Archive for the ‘Editorials’ Category
Rankings Drop Driven in Part by Judicial Behavior
The U.S. Chamber Institute for Legal Reform (ILR) routinely conducts a survey of in-house general counsels, senior litigators, and other senior executives at companies with at least $100 million in annual revenues with recent litigation experience in each state (within the last four years). 75% of survey respondents reported that a state’s litigation environment is likely to impact important business decisions at their companies such as whether to locate or do business in the state.
Down from 15th in 2012, Wisconsin now ranks 20th overall. This drop was very disappointing given the significant reforms recently enacted in Wisconsin. As stated in the ILR Report, the Wisconsin ranking drop was driven by a poor ranking of our judiciary. Survey participants ranked Wisconsin substantially lower this year in several key areas related to judges, including on enforcement of venue requirements (nine spot drop), treatment of class actions (20 spot drop), impartiality (eight spot drop) and on competence (10 spot drop).
- Overall treatment of tort and contract litigation – Wisconsin is ranked 21st.
- Having and enforcing meaningful venue requirements – Wisconsin is ranked 22nd.
- Treatment of class action suits and mass consolidation suits – Wisconsin is ranked 28th.
- Damages – Wisconsin is ranked 17th.
- Timeliness of summary judgement or dismissal – Wisconsin is ranked 16th.
- Discovery – Wisconsin is ranked 17th.
- Scientific and technical evidence – Wisconsin is ranked 19th.
- Judges’ impartiality – Wisconsin is ranked 20th.
- Judges’ competence – Wisconsin is ranked 24th.
- Juries’ fairness – Wisconsin is ranked 21st.
Full survey results can be found here.
Senator Chuck Grassley (R-IA), Senate Judiciary Committee Chairman, and Sen. John Cornyn (R-TX), Senate Majority Whip, are calling for more transparency in the litigation finance industry. Litigation finance firms fund plaintiffs to pursue lawsuits, taking a cut of the recovery if plaintiffs win or settle with the defendants. Critics of the industry say that firms fund frivolous lawsuits, drive up costs for all litigation, and exercise undue influence in the strategy and decision making for those they fund. Advocates for litigation financing say it helps plaintiffs, who would not otherwise be able to pursue lawsuits, have their day in court.
As a part of their push for transparency, Senators Grassley and Cornyn sent letters to three major industry firms, Burford Capital, Bentham IMF, and Juridica Investments Ltd., requesting a complete list of cases each company has funded in the last five years, how much money they made, and whether other parties in the litigation were informed of the funding arrangements. The firms have yet to respond to the requests.
Last week US District Judge Edward Chen, of the Northern District of California, certified a class of up to 160,000 California Uber drivers who could seek mileage and tip reimbursement from Uber. Attorneys for Uber unsuccessfully argued that its relationships with individual drivers were too unique to be represented by a single class of plaintiffs.
Shannon Liss-Riordan, a prolific plaintiffs’ class-action lawyer, has filed lawsuits against Uber, Lyft, Homejoy, Postmates, and Caviar – five of the largest “on-demand” start-ups in the world. She argues Uber gives its drivers employee-like duties while treating them as independent contractors in order to skirt its obligations as an employer. Uber argues it is simply a software platform that connects drivers with people looking for rides.
If Uber drivers are found to be employees, Uber would be required to pay overtime, unemployment insurance, workers compensation, and potentially expenses such as gas and vehicle wear and tear. Start-up advocates fear that this could put many “on-demand” start-ups out of business or prevent new ones from being created due to labor costs.
Warner Music Group (Warner) claims the rights to “Happy Birthday to You” – the most recognized English language song in the world. Warner has aggressively asserted rights to anyone who performs a public rendition of the song, from celebrities to parents audacious enough to post videos of their children’s birthday parties online, demanding licensing fees and threatening to sue if not paid. However, according to a University of Pittsburgh Law Librarian, Warner may not have a valid patent for the song.
A class action lawsuit was filed against Warner challenging their copyright to the song, from which Warner receives approximately $2 million in revenue a year. The case was cracked open after evidence of a book, the fourth edition of “The Everyday Song Book,” published in 1922, has an un-copyrighted version of “Happy Birthday to You” in it. This would predate Warner’s 1933 copyright. Evidence of this book was uncovered in Warner’s own files which were handed over during discovery. Attorneys representing the plaintiffs reached out to University of Pittsburgh Law Professor Michael Madison on a hunch that the University had a copy of the book. A law librarian found a copy in the university library’s storage facility. The librarian quickly sent copies of the relevant pages to the plaintiffs, who then motioned for summary judgment.
Kohl’s Corporation is being targeted by two class action lawsuits in California over its pricing practices. These suits were recently filed in the U.S. Southern District of California.
Both lawsuits argue that Kohl’s discounted pricings on its own brands violate California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act because the retailer gets to set the original price in the first place. One suit alleges that it is possible that hundreds of thousands of California consumers, “have been victims of [Kohl’s] deceptive, misleading, and unlawful pricing scheme.”
The lead plaintiffs essentially argue that if Kohl’s wants to sell a piece of clothing for $20, then they mark the original price at $40, place a 50-percent discount on the item, and the consumer buys the product at $20 thinking they are getting a deal even though the item was never worth $40. The plaintiffs argue these pricing schemes have led to Californians unknowingly purchasing merchandise of lesser value and quality than they expected.
Kohl’s is based in Menominee Falls and operates 1,164 department stores in the United States including 126 in California.
Three Wisconsin residents have filed a lawsuit against Delta, United, Southwest, and American airlines claiming they violated anti-trust laws. The plaintiffs are currently attempting to get their class certified.
In their complaint, the plaintiffs allege (in their only count) these airlines conspired to restrain trade and commerce in violation of the Sherman Act (15 U.S.C. §§ 1, 3) by artificially lowering the amount of airline flights thereby reducing competition within the industry. They explain that since 2008 the four major airlines have cut flights, raised fares, and have gained control of 80% of the market place. Fares have continuously increased despite a 34% drop in fuel prices, which are airlines single largest expense.
This lawsuit comes on the heels of the U.S. Department of Justice opening an investigation into “possible unlawful coordination” among major airlines’ plans to expand in a way to reduce competition and keep rates high. Several major airlines have announced they would limit growth in order to keep fares high to protect profit margins. However these statements were made in the context of preventing airline stock prices from declining further than they have in recent months.
Multiple similar lawsuits have been filed in major cities across the U.S. including New York, Chicago, San Francisco, Dallas, and Washington. The defendant airlines have released statements saying the lawsuits have no merit.
Read the complaint.
Repeal Expected to Improve Legal Climate and Return More Money to Medical Assistance Fund
WCJC has accomplished one of its major objectives for the 2015-2017 state budget with the repeal of Wis. Stat. §20.931, Wisconsin’s “False Claims for Medical Assistance Act”.
The act allows private individuals, unaffiliated with the government, to sue private businesses alleging fraud against the state’s medical assistance program. The act rewards private individuals for filing these actions by providing that the person who brings a private cause of action may be awarded up to 30 percent of amounts recovered in addition to expenses, costs, and reasonable attorney fees. While the original intent of the act, to root out fraud, is admirable this law was ineffective and unnecessary.
The act, originally created in the 2007-2009 state budget act, is ineffective because the Department of Justice (DOJ) proactively prosecutes these claims on its own. Furthermore, DOJ has stated the repeal of the act could increase recoveries for the Medical Assistance program because the state will not have to pay the 30 percent “bounty” to the whistleblowers who bring a private cause of action.
The repeal of this act will not discourage legitimate whistleblowers from bringing information about fraud forward. There are already other avenues in place for whistleblowers to contact state officials, anonymously if need be, such as the governor or attorney general and report fraud. Studies have also shown that whistleblowers with legitimate claims do not have a profit motive and thus the lack of a financial award is unlikely to result in less whistleblowers coming forward. Thus the act is unnecessary.
Repeal of the act was included in the Joint Finance Committee motion #495, the committee’s omnibus motion on Medical Assistance. The motion was adopted by the committee on Thursday, May 21, 2015.
WCJC is grateful for the support of the state legislature and Governor Walker in helping to better Wisconsin’s legal climate.
 Kesselheim et al., Whistleblowers’ Experiences in Fraud Litigation Against Pharmaceutical Companies, 362:19 New Engl. J. Med. 1832 (May 13, 2010).
Scalia, writing for the Court, stated that “[EPA] gave cost no thought at all, because it considered cost irrelevant to its initial decision to regulate,” he continued, writing, “It is unreasonable to read an instruction to an administrative agency to determine whether ‘regulation is appropriate and necessary’ as an invitation to ignore cost.” With that the Court found the Obama Administration’s most monumental environmental regulation to date unreasonable and remained to the D.C. Circuit Court of Appeals.
The regulation in question was the EPA’s Mercury and Air Toxics Standards (MATS). MATS required coal-burning power plants to reduce emissions of mercury, arsenic, and lead by installing control technologies or retiring plants. The rule was finalized in December 2012. While reducing the amount of hazardous emissions may seem admirable, the direct benefits of the regulation were valued at $4 million to $6 million, while the annual cost to industry would be approximately $9.6 billion. EPA contested the direct benefit of the program saying that, fully implemented, the MATS would yield between $37 billion and $90 billion in health benefits. EPA did not contest the cost of the program.
Opponents of the rule argued the costs imposed on business and society versus the limited benefits were unreasonable and that the practical implication of the MATS standard would be to put many coal-burning plants out of business. Environmentalists, and the EPA, have pointed out the health benefits to the program which they argue would protect vulnerable populations, such as pregnant women.
The practical effects this ruling may be limited. Because the rule has been implemented for two years just under 70% of coal burning power plants are already in compliance with the regulation. Furthermore, SCOTUS did not vacate the rule, only remanded it, therefore MATS will stay in effect while the D.C. Circuit reconsiders the case.
Furthermore, initial discussions make it seem unlikely that this case will have a broader effect on other EPA regulations. Some legal commentators contend that Justice Scalia seemed to cabin his analysis within the confines of the MATS program. As evidence of this, Justice Scalia took several pages drawing distinctions between the National Ambient Air Quality Standard, EPA’s largest Clean Air regulatory regime, and MATS making it unlikely that the rationale from this ruling can easily be applied more broadly throughout the Clean Air Act. Time will tell if these preliminary analyses correct.
Read the full opinion.
Further reform to class actions may be on the horizon after the House of Representatives Judiciary Committee passed the Fairness in Class-Action Litigation Act (FICALA) of 2015 on June 24. The legislation was introduced by House Judiciary Committee Chair Bob Goodlatte (R-VA) and Civil Justice Subcommittee Chair Trent Franks (R-AZ). FICALA seeks to limit which potential plaintiffs can opt into a class action lawsuit based on the severity of the potential plaintiff’s injuries compared to the injury of the party. In a press release the Judiciary Committee stated, “uninjured or non-comparably injured parties can still join class actions, but must do so separately from parties that experienced more extensive injury.” The legislation is short and to the point:
§1716. Limitation on certification of class
(a) In General.—No Federal court shall certify any proposed class unless the party seeking to maintain a class action affirmatively demonstrates through admissible evidentiary proof that each proposed class member suffered an injury of the same type and extent as the injury of the named class representative or representatives.
(b) Definition.—In this section, the term ‘injury’ means the alleged impact of the defendant’s actions on the plaintiff’s body or property.
(c) Clerical Amendment.—The table of sections at the beginning of chapter 114 of title 28, United States Code, is amended by adding at the end the following new item:
In its present form this bill would only affect class actions with economic or monetary losses, not civil rights cases. Proponents of the bill, such as the U.S. Chamber of Commerce, argue the reform is necessary to prevent lawyers from “gaming the system” to inflate their legal fees. Opponents argue that the bill could effectively end class actions by forcing individuals to have identical injuries in order to join class action lawsuits.
The Wisconsin Civil Justice Council will keep you updated as the bill moves forward.
Madison County, a small county in southwestern Illinois that has long been a prime venue for plaintiffs’ lawyers, may be the asbestos litigation capitol of the world. A new report by the Madison-St. Clair Record shows that 74.6% of cases filed in Madison County circuit court are asbestos cases.
The Illinois Trial Lawyers Association chalked the numbers up to historically large concentrations of industry and population. However the Record’s analysis challenged the Association’s claim and showed that industry in Madison County has drastically dropped over the past thirty years and that the county’s population only represents 2% of Illinois’ populace.
Madison County became a go-to destination for filing class action lawsuits around the turn of the 21st century. By 2002 it ranked third nationwide in the number of class actions filed per year behind only Cook County, IL, and Los Angeles County, CA. Lawyers frequently file more mesothelioma cases in Madison County than any other county in the nation. This stems in large part due to “rampant forum shopping” which has been detailed by a U.S. Chamber of Commerce report due to Madison County judges (and the Illinois Appellate Court) largely ignoring the forum non conveniens doctrine. According to the report many cases have little, if any, connection to the county and a minimal connection to the state of Illinois (The Record’s analysis shows that 98% of plaintiffs in these cases do not reside in Illinois).
Tort reform has been slow to come to Illinois. While the Class Action Fairness Act may be responsible for a temporary reduction of class action cases filed in Madison County, the numbers have since rebounded. Recently the Illinois senate judiciary committee voted down Governor Bruce Rauner’s tort reform bill. He has since stated that he intends to continue negotiations on tort reform as part of the state budget process. The budget process is currently stalled.