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Senate Democrats subpoena Mukasey over detainees
Opinions |
2008/10/21 19:44
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| Senate Democrats on Tuesday subpoenaed Attorney General Michael Mukasey for testimony and documents about the Justice Department's legal advice to the White House on detention and interrogation policies since the 9/11 terrorist attacks.pSenate Judiciary Committee Chairman Patrick Leahy, D-Vt., complained to Mukasey that after five years of efforts to glean the information, the committee still has seen only a fraction of the documents it is seeking./ppThere is no legitimate argument for withholding the requested materials from this committee, Leahy wrote in a letter to Mukasey that accompanied the subpoena./ppThe Justice Department blasted the subpoena as a partisan move./ppWe have worked in good faith over the past several months to see that the Judiciary Committee's legitimate oversight requests were being met in a manner consistent with the Justice Department's equally legitimate and long-standing need to provide confidential legal advice within the executive branch, department spokesman Brian Roehrkasse said. We will now assess our next steps./p |
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Second Circuit Deals a Severe Blow
Opinions |
2008/04/08 07:37
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| pLast week, the U.S. Court of Appeals for the Second Circuit issued its opinion in McLaughlin v. American Tobacco Co. The decision constituted a major win for Big Tobacco - and a major loss for the plaintiffs. /ppThe theory behind the case - which was a class action -- was simple. The plaintiff class was composed of persons (and the estates of persons) who had smoked lights cigarettes and allegedly suffered harm. The plaintiff class alleged that the tobacco industry has known for years that light cigarettes are not safer than regular cigarettes. Therefore, the class argued, the advertisement campaigns for light cigarettes constituted a form of consumer fraud, in which the seller promised one thing (a safer cigarette) and intentionally delivered something else (a cigarette that was not, in fact, safer). /ppGiven this compelling, simple theory, why did the plaintiffs suffer a major loss? In this column, I'll explain the reasons. I'll also consider what that loss might mean for the future of consumer class actions in the Second Circuit./ppA Prediction Made by Many Observers, Based on the Oral Argument, Is Now Fulfilled/ppLast July I wrote a column suggesting that Michael Hausfeld, one of America's greatest plaintiffs' lawyers, had made a crucial error in an oral argument in this case - an error that, I contended, ensured that the Second Circuit would hand him a defeat. In fact, my prediction was confirmed--Hausfeld lost 3-0 before the Second Circuit. Importantly, however, I was far from /ppthe only person who predicted that Hausfeld would lose. To the contrary, it was the conventional wisdom among lawyers observing the case that the Second Circuit would reverse the lower court's decision. After all, the district judge was Jack Weinstein, and his decision was a true Weinstein special--brilliant, iconoclastic, and somewhat inconsistent with precedent./ppHausfeld's major error, as I explained in my prior column, occurred when he told the panel that there was nothing out of the ordinary with Judge Weinstein's decision, and that they would be breaking with twenty years of precedent if they did not affirm the lower court. That statement was, on its face, ridiculous, and it left the two moderates on the panel - Judges Walker and Pooler - nowhere to turn if they were inclined to help the plaintiffs in the case. (The last member of the panel, Judge Winter, was a lost cause from the start.) /ppBefore the argument, it had seemed plausible that the McLaughlin class action might appeal to the sympathies of the two moderates. /ppOther lawyers have brought lights cases around the country with mixed success. Moreover, since lights cases are fraud cases involving money damages, not personal injury, they should, in theory, have been easier to certify as class actions, since class actions in tobacco have proven impossible to certify when they involved highly individualized questions regarding cancer and other ailments. But this case proved somewhat different./ppOverextending the Reach of the Fraud on the Market Theory/ppHausfeld hit upon the idea of bringing a nationwide class action based on a federal racketeering statute, the Rackeetering-Influenced Corrupt Organizations (RICO) law. This strategy had the advantage of permitting Hausfeld to consolidate the millions of small-value individual claims into a single, huge, $800 million class action ($2.4 billion, if treble damages were awarded, as RICO allows)./ppRacketeering law is still the law of fraud, however, and fraud class actions have their own problems. The single most important problem is that fraud typically requires proof of reliance -- that is, proof that it was the defendant's intentional misrepresentation that caused the victim of the scheme to part with his or her money. /ppJudge Weinstein held that because the advertisement campaigns for light cigarettes were directed towards the public as a whole, the question of class-wide reliance could be solved by simply borrowing the concept of fraud on the market from securities fraud. This theory holds that generalized, class-wide reliance can be shown - and individualized reliance need not be shown - if the defendant engaged in uniform misrepresentations to which the entire market for a particular product (such as a stock) was exposed. /ppHausfeld suggested at last year's oral argument that the Second Circuit had already held in previous cases such as Moore v. PaineWebber, Inc. that generalized proof of reliance could be adopted by the courts where the defendant engaged in uniform misrepresentations, and that Weinstein had merely applied Moore to the lights case. In my view, this was Hausfeld's biggest error: to claim /ppthat the facts in the lights cases were just like the facts in financial fraud cases like Moore. As the Second Circuit noted in its rejection of Hausfeld's argument, it had stated in Moore that generalized proof of reliance would only be appropriate in the absence of material variation in the kinds or degrees of reliance by the persons to whom the misrepresentations were addressed. /ppAt oral argument, the panel in the lights case was very concerned that the record suggested that smokers had a variety of reasons for buying lights cigarettes -- even though the advertising by the tobacco industry had affected the choices of almost all purchasers. The problem was that no one knew how much that advertising mattered to the smokers' overall decision of which cigarettes to buy, and whether to buy cigarettes at all. People may have bought lights for non-health-related reasons./ppIn sum, by saying to the Second Circuit that its previous rulings obliged it to treat a consumer product like cigarettes just like a financial product or a security, Hausfeld may have caused the panel to rule exactly the opposite way from the way he had sought. In the decision last week, the court seemed to suggest that, notwithstanding Moore, plaintiffs would be hard-pressed to be able to come up with cases where circumstantial evidence would be sufficient to permit a presumption of reliance./ppAs I said earlier, the decertification of the lights class action was not, in itself, a great surprise. The case was always a bit of a gamble. (In fact, the Supreme Court has just granted review in a federal preemption case that might eliminate lights litigation entirely.) But did the Second Circuit go further than just decertifying this particular action, to foreshadow doom for similar consumer actions in the future? /ppDid the Second Circuit Shut the Door on Future, Similar Consumer Class Actions?/ppPut another way, by overreaching, did Hausfeld provoke the Second Circuit into overreacting, thus producing a decision that shuts the door for future consumer class actions?/ppI don't think so. It is important to note that the Second Circuit went out of its way to distance itself from the Fifth Circuit's 1996 decision in Castano v. Am. Tobacco Co,. which the Second Circuit described as imposing a blanket rule against class certification whenever issues of individual reliance exist. /ppFurthermore, the phrase material variation, which the court used to map out the boundary between acceptable and unacceptable class-wide treatment, is not meaningless --- although Hausfeld, in oral argument, seemed to suggest it was. /ppRather, material variation clearly contemplates that will be some individual differences between the reasons for reliance among the members of a class. Thus, it does not require, for certification, a presumption that all members of the class have identical reasons for acting (as is the case in fraud-on-the-market in the securities context, where investors are presumed to all know about and act on public information). /ppConsider, for example, a hypothetical consumer fraud claim based on the purchase of word-processing software that fails to work with a certain type of computer, despite contrary representations by the manufacturer on the box. It may be the case that some of the class of consumers who purchased the software did not, in fact, rely on that representation. For example, some of these purchasers might not have owned a computer incompatible with the software until after they bought the software, so the misrepresentation may have been irrelevant to them at the point of purchase./ppHowever, one might assume that, at the point of purchase, all of the purchasers would have placed a value on the full functionality of the software, even if their decision to buy was not motivated by a desire to exploit that functionality. Let's assume - quite realistically, I think -- that functionality with a typical range of computers is part of the core set of elements that consumers expect in a commercial software program. If so, then the fact that some did not actually subjectively respond to the misrepresentation about functionality should not be, even after last week's Second Circuit decision, a bar to class certification. That is because the differences in various class members' reasons for purchasing the software do not vary in any material sense, and thus, the hypothetical class proposed by this example should not fail the Second Circuit's material variation test./p |
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Where Lawyer Creativity Shines
Opinions |
2008/04/02 07:53
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pA new type of legal service provider emerges through innovation.
When it comes to technology, let me confess, I am definitely not an expert. Nevertheless, I am fascinated by the two types of creativity involved with technology. The most obvious is the technical creativity required to invent and develop a new product or system. But the other, less-obvious type is the client-focused creativity that innovative lawyers demonstrate in developing new products and services as the result of existing technology./ppOne recent example of this is a product developed by Nova Legal and Advisory, which is located in Sydney, Australia, and consists of both a traditional law firm and a consulting firm. The law firm specializes in commercial legal services and complex corporate transactions, while the consulting firm specializes in corporate governance and risk management. The lawyers worked with the consulting firm’s technology staff to come up with a product called Nova Solutions. As Nova Legal and Advisory describes it, the product is “an integrated online management tool for the governance infrastructure needs of organizations.”/ppLawyers and Technicians Collaborate
Basically, Nova Solutions is an online training and compliance program. The firm’s lawyers had developed an extensive understanding of client needs in human relations, compliance, governance and training. They then collaborated with the consulting group’s researchers, technical writers and technicians to convert basic systems into, as the firm summarizes it, “an Internet package tailored to each company, where users can click on a screen to see the company’s policies in relation to a range of regulatory and compliance issues.”/ppBut this product goes even further. Users can click again “to complete a training course to bring them up-to-speed on the company’s requirements in these areas.”/ppThis is at least the fourth such online training and compliance product developed by a law firm. Blake Dawson Waldron, one of Australia’s largest firms, offers Salt TM Enterprise, a fully managed, Internet-delivered service supported by the professional team at Blake Dawson Technology Pty Ltd./ppSalt TM Enterprise is quite an extensive program. In Australia, it currently offers 14 courses covering key areas of the law, including corporate governance, environmental compliance and insider trading. There is also a module for information and communication technology companies to help them benefit from Australia’s Free Trade Agreements with the United States, Singapore and Thailand./ppAnd recently Blake Dawson extended Salt TM Enterprise to New Zealand through an affiliation with Kensington Swan, a full-service commercial law firm. Among the 12 courses offered there, several are different from the courses offered in Australia, including “Consumer Guarantees,” “Money Laundering” and “Resource Management.”/ppThere are Stateside examples, too.
“Down Under” law firms aren’t the only ones that offer online training and compliance programs. Holland amp; Hart offers the Holland amp; Hart Compliance Management System (HHCMS). Developed in collaboration with My Learning Advantage, Inc., an e-learning software provider, HHCMS is offered as a “fully hosted,” customizable and continually updated service. Its design utilizes a multimedia approach, with video segments at the beginning and end of each course./ppA similar training program, but without the compliance component, has been developed by the multi-office law firm Howrey in the form of its Howrey Virtual University, which is a system designed for a group of internal clients—the firm’s associates. Located on the firm’s intranet, this program
allows associates to manage their
training individually, on their own
time schedules. /ppApplying Preventive Legal Medicine
The point here isn’t the technical creativity. The underlying technology already existed. What is noteworthy is the client-focused creativity employed by the lawyers in these firms. They took an existing system and, with the assistance of technology experts, developed it into a product that not only provides clients with information and knowledge 24-7, but also provides the ability to anticipate and resolve issues that otherwise could grow into major legal problems./ppIn other words, just like many doctors do with their patients, these firms don’t just “cure” their clients-—they try to keep them healthy by providing preventive legal medicine. And in the process, by applying creativity to technology, they have created a new type of legal service provider. To me, that is really fascinating. /p |
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Brits vs. Americans: Who Can Better Weather a Recession?
Opinions |
2008/03/24 14:14
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| When a downturn hits the economy, elite U.S. firms are better hedged than the U.K.'s -- or so says conventional wisdom. In the past New York's rainmakers haven't felt the effects as sharply as the London locals. But today, with financial markets in crisis and recession looming, how will American firms, with their diversity of practices, stack up against Brits and their superior geographic reach? I would rather be a lawyer in a U.S. firm in a downturn, says David Lakhdir, a London partner at Paul Weiss. |
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Health-Care Fraud: Keep an Eye on the Small Fry
Opinions |
2008/03/11 06:01
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pYou might have been afraid to attend the American Bar Association’s white-collar crime conference last week. But the Health Blog, armed with the First Amendment, endured the topic and the tropical clime of Miami to check out a panel on health-care fraud. /ppThe government and the corporate defenders were there. Big Pharma bogeywoman Susan Winkler, chief of the health-care fraud unit at the U.S. Attorney’s Boston office, shared the dais with defense attorneys Ty Cobb, Nicholas C. Theodorou, Katherine Lauer and Thomas Dwyer./ppThe group ran though the health-fraud hit parade: off-label marketing, assessing the value of a case and how a company, once cornered, can strike a productive note with the feds. /ppBut the thing that jumped out at us was the group’s consensus that smaller companies–biotechs and device companies—are expected to be the next big hunting ground for fraud and wrong-doing. “Small cap companies, biotech and medical device companies, their resources are limited in terms of compliance,” Theodorou said. And, he added, “they’re very sales and marketing driven.” /ppWinkler agreed, saying, “We’re going to see more and more off-label with medical devices.” The U.S. Attorney’s office in Boston has been a leader in rooting out health- care fraud, including cases against a host of drug companies. Sketchy pricing schemes and off-label marketing, or pitching a drug for uses beyond those approved by FDA, have been regular fraud fodder./ppBut Big Pharma, said the panel, has learned from its lumps after battling government investigations and charges. “There are a lot of drug executives walking around with huge dents in their heads,” Cobb said. “They’ve been beaten with rules and compliance.” It’s the little guys, particularly single-product companies, who don’t have the resources and infrastructure to set up checks and balances. The legal stakes can break a company, Cobb said. “I got a case where the first person I called wasn’t the forensics guy, but the bankruptcy guy.”/p
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Doctor-lawyer project tackles malpractice
Opinions |
2008/03/03 19:23
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| pDoctors and lawyers in Montgomery County are doing something unusual: working together. pMembers of the county's bar association and medical society, along with Abington Memorial Hospital, tomorrow are launching a pilot project they hope will keep more malpractice disputes out of court. pLawyers and doctors will work in teams to mediate conflicts between patients and the hospital or doctors. The hope is that the new approach will resolve problems more quickly and humanely, without the demonization of both sides that can occur in malpractice battles. pWhether it will save money remains to be seen. Project leaders say that is not the primary goal. pJohn J. Kelly, Abington Memorial's chief of staff, said he wanted to avoid the harshness of litigation. At the end of the day, I think everybody walks away feeling like it's a much more productive process, and it's a healing process, he said of mediation. pI think litigation makes everything so much more painful for everyone, and I'm not sure healing ever occurs. pPlanning for the project started three years ago after a nudge from the state Supreme Court. It encouraged counties to look at alternatives to traditional court battles as doctors threatened to leave Pennsylvania because of skyrocketing malpractice-insurance rates. Not much has happened elsewhere in the state, but doctors and lawyers here pursued it because there's got to be a better way to do things than the way we've been doing them, said Mark Lopatin, a rheumatologist, who led the medical society's part of the effort. pPeople on both sides say the current system is emotionally draining, even when you win. pClients hate courtrooms, said Robert Morris, president of the Montgomery County Bar Association. I haven't ever had a client that wanted to get in the witness stand. pThe project deals with unhappy patients and their families through a two-step process. In the first, doctors and nurses at Abington have been trained to listen to such patients and explain what happened in as much detail as possible. Project leaders say many people who sue do so primarily to find out what happened. pIf that is not enough, patients can move to mediation, a process that helps them hammer out a settlement with their doctors. The mediator shuttles between the sides, bringing their positions together. Unlike a judge or arbitrator, the mediator does not decide the case. Instead, the patient and doctor - or more likely their attorneys - determine an acceptable outcome. Usually that involves money, but patients also often want an apology and assurance that steps will be taken to prevent future mistakes. pIf the sides are still fighting, patients still have the option of going to court. pIn this region, Drexel University College of Medicine's doctors have the longest-running mediation program. Theirs often uses a team approach, pairing lawyers who typically represent patients with those who defend doctors. Abington's new program creates even more unusual teams. A lawyer with health experience will be the lead mediator, and a doctor will be his medical partner. pIt's precedent-setting, this project, said Jane Ruddell, a former health-system lawyer who now runs a company devoted to alternative dispute resolution. It's really trying to change a culture. pRuddell ran a training session last week in the bar association's Norristown office to train about 30 doctors and lawyers to be mediators. Many of the lawyers had previous experience with mediation, but the daylong program was an eye-opener for the doctors, who understood for the first time how hard and time-consuming it was to sort through strong emotion and find common ground. pIn a training exercise, the doctors and lawyers were split into groups for some role-playing. Abington Memorial obstetrician-gynecologist Robert Michaelson played the mediator for one. The bar association's Morris was an angry woman with cancer, and Mark Pyfer, president of the Montgromery County Medical Society, was her even angrier husband. pThe patient in the case had had foot pain, which the doctor thought was caused by a pinched nerve. The patient decided not to have surgery the doctor recommended and later lost part of her leg after the cancer was discovered. pMichaelson got into trouble almost immediately, waiting too long to separate the warring parties. He ran out of time without getting close to a settlement, but Morris, who is a trained mediator, and Pyfer, a novice, proved a good team. pI thought she was negligent because she never paid much attention to me, Morris said petulantly. pDr. Reynolds can say she's sorry, but I don't think she has any idea what it's like to go through life with one leg, Pyfer chimed in. Then he asked for $10 million. pDoctors came away from the experience understanding why the lawyers will take the lead in mediations, at least in the beginning. pThe most striking thing about this was . . . how difficult this is, said Lopatin, the rheumatologist. pFrank Murphy, a lawyer who attended the training, said it might be harder than the hospital anticipated to avoid malpractice filings and to persuade lawyers to be totally open with one another. Legal-filing deadlines, strategy, and payment agreements give lawyers an incentive to file in court and, sometimes, to stretch out the proceedings. pAdvocates of mediation say it is often cheaper than court because there are fewer exhibits and medical experts to pay for. pParticipants usually sign confidentiality agreements, a step that supporters say spares everyone embarrassment. The downside of the secrecy is that mediated cases create no legal precedent and leave no public record. Monetary settlements are reported to the National Practitioner Data Bank. But its information is available only to hospitals and professional groups, not consumers. pSome doctors also worry that mediation will be just one more step on the way to court. That has not been Drexel's experience. Of 40 cases that have gone to mediation, only three were unresolved. pThose involved in the Montgomery County experiment say it is more likely to give patients what they really want: early action, an apology, and information. Patients want answers. That's what they want more than anything, said Sheila Stieritz, a former director of patient safety at Abington Memorial, who consulted on the pilot project. And if it's something really serious, most patients want it not to happen to anybody else./p |
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