The California Civil Justice Blog

A pair of federal court decisions may lead to an upsurge in expired patent lawsuits, as detailed in Wednesday's Wall Street Journal (sub. req'd).

On Tuesday, a federal appellate court upheld the right of a New Jersey attorney to sue Brooks Brothers for listing expired patents on its bow ties, overturning a trial court that had ruled he didn't have standing. That suit comes on the heels of another federal appeals court ruling in December that sharply increased the stakes in such suits.

Patents have a life span of 17 to 20 years, and if companies fail to pay maintenance fees every four years the patents expire and companies are required to remove the patent numbers from their packaging. Until recently, listing an expired patent on a product was at worst a $500 penalty for misleading the public. But thanks to December's ruling by the Court of Appeals for the Federal Circuit in Washington, D.C., defense lawyers are worried that clients will be liable for up to $500 for each item marked with an expired patent.

The Journal notes that "would-be plaintiffs have been fanning out across retail stores and the Internet searching for expired patent numbers on everything from toothpaste to toilet plungers." Nearly 350 federal lawsuits have been filed since December's ruling. Many had been stayed, pending the outcome of the Brooks Brothers case.

Defense lawyers advise clients that now would be a good time to check their packaging for expired patents.

On his Fox Business Channel show tonight, John Stossel will be taking a hard look at how the Americans With Disabilities Act has led to litigation abuse in California and across the nation.

The show will air tonight on Fox Business Network at 6 p.m. and 9 p.m. Pacific time. It re-runs Fridays at 7 p.m., Saturdays at 6 p.m. and 9 p.m., and Sundays at 7 p.m. (all times Pacific).

For a lengthier preview, here's Stossel's syndicated column on the subject.

The Legislature adjourned early this morning without having taken final action on SB 624, the bill that tried to link the state rock, serpentine, with mesothelioma and other diseases caused by industrial use of asbestos decades ago. So unless language is slipped into a budget bill later this year - assuming a budget bill is enacted - the bill is officially dead for this year.

In a previous post, we poked fun at a warning label on the "Drive 'N' Talk Speakerphone - Not for use while driving," but employers may be wise to make sure their employees heed this seemingly "wacky warning": There are trial lawyers lurking.

The latest issue of the national plaintiffs' attorneys' organization's monthly magazine includes an article advising members that phone usage while driving could be the next wave of litigation, and employers could be among the top targets.

The article states that in the last decade, a new type of liability has emerged in which employers can be held responsible when their employees get into collisions while making work-related phone calls from their cars. Most troubling, a company may be liable even if the call was made from a non-company car, even if the call was made outside of business hours, and even if company policy explicitly prohibits the practice of driving and talking/texting.

The lawyers who wrote the article helpfully point out that even employers who have a no-talking-while-driving policy in place could still be held liable for not monitoring or educating employees extensively enough to ensure that the policy is being strictly observed.

In California, for example, it is illegal to text/e-mail or to hold a cell phone while driving, but it is legal to talk on a cell phone using a hands-free device.

So even if an employee is adhering to state law by using a hands-free device, the employer can still be held liable if that employee gets into an accident while making a work-related call or while making a personal call from a company car.

Perhaps the lawyers who advised the manufacturer of the Drive N' Talk Speakerphone to include that warning label weren't so wacky after all...

Today's edition of The Recorder, one of the state's leading legal publications, has a great analysis of how unscrupulous trial lawyers have worked to subvert justice in the long-running, trumped-up legal claims involving Chevron and environmental damage in Ecuador.

The full article, by Michael D. Goldhaber, a reporter for the paper's sister publication, The American Lawyer, is available here (sub. req'd) but we thought we'd run a few excerpts.

We've seen this movie before.

The story of Chevron in Ecuador already bears a remarkable resemblance to that of Dole in Nicaragua. A U.S. company persuades a U.S. judge to toss out an alien tort claim on forum non conveniens grounds. U.S. plaintiffs lawyers then seek jackpot damages in a Latin American court (while being lionized in a controversial documentary). The corporation discredits the Latin American court by returning to the U.S. courts and alleging fraud.

In Dole's case, a judge in California state court found that some of the plaintiffs' lawyers had misled the court. In the Chevron case, it appeared that the actor most clearly discredited was the Ecuadorean judge caught on film discussing damages with an outside party. But earlier this month, as Recorder affiliate The Am Law Litigation Daily previously reported , Chevron's lawyers at Gibson, Dunn & Crutcher filed a brief asserting that outtakes from the documentary Crude, turned over by the filmmaker in response to a Second Circuit discovery ruling, suggest that the plaintiffs' lawyers themselves choreographed an "independent" expert's report recommending up to $27 billion in damages.

Chevron is hoping the long litigation nightmare over oil operations conducted by Texaco before the two oil companies merged is coming to an end.

"It is obvious that the plaintiffs' lawyers and their associates have engaged in an illegal scheme to corrupt the proceedings in Ecuador. The evidence submitted shows beyond any doubt that there is no basis for an award of damages against Chevron, much less the fraudulent $27 billion assessment pending before the court in Ecuador," said Kent Robertson, Chevron's manager for issues management and litigation communications.

The article goes on to document how outtakes from the "documentary" show the lawyers appearing to collude with a key court-appointed expert. Then it concludes with a powerful warning to every American truly interested in justice:

The first lesson of the Chevron and Dole cases is that U.S. courts should not offshore justice to corrupt judicial systems. The second lesson is that if U.S. plaintiffs lawyers are set loose in corrupt judicial systems, they may still need to be held in check by U.S. courts.

The California Serpentine Fight Goes On
Andrew's Geology Blog, About.com, August 19, 2010

Key quote: "The objectionable preamble declaring serpentine a carcinogen is gone; so now what's the point of the bill?"

Home Sweet Serpentine
KQED's Quest Community Science Blog, August 16, 2010

An answer to that question can be found in today's Sarasota (Fla.) Herald Tribune, which has been investigating a proposed class action settlement over allegations that Lowe's sold tainted Chinese drywall. As is so often the case, the lawyers reached an agreement that gives buyers of the product gift cards, and themselves $2.1 million.

Brian Wolfman, a visiting professor at the Georgetown University Law Center, said too much of the Lowe's settlement money is going to the plaintiffs' attorneys.

Barrett, the lead attorney in the case, said the attorneys would get about 23 percent of the total $9.6 million settlement, which provides $6.5 million for the victims, $1 million for the cost of administering the settlement, and $2.1 million for the attorneys. He defended the agreement and said 23 percent is "on the lower end of fees paid in settlements."

But a close reading of the settlement shows that percentage could grow, because the agreement stipulates that if the plan doesn't draw enough claimants to pay out at least $2.5 million in cash and gift cards, Lowe's would keep the remaining $4 million that was set aside for the plaintiffs. If that happens, the lawyers would still be paid $2.1 million, which means they would receive almost as much as their clients.

Gift cards would be for $50, $250, or $2,000. People who could document larger purchases could receive a maximum of $2,500 extra in cash - in many cases, far less than the purchase price. In addition, the paper - in articles co-written with ProPublica, an investigative journalism group - notes that the lawyers apparently aren't trying too hard to reach people who may have purchased the drywall.

Lowe's customers who don't like those terms have until Nov. 9 to file a formal letter saying they've chosen to opt out of the agreement. If they don't meet that deadline, they'll automatically be included in the settlement and lose their right to sue Lowe's.

According to the agreement, the letters must be sent to a single mailing address to be considered valid for opting out. But the plaintiffs' attorneys have yet to establish such a mailing address, saying they won't be doing so until later this month. That's when they'll also begin notifying Lowe's customers of the settlement by placing information on the receipts of current Lowe's customers and by hiring a company to set up a website and place ads in publications like Parade Magazine. They will not, however, send notices directly by mail.

Ed Mierzwinski, consumer product director for the U.S. Public Interest Research Group, a nonprofit consumer advocacy organization, said the notification plan is inadequate because many Lowe's customers may not learn of the settlement and could lose their right to sue without even knowing it.

Lowe's has said it does not believe the drywall it sold was defective and that its vendors have assured it that they never supplied Lowe's with any of the Chinese drywall that is the focus of a much larger drywall case that's being heard in federal court in New Orleans. Some shipments of drywall were apparently made with high levels of sulphur, and can give off a foul odor and cause corrosion of copper pipes.

Meanwhile, trial lawyers who filed a much larger multi-district litigation in New Orleans have filed a motion seeking to block the settlement, claiming it provides only minimal compensation to drywall victims, overly generous fees to the attorneys who negotiated it, and is an attempt to circumvent the federal court's effort to deal with the issue globally.

Today's article can be read here. An earlier article can be read here.

In the latest chapter in what will no doubt be a long and drawn-out saga between a group of trial lawyers who specialize in filing suits against nursing home companies and an Orange County-based provider, the company has asked a judge to declare a mistrial or order a new trial over a jury's staggering $671 million damages award.

The company asked the Humboldt County judge who presided over the trial to throw out the verdict because one juror lied about knowing one of the plaintiffs and was biased and hostile toward the company, according to an article on Bloomberg.com. The judge is expected to issue a decision on August 31.

A jury in Eureka on July 6 found Skilled Healthcare liable for statutory damages and restitution over claims the company improperly staffed its nursing homes. Although the plaintiffs did not claim any patient was harmed because of the alleged staffing shortages, the jury still awarded them the largest jury award in the U.S. this year, according to Bloomberg data.

Forbes.com against Skilled Healthcare earlier called the case "a tort reform advocate's dream--meaning a defendant's worst nightmare."

The class action suit was based entirely on wording so tortuous that the nine members of the Supreme Court would have 10 different interpretations. An earlier case in the same state was tossed out because of that wording. Yet this defendant was slammed with a massive $671 million penalty, vastly beyond its ability to pay. And punitive damages are still pending. And the decision caused the defendant's stock value to plummet 75%.

Oh, and just one other thing. The very size of the verdict effectively prevents an appeal. But besides all that...

This is the inner layer of hell in which Skilled Healthcare California LLC finds itself. The nation's 10th largest nursing care provider, it has 14,000 workers in California alone, making it one of the largest employers in a state with the third-worst jobless rate in America.

At issue was whether the company violated a state law requiring nursing homes to provide a minimum of 3.2 nursing hours per patient per day (ppd), based on a 139-word sentence in the statute that defines who should provide that care and under what circumstances.

Forbes.com points out that three years earlier, a Los Angeles County trial court faced with the identical 3.2 ppd issue said no judge or jury should be allowed to interpret the byzantine wording. An appellate court upheld the decision.

But of all the areas in which Skilled Healthcare operates its 22 California facilities, plaintiffs' attorneys wisely filed suit in the most amenable venue imaginable. This was Humboldt County, a land of recycled toilet paper and Priuses, about 250 miles north of San Francisco--and quite possibly to the left of it as well.

The activist jurors were so determined to make their message loud and clear that they awarded the maximum damages over a six-year period to each patient in the class of 32,000. That was aided by a law that includes in a class anyone who simply doesn't respond to mailed notices, including those who never received them.

Skilled Healthcare can't afford to appeal because it would have to post a bond equal to 150 percent of the verdict to do so, and says it has exhausted its primary professional liability insurance coverage and at most can borrow $94 million. Of course, that also would make paying the award difficult, and bankruptcy is a possibility.

Which, of course, begs the question of where would the patients at the company's 100 facilities nationwide go if Skilled Healthcare had to shut down - especially since two-thirds of them are on Medicare or MediCal?

But what about the plaintiffs' attorneys? As Tom Scott, executive director of Citizens Against Lawsuit Abuse, pointed out, the total fees will likely run between 30 and 40 percent of the verdict - and punitive damages have yet to be assessed. Jackpot justice indeed.

You can read the company's response to the verdict and motion here.

Yoo-hoo is a chocolate soft drink that's popular in the New York area. In fact, Yankees Hall of Famer Yogi Berra endorsed Yoo-hoo for years. But that didn't stop a trio of lawyers from filing a class action lawsuit against the Dr. Pepper Snapple Group, the company that makes the drink, alleging that Yoo-hoo doesn't warn customers it contains partially hydrogenated oil - even though the label explicitly says just that.

Lawyer and blogger Russell Jackson, who defends companies in class action consumer lawsuits, pulls no punches and tells readers what he really thinks about the lawyers involved:

The three Tort Twits of the Month for July are lawyers at Reese Richman right here in NYC: Michael R. Reese, Kim E. Richman, and Belinda L. Williams. They have brought a putative class action in the Eastern District of New York on behalf of "all persons in the United States who purchased Yoo-hoo and other similar products from Defendants" from June 22, 2004, to the present. They want in excess of $5 million, including the profits the defendants made on the sales, as well as damages, punitive damages, and injunctive relief.

What gripe could these lawyers possibly have against Yoo-hoo, you ask?

It boils down to an alleged failure "to properly disclose [that Yoo-hoo products] contain a highly unhealthy, non-nutritious ingredient known as partially hydrogenated oil." Compl. para. 6. Of course, the list of ingredients on Yoo-hoo's label includes: "soybean oil (partially hydrogenated..."

In sum, this is a ridiculous lawsuit. It's a shame the defendants have to expend money to get it dismissed -- a cost that, no doubt, will be passed along to consumers.

Should the Tort Twits actually win the case, we would place bets that the consumers would get coupons to save a few cents on their next purchase of Yoo-hoo, while the lawyers would get the $5 million.