Monday, September 22, 2008

The Perfect Solution To Corporate Corruption--And "Punitive Damages" Claims

For those unfamiliar, punitive damages are money damages a jury can return to punish a defendant for reckless, intentional, or fraudulent bahavior. Simple example: a drunk driver hits you head on, injuring you. A jury tallies your "compensatory damages" (medical bills, lost wages, physical pain and suffering) at $20,000, and levies an equal amount of punitive damages against the driver for driving drunk. The result? His insurance company pays $20,000, and the drunk driver must pay the $20,000 punitive damages out of his own pocket, since almost all insurance policies exclude coverage for punitive damages.

I've been practicing personal injury litigation for twenty years. I have handled hundreds of lawsuits, and I have seen dozens of instances of egregious conduct where punitive damages were justified. Yet, I have NEVER had a jury return a verdict which included punitive damages. Almost all those cases settled shortly before trial, and the prospect of a possible punitive damages verdict was the main reason those cases settled. Punitive damages verdicts are as rare as an Anarctic coconut, and in many cases, they are awarded to one business defrauded by another business.

But big business and The Chamber Of Commerce HATES punitive damages, and both have fought for years to limit these damages or kill them outright. Here's what the StarChamber's "Institute For Legal Reform" said about them at a forum ginned up to create new strategies to curb "excessive" punitive damage awards:

"The huge amount of money pocketed by unscrupulous trial lawyers is destroying businesses, raising consumers' costs, and threatening the jobs of thousands of workers," said Lisa Rickard, president of ILR. "Last year's success calls for more work to solidify our victory, or we risk being undone by half-measures and misguided rulings."

(We got off easy with the "unscrupuolous" tag; usually the standard talking points slamming trial lawyers include "greedy" and/or "ambulance chasing" or some other perjorative term...)

Back to my point. Let's make the quantum leap with the Chamber that it's not outsourcing to China, lousy trade agreements, rising health care costs, and the 77 other valid reasons that affect job losses in this country, but rather "juries gone wild" punitive damages verdicts that are the real culprit.

I have a solution. And it can't come at a better time, when Wall Street financial conglomerates and their CEOs' greed and ineptitude have brought our economy to its knees. And, at the same time, my solution will solve the pesky "punitive damages" issue that seems to be holding our economy down, according to the StarChamber.

Let's get rid of punitive damages altogether. No more of us "pocketing huge amounts of money" with predatory lawsuits asking for punitive damages against poor, defenseless corporations.

What do we replace eliminating punitive damages with? Simple. Prison time. Hard time in the slammer for any CEO's, officers, or Boards of Directors who participate in, or ratify, any corporate behavior that recklessly injures others, or amounts to fraud.

So, if an engineer at a safety meeting warns that a product has not been properly tested or poses a safety risk to consumers, and the corporate officers ignore him or her in a rush to get a product on the market to gain market share, the corporation is free from paying punitive damages to the families maimed by the product. But whoever signed off on the safety shortcuts must go to prison if a jury finds that the corporation's conduct was reckless.

And if financial institutions knowingly push risky money making schemes on consumers in order to invest the profits in more complicated, unregulated shady deals, again, there's no punitive damages liability to the thousands of people defrauded. Just have the officers and CEO's head directly to prison if a jury finds the company committed fraud (no "Club Fed" prison either--rip off schemes that cost us billions should mean hard prison time--maybe 1 hour of exercise a day and NO TV!!!).

No money is paid to trial lawyers, no money is lost by the corporation, and no jobs are lost. I'd trade the right to being a claim for punitive damages in a heartbeat for CEO prison time.

What do you think would happen if we passed a law increasing criminal penalties for this behavior? My guess is that the last thing a CEO making $29 or $83 or $224 million a year wants to hear is the sound of a prison door slamming behind him.

The StarChamber is always moaning about a lack of personal responsibility and a "sue happy society" that we live in. Well, with my proposal, we get both personal accountability for corporate wrongdoers (prison time ), and corporations save money.

Somehow, I don't think the Chamber will run with this idea any time soon. "Personal responsibility" is only a one way street in their press releases and talking points.

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Thursday, September 18, 2008

A Major Crash At The Intersection Of Law, Politics, And Greed

And we thought Enron was a temporary economic infection caused by greed and lack of oversight. Now, it appears that this was not an infection at all: the patient, our national economy, is terminal. Countrywide. Bear Stearns. Lehman Brothers. Merrill Lynch. Fannie Mae and Freddie Mac. And now, mega insurance giant AIG has collapsed(and I'm sure I'm leaving out a few other financial titans of virtue). Emasculated, all of them, and now suddenly looking to the very institution it derided for years--the federal government-- for a taxpayer bailout, like Oliver Twist begging for more gruel.

How on earth did this financial disaster come about? Here's the recipe: (1) repeat over and over again that less regulation and oversight will mean more competition, growth, and that Wall Street will police itself. (2) Spend billions lobbying an administration and a Congress all too willing to give Wall Street and big business every break and legal protection it wants. (3) Convince Congress to pass laws allowing insurance companies to act as banks and offer financial services, and banks to offer insurance and other financial products.

Case in point? In 1999, a Republican Congress passed, and President Clinton signed, The Graham-Leach-Bliley Act, which repealed a 60 year law passed after the Depression that outlawed the comingling of these industries. Here's what Sen. Phil Graham (who is now one of Sen. John McCain's economic advisors and who just a few weeks ago accused Americans of being a bunch of whiners about the economy) said about the bill:
"I believe we have passed what will prove to be the most important banking bill in 60 years. It overturns the key provision of the Glass-Steagall act that divided the American financial system.

"Over time, the market and the regulators have used a variety of innovations to try to undo this separation. As a result, we have substantial competition occurring, but it is competition that is largely inefficient and costly, it is unstable, and it is not in the public interest for this situation to continue.

"The Gramm-Leach-Bliley Act strikes down these walls and opens up new competition. It will create wholly new financial services organizations in America. It will literally bring to every city and town in America the financial services supermarket."

(Note: since both parties were responsible for this bill I'm sure you won't hear much about it on the campaign trail...)

Now, back to the empathetic Sen. Gramm. Financial supermarket? More like a wild west lab experiment fueled by abject greed. And the test subjects have been ordinary Americans sold risky mortgages that were then packaged into securities and sold and resold, and we know the rest of the picture.

But there's another layer of hypocrisy to add to this story. At the same time these paragons of virtue and trust (note sarcasm here) were going hog wild in this financial feeding frenzy, they were also lobbying for legal reform. The claim? Lawsuits of all kinds, like class actions and personal injury lawsuits, were limiting their competitiveness, draining the economy, and killing jobs. So, at the same time these behemoths were given free financial reign, Congress passed class action "reforms" making it more dificult for ripped off consumers to sue big business.

The biggest cheerleader for all this legal reform? None other than AIG Chairman and CEO ($29 million per year) Maurice Greenberg. Below is an excerpt from an excellent article in The Washington Monthly chronicling the orchestrated movement by big business and insurance companies to restrict personal injury lawsuits:

In the mid-1980s, with insurance companies hitting a slump, the insurance industry's "tort reform" movement, as it became known, broadened its emphasis. Instead of limiting itself to targeting individual jurors through mass media advertising, the industry began to heavily lobby legislators to restrict citizens' ability to sue. The movement pursued strict caps on damage awards, tougher standards for proving liability, and caps on plaintiffs' attorney fees. The industry's crusade was taken up by small government conservatives, who believed that tort reform paralleled their own efforts to fill the federal bench with pro-business jurists and roll back government regulations. They were also upset by changes in the 1960s and 1970s that broadened legal protections for women and minorities, such as the 1964 Civil Rights Act, and the expansion of product liability doctrines that made it easier for injured consumers to force companies to compensate them for faulty products. Politically, it was a lot easier to attack juries and trial lawyers than the popular consumer, civil rights, and environmental protection laws they enforced--or the injured victims they represented.

Advertising was a key component of those efforts. In 1986, Newsweek ran a series of ads sponsored by the insurance industry under the heading, "We all pay the price." The ads warned that lawsuits were driving ob/gyns out of business, shuttering local school sports programs, and scaring the clergy out of counseling their flocks--though few of these assertions turned out to be true. That same year, 1,600 tort reform measures were introduced in 44 state legislatures, 21 of which passed significant restrictions on lawsuits and jury awards before adjourning.

Tort reformers still weren't satisfied but were hamstrung by the fact that most Americans didn't see lawsuits as a huge problem. After all, most people never have any contact with the legal system unless they're getting divorced. So, a group of corporate leaders, including AIG's Greenberg, set about to change that by pumping money into right-wing think tanks to prepare a body of "evidence" proving that not only was there a crisis in the courthouse but also that "we all pay the price" as a result.

Seems like Mr. Greenberg was right about one thing. We ARE all paying the price right now for a toxic mix of lax regulation and a simultaneous rollback of laws that make it much more difficult to sue these companies under all kinds of circumstances. I'm sick and tired of certain politicians screaming about a "lack of personal responsibility and accountability," which are code words of the tort reform movement. I'm all for those concepts on a personal level. But where is the hue and cry now for corporate responsibility and accountability from these same politicians?

Looks like AIG just got an $85 billion pass on that train...

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Wednesday, September 10, 2008

"Who Can I Sue" Website? How About "Please Just Go Away.Com?"

I recently heard a TV interview with someone promoting a new website called "" Apparently you can write or call the site, explain what happened, and some lawyer will let you know if you have a claim. But as I understand the site, participating lawyers will pay $1,000 per month to answer questions about potential lawsuits.

Certain adjectives came to mind when I heard about this site and did some research. They include "garbage," "shameless," and "embarrasing" (and I'm keeping it clean here). What competent, self respecting, knowledgeable attorney who handles personal injury cases would actually PAY MONEY to be affiliated with this nonsense?

With the advent of the Internet, there are many ways to search for answers to legal questions that people might have, without resorting to cartoonish websites like this one. It's so over the top that it makes me wonder who's really behind this idea. It wouldn't suprise me if it's a set up for bashing trial lawyers and making us all look like fools. And sites like this are EXACTLY why we trial lawyers who think this is embarrasing, and don't resort to this crap, need to expose these sites for what they really are.

I suppose this site is good for one thing: if you consult with an attorney about a possible legal claim, I'd ask him or her: "Are you a participating member of "" if the answer is yes, consider the advice given to Forrest Gump, and run like hell...

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Sunday, September 7, 2008

Build It And They Will Come....? The Battle For Patients

I'm not referring to a new retail store or strip mall. Rather a proposed for profit, physician owned, $100 million hospital in Northern Summit County is creating alot of infighting between local hospitals and doctors there. Apparently, over 85 local physicians have agreed to invest in a swanky, 100 bed hospital which will feature "upscale services" such as a spa, a gourmet restaurant, and walking trails, of all things.

The proposed benefits? "Growing the market for Akron," according to Dr. Robert Kent, president of the group lobbying for the project. What's more, it is projected to generate revenues of $150-200 million per year, and spawn another $138 million in related economic development.

The huge economic numbers being thrown around sound like something Wal Mart officials say when opening another new store. But we're talking about patient care here, not big box retailers.

Not so fast, say local hospitals like Akron General and Cuyahoga Falls General. Their occupancy rates range from 16 to less than 50%, and they are claiming that "greedy doctors" are pushing this project as a money making venture at the expense of the vitality of existing hospitals.

This whole debate underscores how health care delivery is becoming just as much a business model as it is the delivery of quality care. On the one hand, if there is truly a need for such a hospital, and doctors who invest in it can deliver good care and make handsome profits doing it, that is the nature of our free market system. But it also shows how the influence of money affects our health care delivery system. If Akron and Cuyahoga Falls General are correct, this new hospital will drive well paying patients away from existing hospitals, and possibly create a two tiered system of health care delivery for the haves and the have nots.

So who's right about this? I'm not sure, but I look at it from a different perspective. Just a few years ago, doctors were threatening to leave Ohio, claiming that they were being held economic hostage due to too many lawsuits, and demanded (and received) limits on what negligently injured patients could recover in lawsuits. So when I read about a $100 million, apparently physician funded hospital, it really makes me wonder now about the hollowness of those claims.

More importantly, physician groups like The AMA and certain politicians have claimed for years that the primary way to reduce health care costs is to limit what patients can recover in malpractice lawsuits. These hospital wars prove that malpractice lawsuits or no malpractice lawsuits, there are MANY other factors that affect health care costs, and quality health care. Just remember that point, and this story in the next few weeks when certain politicians will (again) drag trial lawyers out of the basement and blame them (again) as the primary reason our health care costs are increasing.....

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Thursday, September 4, 2008

Sometimes We're Not So Smart..................

Levity is a good thing. Lest we take ourselves too seriously, the following excerpts are actual (and hilarious) examples of not so stellar lawyer questioning taken from actual testimony. Sometimes during the heat of battle we’ve all been guilty of asking a wordy or vague question, but THESE ONES need to be taken out and shot. Enjoy!

1. Q: I show you exhibit 3 and ask you if you recognize that picture?
A: That's me.
Q: Were you present when that picture was taken?

2. Q: What happened then?
A: He told me, he says, 'I have to kill you because you can identify me.'
Q: Did he kill you?

3. Q: She had three children, right?
A: Yes.
Q: How many were boys?
A: None.
Q: Were there girls?

4. Q: And lastly, Gary, all your responses must be oral, OK?
A: Oral.
Q: How old are you?
A: Oral.

And my personal favorite is…

5. Q: You say that the stairs went down to the basement?
A: Yes.
Q: And these stairs, did they go up also?

My guess is that I'll be able to find a few more of these.........

Tuesday, September 2, 2008

Doll Wars: This "Runaway Jury Verdict" Is Just Fine

Last week, a federal jury awarded Mattel $100 million in damages against the designer and company of the rival "Bratz" dolls (click on the title of this post to read the article). The jury concluded that the creator of the dolls stole the idea from Mattel while working there (Mattel had asked the jury for over $1 billion in damages).

Isn't this one of those "runaway jury verdicts that the Chamber of Commerce has been crying about for years? In 2004 and 2005, The Chamber, and its legal arm, known as "The Institute For Legal Reform," spent $102 million in lobbying and a never ending public relations campaign for the sole purpose of passing legislation to limit what individuals can recover from juries at the hands of corporate wrongdoers and insurance companies. This never ending campaign (which, in reality began in the 1950's) has launched phrases like "litigation lottery," "jackpot justice," and the all too familiar "runaway juries."

So, on the heels of this monsterous verdict, one would expect The Chamber to express its usual outrage and demand "reforms" on corporate lawsuits like this one. But here's the catch: you won't hear a peep from The Chamber over this verdict. The reason: it involved large corporations' rights to recover lost profits. The lesson? It's perfectly OK, and downright American, for large corporations to spend millions on lawyers to sue when products like childrens' dolls are stolen in the marketplace.

But when you as an ordinary citizen lose a limb or are sentenced to a wheelchair due to an unsafe or recalled product, suddenly it's different. According to The Chamber, we need "limits" and "caps" and "predictibility" and "certainty" from our justice system, or else it's a "litigation lottery."

See how this works? It's a one way street on the hypocrisy highway, and it's yet another reason why the system is tilted against the individual and in favor of big business and insurance companies.

Sometimes you learn the real stench of an interest group's true colors by what it DOESN'T say.

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