The California Civil Justice Blog

There's a great piece today from Bloomberg on how the four disgraced securities lawyers from Milberg Weiss are adjusting to life after prison. Needless to say, with the money the four pocketed during their years of raiding corporate America over fluctuations in stock prices, they're doing a lot better than most of us.

Melvyn Weiss reports that he's "enjoying my freedom" and playing lots of golf in Florida. Bill Lerach is enjoying a ski vacation in Steamboat Springs, Colorado, and is planning future trips to go trout fishing in Alaska and exploring his roots in Bavaria. David Bershad is enjoying life in suburban New Jersey.

The fourth convicted trial lawyer, David Schulman, refused to comment.

Prosecutors said the men, who industrialized the filing of securities fraud class actions, secretly paid clients to pursue such cases, bringing the firm $251 million in attorney fees from 1979 to 2005. All four pleaded guilty. Their old firm, now Milberg LLP, agreed to pay $75 million to end the case.

You can read the full article here, and an account from the WSJ Law Blog here.

Lanny Davis is an inside-the-Beltway insider. A DC lawyer for decades, he became known nationally as a special counsel to President Clinton during the 1990s, serving as the spokesman for the president on matters "concerning campaign finance investigations and other legal issues."

Since leaving the White House, he has been an advisor to Hillary Clinton's presidential campaign, a partner in high-level Washington law firms, and is a frequent pundit for TV and newspapers. And now, he's taken up the cause of legal reform.

In a recent interview with _Wall Street Journal Law Blog _editor Ashby Jones, Davis talks about why tort reform is anathema among many liberals, concedes that there are frivolous lawsuits, supports mandatory arbitration in medical malpractice cases - and calls on President Obama to take on the plaintiff's attorneys to enact real health care reform.

Here are a few of his quotes:

On tort reform:

I'm for it. I am. And I really think that it can't be achieved by Republicans or conservatives alone. This is Nixon-goes-to-China time for Democrats. Liberals are the ones who can get this done, much like Nixon was the only one perceived as hard enough on communism to get away with a trip to Red China.

But for now, it's unspeakable in liberal circles. We have to start making it speakable.

On frivolous lawsuits:

I really believe that some plaintiffs' lawyers misuse the courts with frivolous lawsuits.
The problem is this: You can file a suit that doesn't have much substance to it, and you're not violating your ethical duty as a lawyer so long as there are a couple legitimate claims in it. There's no cost to filing a frivolous lawsuit. And so there's no reason not to do it. The bogus lawsuits that I've seen -- the false claims cases, the securities fraud cases, the cookie-cutter complaints -- all this has proven to be enormously lucrative in recent years. If you get to be lead plaintiff in one of these cases, you can get a settlement and retire forever. You know that the insurance company isn't going to risk going to trial, and you're going to get a big settlement.

I'm not exactly sure what the best way to do this would be, but I'd look seriously at fee-shifting. In England, when you lose, you pay the other side's legal fees most of the time. Here, you can ask a court to award legal fees after a win, but it hardly ever happens. So I think we need to look at this, at why it works in England. They're not a bunch of right-wingers over there in England. Not by a longshot, but they've managed to make it work.

On what he'd tell the President:

I'd say, Mr. President, our legal system is broken, because the plaintiffs' bar misuses it. You need to fight this and fix it. A Republican can't do it. This is Nixon to China.

You can read the full interview here.

We were flipping through the pages of Newsweek a few days ago when we ran across one of those class action lawsuit settlement ads. This one's a classic.

It seems the folks at Dannon Yogurt were alleged to have engaged in some misleading advertising over their Activa and DanActive products, the ones actress Jamie Lee Curtis has been promoting for the company.

As part of the record-setting $35 million settlement - the largest-ever for a suit alleging false advertising of a food product - Dannon, without admitting guilt, has agreed to slightly modify its advertising. For example, it will replace the words "clinically proven" and/or "scientifically proven" with phrases such as "clinical studies show." They also will list the genus, species, and strain designation for the bacterium it has trademarked as Bifidus Regularis.

Well, we're all for truth in advertising, and had we been a biology major perhaps we'd understand the importance of specifying that the bug in question is Bifidobacterium lactis DN 073-010.

But what about the alleged victims?

Under terms of the settlement, every American who has seen one of these slightly annoying commercials is entitled to $15 cash money, no questions asked. All you have to do is fill out a form, conveniently included in the ad.

If you were a moderate user of Activa or DanActive yogurt, and are willing to sign on the dotted line that you really did eat that much of the stuff, you can get up to $30. And if you were a really hard-core user, you can get up to $100. Of course, for anything over $30 you had to have kept your grocery receipts - doesn't everybody? - and also have to sign a statement that you're submitting the claim under penalty of perjury.

But what about the lawyers? Surely they need to be compensated for achieving this monumental victory?

Don't worry. Coughlin Stoia Rudman & Robbins - the San Diego-based class action firm that formerly employed disgraced superlawyer Bill Lerach - will do just fine. The firm will get up to $10 million in fees, plus expenses.

And according to the Web site consumeraffairs.com, the firm isn't done yet protecting Americans from a problem they probably weren't aware existed. Coughlin Stoia is also suing General Mills' Yoplait Yo-Plus yogurt on similar grounds.

We will sleep better tonight, knowing that the trial lawyers are working so diligently and selflessly on our behalf.

Here's another article you won't see the trial lawyers talking much about, courtesy of today's National Law Journal.

A federal judge in Riverside has balked at a proposed class action settlement with American Honda Motor Co. over ads for the company's Civic Hybrid after objectors, including the attorneys general of 25 states, questioned whether the plaintiffs or their attorneys would benefit most. Our own AG, Jerry Brown, was one of those questioning the settlement.

And rightly so:

• The alleged victims of Honda's allegedly misleading advertising - 158,000 Civic Hybrid owners - would have received a DVD on how to maximize fuel efficiency and rebates on future purchases of Honda vehicles ranging from $500 to $1,000. If an owner had made a documented complaint, he or she would get $100 cash.

• The plaintiffs' attorneys would have collected nearly $3 million in fees.

The usually loquacious lead attorneys on the case were unavailable for comment.

You can read the full article here.

Every once in awhile, even the polarized U.S. Supreme Court finds a case on which everyone can agree. Today, in a blow against jurisdiction-shopping trial lawyers, the justices ruled unanimously that lawsuits against out-of-state corporations should be filed in the state where the company's executives are headquartered.

As the AP story covering the decision (Hertz Corp. v Friend) pointed out, "The unanimous ruling likely will make it harder to sue out-of-state corporations in state courts, which are considered friendlier to class-action lawsuits than are federal courts."

The case involved Hertz Corp., which is based in New Jersey but had been sued in California state court by employees seeking unpaid overtime and vacation pay. The company had argued the case should be tried in federal court since the parties in the case were from two different states, but a federal judge and the 9th Circuit agreed that since the largest part of the company's business was conducted in California, the class-action lawsuit should be heard in state court here.

The Supremes disagreed. Writing for the majority, Justice Stephen Breyer wrote:

"We conclude that the phrase 'principal place of business' refers to the place where the corporation's high level officers direct, control and coordinate the corporation's activities.

"Lower federal courts have often metaphorically called that place the corporation's 'nerve center.' We believe that the 'nerve center' will typically be found at a corporation's headquarters."

You can read an analysis of the case (written before the decision was rendered) here.

CJAC today urged state legislators to support a bill that will eliminate rules that unfairly penalize public and private defendants for appealing civil trial decisions to a higher court.

Senate Bill 1117, authored by Senator Mimi Walters (R-Laguna Niguel) and sponsored by CJAC, would ensure that defendants pursuing legal appeals would pay interest on judgments at a rate comparable to market rates during the appeals process, not the fixed 10 percent currently set by state law.

"Although the issue seems obscure, the current process makes defendants think twice about appealing because if they lose the appeal, the amount of money owed to the plaintiffs can jump by as much as 20 percent," said CJAC President John H. Sullivan. "For example, if the appeal of a $1 million judgment took two years to complete and was unsuccessful, a defendant would owe an additional $200,000."

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CJAC today announced the introduction of a bill that would help California's economic recovery by making legal damages fairer and more predictable, while protecting the compensation that injured parties receive in a lawsuit.

Assembly Bill 8X 40, authored by Assemblyman Roger Niello (R-Fair Oaks) and sponsored by CJAC, focuses on setting limits on punitive damages that can be added to the money an injured person receives to cover medical bills and related pain and suffering, property damage, lost earnings, and other actual losses.

"This bill is a fair, sensible solution to the problem of unpredictable jackpot awards, which drive up the cost of goods and services for all Californians and is yet another barrier to economic growth and job creation in a state that needs both," said CJAC President John H. Sullivan.

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The Civil Justice Association of California (CJAC) urges swift legislative action on a proposal introduced on Thursday that would stop the worst abuses of the state's jumbled class action law, while still protecting the right of truly harmed Californians to have their day in court.

Assembly Bill 8X 38 would align California with the federal system and other states by giving judges clear statutory rules for handling class action cases and greatly reducing the legal uncertainty that makes these lawsuits expensive and time-consuming.

The bill - dubbed the Consumer Legal Remedies Act - was authored by Assemblywoman Audra Strickland (R-Thousand Oaks) and sponsored by CJAC, and would bring much-needed clarity to class action law and help counter the states competing with us for good jobs.

"This bill strengthens California law," said CJAC President John H. Sullivan. "It will stop the game playing and uncertainty that results under current state law, while protecting the class action remedy in cases where it's appropriate."

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In an important case upholding the validity of employment arbitration agreements, a panel of the California Court of Appeal has ruled that an arbitration contract that allowed for expanded discovery only at the discretion of the neutral arbitrator was not unconscionable and should therefore be enforced.

In Dotson v. Amgen, Inc., a former staff lawyer of the bioengineering company contended that his claim for wrongful termination should not be bound by an arbitration contract he accepted when hired four years earlier because of provisions in that contract unfairly limited discovery. The provisions state: "Each party shall have the right to take the deposition of one individual and any expert witness designated by another party. . . . Additional discovery may be had where the arbitrator selected pursuant to the agreement so orders, upon a showing of need."

In reversing a trial court judge who had agreed with the attorney, the Second District Court of Appeal in Ventura analyzed the arbitration agreement for both procedural and substantive fairness.

The appellate court first discussed the fact that the terms of the arbitration contract, which accompanied Amgen's offer of a $170,000 starting salary (plus a $35,000 signing bonus, stock options, and other benefits), were clearly presented to Darrell Dotson, a trained attorney. Even if Amgen's offer to employ Dotson subject to his acceptance of arbitration was given on a "take it or leave it" basis (which Dotson took), the appellate court found that there was only a "low degree" of procedural unconscionability involved:

"Dotson is not an uneducated, low-wage employee without the ability to understand that he was agreeing to arbitration. He was the opposite - a highly educated attorney, who knowingly entered into a contract containing an arbitration provision in exchange for a generous compensation and benefits package."

Thus, to now find the arbitration agreement unenforceable, the appellate court explained, "the degree of substantive unconscionability (i.e., the actual provisions of the contract) must be high."

The appellate court said that the lower court judge's assumption that the arbitrator would not be fair in determining whether additional depositions would be needed was not valid in determining the validity of a discovery provision. "Indeed, it is quite the opposite. We assume that the arbitrator will operate in a reasonable manner in conformity with the law," the three justices said in the January 21 opinion, which was certified for publication on February 3.

Indeed, the appellate court noted that one of the reasons that arbitration is a favored means to resolve disputes in California is its streamlined nature. "Limitations on discovery, including the number of depositions, is one of the ways streamlining is achieved, " the court said.

With California's judicial system facing further funding cuts and even closed courtrooms, the Amgen case is a reminder that viable alternatives to seeking justice do, in fact, exist.

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Gordon Ownby is general counsel of the Cooperative of American Physicians, Inc., www.cap-mpt.com, and can be reached at gownby@cap-mpt.com.

Not content to chase ambulances the old-fashioned way, a group of British trial lawyers has created an iPhone application that lets people reach the firm's lawyers right away if they're involved in an accident or other "incident."

According to the UK edition of MacWorld, the app gives potential litigants instant access to a personal injury solicitor, and helps the claimant collect all necessary information, such as the accident location, the car involved, whether the police took a report, and photos of the crash.

Once the firm has been instructed via the iPhone app, the "Car Incident Assistant" also allows claimants to track their case online and will arrange appointments for medical reports and send text updates and reminders.

The founder of the law firm spins the service thusly: "It's all about customer service and we feel this application gives any accident victim instant comfort that someone is looking after them."

Frankly, we'd much rather have a paramedic looking after us after an accident than a lawyer.