"This [package] is probably significantly more broad than anything we've done before," Bishop said. "But there were a lot of issues that need to be addressed."

Associated Industries was instrumental in the formation of the group Florida Coalition for Legal Reform, which was formed in December. Bishop said the group, which meets weekly at the Associated Industries' Tallahassee office, comprises 40 different organizations and individual companies, which Bishop declined to identify. "They don't want to publicly be linked to the coalition," he said.

The group is modeled after a workers' compensation lobbying group that Associated Industries spearheaded in 2003 to successfully push through major changes such as elimination of hourly fees for plaintiffs lawyers.

The new coalition contacted a variety of medical, retail, service industry and individual companies, inviting them to their meetings and soliciting their wish lists of what tort measures they'd like to see passed. The Florida Medical Association came to one meeting but has not been active since, Bishop said.

In the past two years, the medical association has split with traditional allies, such as Associated Industries and the Florida Hospital Association, on certain tort issues. One such split came over the medical association's push to win voter approval for drastic limits on contingency fees for plaintiff lawyers in malpractice cases. That cap passed in November.

The new coalition has decided not to seek broad medical malpractice changes this year, though it is seeking immunity for ER doctors. Bishop said the coalition members agree with the plaintiff bar that the medical malpractice changes enacted in the last two years need more time to work.

Rehashes of Old Bills

The Associated Industries' wish-list bill also includes measures to:

•• Extend Amendment 3, the recently passed ballot initiative, from medical malpractice to all tort cases.

•• Give insurers more time to settle cases without incurring the risk of a bad faith lawsuit. Plaintiff lawyers say that will lead to fewer settlements.

•• Grant immunity from lawsuits for car rental companies and car dealers allowing test drives, for most retailers in product liability lawsuits and for manufacturers in product liability lawsuits if the product "met the prevailing standards of performance and safety at the time it was designed."

•• Eliminate jury duty exemptions for law enforcement officers, attorneys, doctors, pregnant women and those caring for small children or disabled persons. The act is intended to eliminate "critical juror shortages" by increasing the penalty for missing jury service to 60 days in jail and a fine of up to $1,000.

•• Repeal Florida's landmark Sunshine in Litigation Act because, according to the bill, it requires manufacturers to reveal trade secrets and is a disincentive to settle cases because defendants would fear their trade secrets would then become public.

Seiler said he opposes most of these proposals, which he said are mostly rehashes of old, failed bills. But he said he would support the tougher sanctions for avoiding jury service and class action litigation reform.

"Some of these are valid," he said. "But why do we need such overreaching reforms? Florida has been called a great place to do business."

State Rep. Dan Gelber, D-Miami Beach, a former federal prosecutor, said he strongly disagrees with the new criminal sanctions on those skipping jury service contained in the so-called Jury Patriotism Act. "To not be able to excuse someone because of a hardship, because they're caring for small children -- that's not very patriotic," he said.

Fred Cunningham, a Palm Beach Gardens litigator who represents doctors in bad faith actions against malpractice insurers, said he was shocked that Associated Industries was trying essentially to eliminate bad faith lawsuits. Some doctors who are defendants in malpractice cases use such suits to recover damages from their insurers and offset their own liability.

"Associated Industries is supposed to be a friend to businesses," Cunningham said. "It's inexplicable why they would try to sell out the protections their business members have under bad faith law."
 

           GOP Gains Could Revive Class Action Reform

T.R. Goldman
Legal Times
November 9, 2004

Predicting the priorities of a new Congress is always an uncertain business, but there is no mistaking a new mood of buoyant determination in the GOP-strengthened House and Senate.

A handful of civil justice reform issues, an energy bill and the reauthorization of certain sections of the USA Patriot Act are among the key pieces of legislation a re-energized Republican majority is almost certain to try to accomplish.

And Congress will once again try to hash out its version of the recommendations of the 9/11 Commission, legislation that is now sitting in a House/Senate conference committee with significant differences between the two chambers.

By any reckoning, Senate Republicans made serious gains.

Seven new Republicans were elected to the Senate; one, former Rep. Tom Coburn, replaced retiring GOP Sen. Don Nickles in Oklahoma. But Republicans lost two seats to Democrats -- in Colorado and Illinois -- creating a net gain of four and swelling their ranks to 55.

That's still not the 60 needed to stop debate and force a vote, but it's significantly closer to that magic number than before.

"It's a big difference," says veteran GOP lobbyist Charles Black. "Having four more Republican senators strengthens your hand."

Even so, the additional GOP members may only provide minimal help in some areas, especially when it comes to the various legal reform bills expected to be introduced.

Several of the new members replace senators who were already in the legal reform camp, two of the newcomers are Democrats who traditionally oppose civil justice reform measures, and at least one, newly elected Republican Sen. Mel Martinez of Florida, is the former head of the Florida Academy of Trial Lawyers.

The House, meanwhile, where minority rights are sometimes viewed as an oxymoron, remains even more firmly in the GOP's grip and far more likely than the Senate to carry out a presidential agenda.

A Chance for Compromise?

The significance of the Senate's larger GOP majority, however, may hinge more on the legislative strategy of the new Senate Democratic leadership than on anything else.

Senate Minority Leader Tom Daschle, the only Senate incumbent to lose on Nov. 2, was widely viewed by many Republicans as spending more time obstructing their agenda than trying to reach a legislative compromise.

His defeat, they say, and his expected replacement next year by Nevada's Harry Reid, the Democratic whip and a skilled floor tactician, may lead to a change in tactics.
"Daschle was the poster child for obstructionism," adds a former senior Republican Senate staffer who now lobbies. "The question is how Democrats will respond to the loss of the poster child."

That response could be what longtime Senate Parliamentarian Robert Dove calls "a real change of heart." Dove, now a consultant at Patton Boggs, believes a change could be evident as early as next week when the lame duck Congress reconvenes.

The decisiveness of the GOP victory in the 2004 election, Dove says, "settles a lot of issues, and settles them in a way that enormously increases the power of the majority leader and his agenda."

After the 2000 election, says Dove, many Democrats believed that it was only a matter of four short years before George W. Bush's "illegitimate" presidency was overturned.

"The obstructionism was a symptom of this," he says. "Now it's time to make your peace with the devil, and act the way the Senate usually acts -- with both sides getting something."

And that means that especially knotty legislation, such as reaching an asbestos settlement that satisfies not only trial lawyers but also insurance companies, asbestos makers and labor unions may finally be achieved. At issue is the size of a trust fund, now totaling more than $100 billion, and the medical criteria used to determine who has a valid claim.

Most Congress watchers believe that the lame duck session, which begins Nov. 16, will do no more than the bare minimum: Members will pass the mandatory spending bills and then leave town, not returning until January.

But when the 109th Congress does convene, there ought to be plenty of action with little delay.

"My experience says that the administration has only a limited time before it becomes a lame duck itself," says Dave McCurdy, a Democrat who represented Oklahoma's 4th District for 14 years and now heads the Electronic Industries Alliance. "The longer it takes, the more independent these agendas become."

Leaning  Toward Legal Reform

Bush himself has already outlined an agenda that puts "legal reform" at the top of his priority list, one whose "groundwork has been laid," he noted during a Nov. 4 news conference.

"Medical, asbestos, class action, none of these are slam dunks, but this is the best opportunity we've [had] at the federal level in years," says Kevin McMahon, the chairman of the American Tort Reform Association and vice president for government affairs at TRW Inc.

Most likely to pass is so-called class action reform, which would move class actions from state courts to federal courts, where they often have a harder time being certified.

"Putting them into federal court would allow a broader view from perhaps a more sophisticated judge looking at the issue of certification," says Stanton Anderson, who heads the U.S. Chamber Institute for Legal Reform.

The bill, which passed the House last year, died in the Senate in July after its supporters failed to overcome a filibuster on an amendment to the legislation. A clean bill, however, is believed to have more than 60 votes.

If supporters want such legislation to pass during the lame duck period, Anderson and his team must persuade appropriators to attach the legislation to their spending bills, something they are often reluctant to do. Otherwise, they'll have to wait for the new Congress.

"If the decision is made to have riders, then we want to be at the top of the list," he says. The urgency, adds Stanton, comes from not knowing for sure what will be on the legislative calendar next year.

One thing that worries him: A drawn-out fight over the Supreme Court.

"If there's a Supreme Court nomination," he says, "then that will suck up everybody's time and energy."

Supreme Court watchers believe up to four vacancies may occur on the Court before Bush's second term expires, including the seat of Chief Justice William Rehnquist. A key player in these vacancies, in other judicial nominations and in any legal reform issues will be the new chairman of the Senate Judiciary Committee, Arlen Specter, R-Pa., who has served on the committee since he was elected to the Senate in 1980.

Specter, who will be replacing Utah's Orrin Hatch, played a major role in trying to broker a deal on asbestos litigation in the 108th Congress. His chairmanship could give that issue a serious boost toward passage next year.

Historically, says Shook, Hardy & Bacon partner and longtime civil justice reform advocate Victor Schwartz, Specter has a mixed voting record on legal reform issues. "He's very unpredictable," says Schwartz. "I feel like I have a chance with him, but you rarely know until the last minute how he's going to vote."

Medical malpractice reform, despite the gain in Republican seats and President Bush's strong support, is still considered a tough, uphill fight.

"The hurdle for medical liability has always been the cap of $250,000 on pain and suffering," notes Mark Behrens, Schwartz's colleague at Shook Hardy.

"Med-mal is a more-complicated issue," concedes Anderson. "We are 10 to 12 to 15 votes shy in the Senate. But given the changes in the Senate, modifying the cap size -- [California Democrat Sen. Diane] Feinstein is looking at $500,000 -- we could cobble something together. I'm much more optimistic now."

Even Martinez, the newly elected senator from Florida and a trial lawyer, said during his campaign that he would support a $500,000 cap.

Energy  Boost

While the current Congress came close to passing class action reform, it was also just as close to passing a comprehensive energy bill, one that would include tax breaks and air compliance waivers, a doubling of ethanol production, and, most controversially, retroactive liability protection for makers of the gasoline additive MTBE, which has contaminated water supplies in more than two dozen states.

"They probably now have the 60 votes they needed last year," says one energy lobbyist who worked the bill. "If the majority in the House and Senate play it right, they can get a bill. But if you add ANWAR and all the things business wants, that may push the total below 60," he adds, referring to the 19-million acre Arctic National Wildlife Refuge, where oil companies are keen to drill.
The problem, notes Van Ness Feldman partner Robert Nordhaus, is that the world has changed significantly since the last energy bill was crafted early in the Bush administration.

"That bill was responding to the California energy crisis, when oil prices were under $20 a barrel. Since then, oil is 2 1/2 times the price. Natural gas, at least three times higher. And gasoline has almost doubled since 2001. Now, the issue is supply and price."

A reauthorization of key provisions of the Patriot Act may also be more likely to happen. The act, which expanded law enforcement powers in the wake of 9/11, has 16 provisions that are due to expire at the end of 2005. Among the sunsetting provisions are those allowing emergency disclosure of e-mails without a court order and access to business records.

The Center for Democracy and Technology's Lara Flint says Congress went too far in passing the legislation originally. "Now that we have some hindsight and perspective, there's an opportunity to see if some provisions need fixing," Flint says. "A lot of what the Patriot Act did was not add powers, but remove safeguards. We just want to provide additional checks and balances."


     Who Scored Better in the Election: Doctors or Lawyers?

By David Crary
New York Lawyer
The Associated Press
November 5, 2004

Doctors and trial lawyers spent millions of dollars in an unprecedented, four-state election battle over limiting damage awards and attorney fees in malpractice cases. The voters' verdict: a virtual stalemate reflecting deeply divided public opinion.

Doctors vowed to keep pressing their cause, hoping President Bush's re-election and Republican gains in Congress might weaken Democratic opposition to federal legislation capping malpractice awards.

"We will continue to be relentless in our fight," said Dr. John Nelson, president of the American Medical Association. "We look forward to working with President Bush to fix America's broken liability system."

Both the AMA and the trial lawyers had hoped to come away from Election Day declaring that the public -- given a rare chance to pass judgment on the dispute -- was on their side. Instead, the outcome was indisputably a split decision.

In Wyoming and Oregon, voters narrowly defeated doctor-backed proposals to implement caps on awards -- results were almost 50-50 in each state. Nevada voters approved a cap and Florida voters supported limits on attorneys' fees, but Floridians also approved two lawyer-backed proposals intended to benefit malpractice victims.

Doctors argue that caps on awards for pain and emotional distress are essential to curb rising insurance rates that otherwise will drive many of them out of high-premium states and high-risk specialties. The lawyers advocate tougher controls on insurance companies, not on juries which may represent a malpractice victim's only chance for justice.

"The voting is done, but the crisis hasn't gone away," said John Barrasso, an orthopedic surgeon and Republican legislator in Wyoming. "The Legislature's still going to need to do something to make sure health care stays affordable."

In Oregon, even opponents of the cap said politicians on both sides of the issue should work together to ease doctors' financial burdens so that all parts of the state -- especially rural areas -- would be adequately served.

"The public has told us what they think. We don't need a cap," said Democratic Gov. Ted Kulongoski. "This doesn't mean we shouldn't look at the issue of how we provide doctors with help obtaining malpractice insurance."

The defeated measure would have limited awards for non-economic damages such as pain and suffering to $500,000.

E.E. Patterson of the Oregon Rural Health Association said insurance reform was necessary to stop an exodus of obstetricians from rural areas. "There's no question that we'll be seeing babies dead or dying because of it," he said.

In Florida, voters supported a doctor-backed proposal limiting lawyers' share of malpractice settlements to 30 percent at most. But voters also approved measures to give the public more information about doctors' mistakes and to revoke the licenses of doctors who make repeated medical errors.

Mark Riordan of Floridians for Patient Protection, which promoted the two lawyer-backed measures, said malpractice victims were weary of struggling to get information about their physicians.

"You can go online and find the safest toaster, the safest hairdryer and the safest car, but you can't find that about the person providing your health care," he said.

The doctors fared best in Nevada, where voters endorsed a $350,000 cap on pain and suffering awards, and also r

like doctors better than lawyers," said Jeff Stempel, a law professor at the University of Nevada, Las Vegas.

But Eric Herzik, political science professor at the University of Nevada, Reno, questioned whether voters' decisions on liability reform were well-informed.

"You're asking the public to make a rather quick decision about a complex issue," he said. "Then it boils down to the worst part of the electoral politics -- can you capture the public's attention with a catch phrase?"

Caps of varying types have been implemented in 27 states, but a proposed federal cap, though successful in the House, has failed because of Democratic opposition in the Senate. Republicans strengthened their majorities in both chambers and intend to work again with Bush to impose a nationwide cap on pain and suffering awards.

President Bush gave it high priority Thursday, telling a news conference, "We must confront the frivolous lawsuits that are driving up the cost of health care and hurting doctors and patients."

                   Two Sides Ready for Malpractice Fights
                          Both Doctors, Lawyers Say They'll
                       Seek Relief with Competing Measures

By Mary Ellen Klas and Jacob Goldstein
The Miami Herald
November 04, 2004

Tallahassee - Florida's doctors and lawyers moved into damage control mode Wednesday as they scrambled to find a way around voter approval of three conflicting amendments that will alter the way each profession does business in the state.

Lawyers said they are considering a lawsuit challenging Amendment 3, the measure successfully pushed by doctors that will limit lawyer fees by guaranteeing clients a greater share of damages in medical malpractice cases.

Doctors said they will ask the Legislature to weaken Amendments 7 and 8, which won approval by margins of 80 percent and 70 percent. The lawyer-sponsored amendments require doctors and hospitals to release reports of their medical mistakes and would strip doctors of their licenses if they are found guilty of three incidents of medical malpractice.

But as they sparred, the Florida Hospital Association, which had stayed on the sidelines during the debate over the competing ballot proposals, quietly filed suit, asking judges in Leon and Alachua counties last month to halt the implementation of Amendments 7 and 8.

The hospital lobby is asking the court to block implementation until the Legislature addresses questions such which records can be released, who is allowed to receive the reports and when they should be released.

''These amendments create so many uncertainties and so much confusion that we're seeking guidance from the courts,'' said Bill Bell, general counsel for the hospital association.

Amendment 7 requires doctors and hospitals to release reports of their medical mistakes if patients ask for them. The reports are now collected by state regulators but are shielded from public view.

Doctors fear the measure could make public the in-house peer-review process hospitals use to study their own mistakes and give lawyers more ammunition with which to sue them. They also say it could prompt doctors to leave the state.

Amendment 8 requires the state to repeal the medical license of a doctor who pleads guilty or is judged guilty of three or more incidents of malpractice.

A study by the Academy of Florida Trial Lawyers found that only two or three doctors in Florida would be affected by the change.

But doctors say it will discourage doctors from practicing in Florida, especially those in high-risk specialties who are often drawn into cases involving several medical professionals.

''I'm going to have difficulty finding doctors who will really aggressively participate and make the changes that improve the hospital,'' said Dr. Richard Callari, chief of staff at Broward General Medical Center.

Callari, a head and neck surgeon, said Amendment 8 might force him to stop doing some high-risk procedures that can lead to malpractice suits.

''I've been trained to do these things, and I've been doing them for 14 years,'' he said. ``Now I have to protect myself.''

The Florida Medical Association said it, too, would be counting on the Legislature to mitigate the impact of the amendments.

''If there are ways to lessen the impact of these, or actually take them off, it would be better for the public,'' said Dennis Agliano, president of the Florida Medical Association and a Tampa dermatologist. ``Whether it's legislation or otherwise, we are going to pursue it.''

Alexander Clem, president of the Academy of Florida Trial Lawyers, said he believes the court and the Legislature have no grounds for intervening in the implementation of Amendments 7 and 8.

If a patient walked into a doctor's office or a hospital to see adverse incident reports, ''it's our position, he could do it today,'' Clem said.

Both sides also differ on what lawsuits will be affected by Amendment 3.

Clem said the measure would affect legal fees from future contracts and exclude already-filed lawsuits in which damages have not been set.

But Liz Hirst, spokeswoman for the FMA, said the doctor's lobby believes the fee limit would apply to ``any court judgments from here on out.''

Clem also suggested that when faced with an expensive case and a lengthy court battle, clients could get around the limitation by waiving their right to the guarantee set by the amendment -- 70 percent of the first $250,000 in damages and 90 percent over that.

''We certainly believe that if an individual can waive his or her Miranda rights or right to a jury trial, he should be able to waive an entitlement to a fee,'' he said.

Meanwhile, the trial bar is weighing its options for challenging the amendment, Clem said. ``We will mount any and all available legal challenges that we have. Price fixing in the Constitution is just wrong.''

South Florida doctors, however, consider the passage of Amendment 3 a victory for patients.

''It's just fair for them to have the proper amount of the award,'' said Hugo Salinas, a colorectal surgeon who is president of the Dade County Medical Association.

            Medical Malpractice in Florida (Amendments 3, 7 and 8)

The Associated Press
Tallahassee Democrat
November 3, 2004

Florida voters Tuesday sided with both doctors and lawyers in the long-running battle over medical-malpractice insurance premiums.

The long-running battle between doctors and lawyers over medical-malpractice insurance produced three proposed constitutional amendments - and voters approved them all.

Lawyers won amendments to give the public more information about doctors' mistakes and to take away the medical license of doctors who make several medical errors. Doctors won with an amendment limiting the percentage of winnings that lawyers can claim as payment in malpractice court cases.

Amendment 7 will make doctors, hospitals and other health-care providers open up records of "adverse" medical incidents to patients seeking information about quality of care. Identities of patients involved in the cases will remain confidential.

With 93 percent of precincts reporting, 81 percent of voters, or 5,030,127 people, supported the change, while 19 percent had not.

Amendment 8, also pushed by lawyers, requires that physicians who have three cases of medical malpractice on their records lose their state license.

That measure was supported by 71 percent of voters, or 4,385,744 people, in 93 percent of the state's precincts, and opposed by 29 percent.

Mark Riordan, spokesman for Floridians for Patient Protection, which supported Amendments 7 and 8, said medical-malpractice victims are tired of fighting to get more information about their physicians.

"You can go online and find the safest toaster, the safest hair dryer and the safest car, but you can't find that about the person providing your health care," he said.

Doctors won with Amendment 3. Here's what it said: "Patients who win malpractice cases would get at least 70 percent of the first $250,000 in damages and 90 percent of damages in excess of $250,000 after costs."

With 93 percent of precincts reporting, it had the support of 63 percent of the voters, or 3,966,410, while 37 percent opposed it.

               Doctors and Lawyers Battle in Four States

David Crary
The Associated Press
September 28, 2004

Rivaling Bush vs. Kerry for bitterness, doctors and trial lawyers are squaring off this fall in an unprecedented four-state struggle over limiting malpractice awards. The volatile issue is in voters' hands and each side is desperate to win, spending millions of dollars to make their cases and portray the other side as greedy.

In all four states -- Florida, Nevada, Oregon and Wyoming -- doctors and health insurers pushed to get measures on the Nov. 2 ballot, and trial lawyers are campaigning hard for a "No" vote.

"We have open warfare here with the personal injury lawyers," said Larry Matheis of the Nevada State Medical Association. "It's a national test of whether, in trying to solve the devastating medical liability crisis, we have to go directly to the people."

Never before have voters in so many states simultaneously had a chance to weigh in on the debate.

The doctors say caps on awards are needed to rein in soaring insurance rates that otherwise will drive many of them out of high-premium states and high-risk specialties. The lawyers say there should be tighter controls on insurance companies, not on juries who may be a victimized patient's only hope for justice.

"The insurance industry, the drug industry, the hospital and nursing home industry have far more money than people injured by medical malpractice and their lawyers," said Carlton Carl of the Association of Trial Lawyers of America. "But if there's a level playing field, I have no doubt Americans will vote to preserve their legal rights."

The American Medical Association has been lobbying tenaciously for federal legislation, supported by President Bush, that would place a nationwide $250,000 cap on non-economic damage awards. Those are awards for pain and emotional distress as opposed to awards for medical bills, lost wages and other quantifiable costs.

The federal legislation has passed the Republican-controlled House but not the Senate, where the trial lawyers' Democratic allies -- although in the minority -- have been able to block it.

"It seems to us that the thing to do is go straight to the people who want and need this reform," said Dr. John Nelson, the AMA's president. "Federal legislation would be easier, but a state-by-state approach is just as effective."

Caps of varying types have been implemented in 27 states. The AMA contends that most of the other 23 states face a "medical liability crisis" in which doctors are moving away, retiring or scaling back essential, high-risk services because of rising insurance costs.

The four ballot proposals differ from each other:

•• Wyoming's is a proposed constitutional amendment that would allow lawmakers to place a not-yet-determined cap on non-economic losses.
•• Oregon's would cap non-economic awards at $500,000.

•• In Florida, where lawmakers imposed a $500,000 cap last year, the proposal would limit lawyers' share of any malpractice settlement to 30 percent at most, less in the case of large awards.

•• Nevada's measure would remove all exemptions from an existing $350,000 cap, and also limit attorney fees.

Doctors depict the fee limits as an appropriate swipe at greedy lawyers.

"The voters can make their own judgment," Matheis said. "Is having enough doctors more important than personal injury lawyers becoming very wealthy?"

The lawyers say fee limits would deter them from handling complex malpractice cases on behalf of low-income clients. "All that those limitations do is make it impossible for victims to hire lawyers as good as the lawyers the doctors and hospitals can hire," said Bill Bradley of the Nevada Trial Lawyers Association.

In Nevada, lawyers got two proposals of their own on the ballot. One would roll back a range of insurance rates, scrap limits on malpractice awards and prohibit caps on attorneys' fees. The other would outlaw frivolous lawsuits while preventing limits on what lawyers can earn representing clients.

Florida lawyers also placed two proposals on the ballot. One would bar doctors from practicing if they have three malpractice judgments against them; the other would make medical records more accessible.

Carlton Carl urged voters to reflect on the plight of those victimized by medical negligence. "Someone who's been horribly disfigured, or parents whose child has been killed -- how can say you say $250,000 is the value of that?" he asked.

Kristi Schaefer, owner of an Oregon company that cares for brain injury survivors, acknowledged that the state's proposed $500,000 cap -- which she opposes -- "is a heck of a lot of money."

"But in some cases it may take more than that to help a family get through life," she said. "No two brain injuries are alike, so why should all settlements be alike?"

The doctors and lawyers disagree on almost every facet of the dispute -- for example, the extent to which doctors are leaving no-cap states and whether caps have lowered insurance rates.

"It will be interesting to see how voters sort through all the rhetoric," said Tom Throop, head of a government watchdog group in Wyoming that opposes the proposed cap. "It will probably be the most expensive ballot item we've seen."

Last year, Texans voted 51 percent to 49 percent to authorize a $250,000 cap on non-economic damages against doctors. The state's largest medical liability insurer cut rates by 12 percent, and plans a further cut, but other insurers haven't followed.

Michelle Mello, a Harvard School of Public Health professor, said the debate is challenging for voters.

"Because of how it's played out in advertisements and speeches, voters are justified in seeing it as an industrial battle between doctors and trial lawyers," she said. "There's a lot of dissonance. ... Most people think lawsuits make medicine safer, yet a majority also think there are too many lawsuits."

                                Time For Tort Reform

by Adam Liptak
The New York Times
November 26, 2002

The politics of overhauling American tort law are anything but straightforward. They involve odd alliances, ideological paradoxes and a great deal of money.

Yet it is all but certain that the Republican Party's election victories will move the call for reform, sought by the business world for years, higher on the legislative agenda. "It's going to be a hot priority," said Joan Claybrook, the president of Public Citizen, a consumer advocacy group. "It's going to be brutal."

When it's all over, the rules governing tort actions -- the civil lawsuits, usually for money, claiming wrongful conduct by defendants, usually companies -- may well change drastically.

"Reform" -- a capacious and loaded term usually used by defendants -- is most likely in the areas of class actions and punitive damages, especially involving asbestos liability and medical malpractice, among other issues. Proponents will no doubt use enormous punitive awards, like the $28 billion awarded last month by a Los Angeles jury to a single plaintiff in a tobacco lawsuit, as a rallying cry. The frivolous suits filed each year also provide ammunition. The American Tort Reform Association's Web site even lists "loony lawsuits," like one saying the haunted house at Universal Studios in Orlando, Fla., is too scary.

Despite the anger those cases incite, even among the general public, earlier Republican Congresses have been cautious in addressing the issue. But George W. Bush, as governor of Texas, pushed through sweeping limits on tort suits. Days after taking office in 1995, he declared a legislative emergency to address the "junk lawsuits that clog our courts." He asked for -- and got -- limits on punitive damages, curbs on awards in cases with multiple defendants and restrictions on where suits can be filed.

"It was far more successful than anyone thought the Legislature would go for," said Frank B. Cross, a law and business professor at the University of Texas at Austin.

The victory was particular striking given the strength of the opposition. "At least until fairly recently, parts of Texas had a reputation for being very plaintiff-friendly," said Joseph Sanders, a law professor at the University of Houston. "They talked about it the way they now talk about Mississippi."

Democrats and Republicans have always had competing philosophies about civil justice, said Philip K. Howard, author of "The Death of Common Sense" (Random House, 1995), which argues that society has become too reliant on regulations and lawsuits. He is also the founder of Common Good, an advocacy group that supports broad changes.

Lawsuits, he said, enjoy "a superficial appeal which is consistent with traditional liberal rhetoric, that the little guy has the right to litigate." This litigation culture, Mr. Howard added, is supported by "the private-jet crowd" of trial lawyers, who have generally been big contributors to Democratic politicians.

Yet the legislative discussion is largely based on apocryphal or at least anomalous lawsuits, said Stephen Daniels, a senior research fellow at the American Bar Foundation, which is a nonpartisan research group. "Some of it is philosophical debate, but most of it is the clash of interest groups," he said.

Pushing the issue called tort reform has never been as important to Republicans as opposing it is to Democrats. "It looms so large in Democratic Party power politics," said Walter Olson, a senior fellow at the conservative Manhattan Institute. By contrast, said George L. Priest, a law professor at Yale, "the Republicans are not single-minded."

The Republicans must also try to reconcile support for legislation that would have its greatest impact in the state courts with their traditional philosophical commitment to federalism, which would leave most local matters to the states.

Still, with a president who has made tort reform a signature issue and with the Democrats on the run, "if the Republicans are smart, they can get more than they have ever gotten," said John Coale, a plaintiffs' lawyer in Washington and a major contributor to Democrats.

Four issues top the legislative agenda.

"Class-action reform is probably the most ripe in terms of the work that's been done," said James M. Wootton, president of the United States Chamber of Commerce's Institute for Legal Reform. A bill called the Class Action Fairness Act of 2001, which was passed by the House in March, would allow defendants to move major interstate class actions filed in state courts to federal courts. That would address the complaint by defendants that a few out-of-the way courts, in places like Madison County, Ill., are too friendly to plaintiffs and thus handle a disproportionate number of class actions.

A bill to address medical malpractice claims was passed by the House in September and will probably resurface. It would shorten the statute of limita-tions, limit certain kinds of damages, disallow claims where regulators have approved the product in question and give courts the power to review lawyers' contingency fees, which entitle them to a percentage of what plaintiffs win.

Legislation that is likely to be introduced in the next Congress would address the internecine disputes among lawyers who represent plaintiffs who were exposed to asbestos and have actual or potential ailments.

And legislation may also be introduced to cap big punitive awards, which loom large in the public debate on all tort reform issues.

Advocates of tort reform like to justify their agenda by pointing to big punitive awards, meant to punish and deter rather than to compensate. Opponents say those awards are unusual and generally justified, but they are often reversed on appeal.

Last month, the Supreme Court of California, in a 4-to-3 decision, declined to hear a challenge to the largest punitive award ever affirmed in American history in a personal injury case. The decision let stand a $290 million award by a jury in Ceres, Calif., to the family of three people killed in the rollover of a Ford Bronco in 1993.

Theodore J. Boutrous Jr., a lawyer for Ford, said his client would ask the United States Supreme Court to hear the case. He added that the outsized award, sustained at all three levels of the state court system, demonstrated why federal legislative action was needed.

Lawyers for Juan Romo, one of the surviving family members, said the award was justified by Ford's conduct in making what the family called "the weakest roof in Ford's history." Made of fiberglass, the roof was sold by Ford as "tough" and "rugged"; the roof's design included a hollow hump that suggested the presence of a rollover bar even though it did not have one.

Other big punitive awards imposed recently in a variety of cases have also made headlines. The biggest is that $28 billion in punitive damages given by a California jury last month, an award in a suit brought by a smoker with lung cancer who accused the Philip Morris Companies of luring her into a lifelong tobacco habit with fraudulent advertising and marketing.

The United States Supreme Court is considering whether State Farm Insurance must pay a policyholder $145 million in punitive damages, in addition to $2.6 million in compensatory damages, in a car-accident insurance dispute. The Alabama Supreme Court is reviewing a $3.4 billion punitive award, on top of a $90 million compensatory award, in a case about the interpretation of an offshore gas lease.

Plaintiffs' lawyers say punitive awards are quite unusual.

"Seeing a check in the mail from a punitive award is very, very rare," Mr. Coale said.

To address the issue of excessive awards, Mr. Boutrous contended, Congress should consider limiting each state's court system to imposing damages based on a defendant's conduct only in that state.

Another approach was suggested by Lori S. Nugent, a Chicago lawyer who represents corporate defendants. "One of the most effective reforms would be to mandate trials in three phases," she said. Under that system, a jury would first decide whether and how much the defendant must pay in compensation, then whether punitive damages were warranted. Only after that would the jury set the amount of any damages.

Such micromanagement of state judicial systems is not universally endorsed, even by people who generally favor changes in this area.

"A federal legislature would be loath to impose a procedural limit on state proceedings," Mr. Boutrous said, "and I am not even sure that they could."

Ms. Nugent argued, though, that the federal government could and should act. "It's a wish-list item," she said. "But when you see the kind of drain that punitive damages is placing on the economy, it joins the ranks of reality."

Regardless of whether the issue of punitive damage awards is addressed, the asbestos crisis may well move toward a resolution. "The Supreme Court seems to have given Congress a strong hint that it needs to do something about the asbestos crisis," said Catherine M. Sharkey, a fellow at Columbia Law School.

In 1999, in the process of setting aside a $1.5 billion class-action settlement in an asbestos case, the Supreme Court referred to what it called "the elephantine mass of asbestos cases" that "defies customary judicial administration and calls for national legislation."

"Asbestos will be on the agenda in the next Congress," Mr. Howard said, "and that bill will be supported by plaintiffs' lawyers who represent people who are actually sick."

Mr. Howard was referring to internecine disputes between lawyers who represent people who have actually developed cancer and other symptoms of asbestos exposure and those who are suing on behalf of people who fear getting sick in years to come. The finite sums of money available are likely to mean that not everyone can be compensated.

Michael E. Baroody, executive vice president of the National Association of Manufacturers, said legislation to address this issue was likely.

"The courts are not distinguishing between people who are sick now, and genuinely so, and people who have been exposed," Mr. Baroody said. He said he expected that legislation to establish medical criteria, at the least, would be introduced in the next Congress.

In addition, he said, Congress could suspend statutes of limitations to ensure that those who did not sue immediately would lose no rights.

There is proposed legislation on broader medical issues, too, much of it driven by what doctors call an insurance crisis. Even Mississippi, widely regarded as one of the forums most receptive to plaintiffs' suits, recently enacted legislation curbing medical malpractice suits.

It apparently had to -- the market had intervened.

"When there is no doctor around, you really notice," Professor Priest said. "You notice it less if there are fewer products to buy."

Mr. Coale said caps would be unwise and unwarranted. "I have had clients with catastrophic medical injuries, and they really need this money," he said.

By most accounts, however, the Republican majority in the new Congress is facing treacherous political terrain on the tort reform issue.

"It's very scary for those of us concerned about protecting the jury system," said Joanne Doroshow, the executive director of the Center for Justice and Democracy, a consumer group that focuses on the civil courts, "but it's hardly a done deal that Congress will start passing huge amounts of tort reform."

Mr. Nugent, a defense lawyer, said action like that was likely.

"We are now in a political environment where reform has a real shot," he said, "and that will save jobs and help the economy."

Ralph Nader, the former presidential candidate, said he agreed that legislation was likely. But he thinks it will backfire. "The Republicans will attack the civil justice system," he said. "That will sharpen and focus the issues, and it will boomerang against them."

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