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In the Courts

California Supreme Court Finds Companies Are Not Liable for Products of Others Attached to Theirs after Sale.

The California Supreme Court unanimously held in O’Neil v. Crane Co. that a manufacturer is not subject to liability for a worker’s exposure to asbestos when its own products are later insulated with asbestos made by another company. While “manufacturers, distributors, and retailers have a duty to ensure the safety of their products,” the court found in its January 2012 opinion, “we have never held that these responsibilities extend to preventing injuries caused by other products that might foreseeably be used in conjunction with a defendant’s product.” The court recognized that “[i]t is unfair to require manufacturers of nondefective products to shoulder a burden of liability when they derived no economic benefit from the sale of the products that injured the plaintiff.” This should be an influential decision in that it was the product of extensive analysis and comes from a court credited with developing much of modern product liability law in a populous state, with significant asbestos litigation, not known to favor defendants. ATRA joined an amicus brief filed in the case, supporting dismissal. Prior to the ruling plaintiffs’ law firms based in Texas had opened offices in Los Angeles hoping the theory would be accepted. But this high court decision may put a crimp in their growth plans, and it is already sharply limiting traction for third-party duty-to-warn claims nationwide. None of which is to say plaintiffs’ lawyers won’t keep trying to make asbestos hay in the California sunshine, especially in Los Angeles.

Illinois Supreme Court Finds that Landowners Are Not Liable to Trespassers Who Ignore Obvious Dangers.

A unanimous Illinois Supreme Court overturned a $3.9 million award to a boy who lost his leg below the knee when he attempted to jump onto a moving freight train while showing off. Choate and his friends had ignored fences and posted warning signs, and were not even trying to get to the other side of the tracks, the court found. While his friends screamed at him to stop, Choate, who was 12-years-old at the time, repeatedly attempted to jump onboard the moving train. On his third try, he slipped and his foot fell under a train wheel. And though a Cook County Circuit Court jury initially awarded him $6.5 million in damages, that amount was reduced to reflect a jury finding that he was 40 percent responsible for his injuries. An intermediate appellate court affirmed the reduced judgment, but the Illinois Supreme Court ruled that the circuit court should have dismissed the case as a matter of law. Why? Because “a moving train presents a danger that is so obvious that any child allowed at large can reasonably be expected to appreciate the risk involved in coming within the area made dangerous by it,” said Justice Charles E. Freeman, writing for the Court. “It is always unfortunate when a child gets injured while playing, but the responsibility for a child’s safety lies primarily with his parents, whose duty it is to see that the child does not endanger himself. . . . No fence would have prevented such bravado” and it “has never been part of our law that a landowner may be liable to a trespasser who proceeds to wantonly expose himself to unmistakable danger in total disregard of a fully understood risk, simply for the thrill of venture,” the court appropriately concluded.

Kansas Supreme Court Rejects Attempt to Nullify Limit on Pain & Suffering Damages.

In stark contrast to the Missouri Supreme Court (see Dishonorable Mentions, p. 33), the Kansas Supreme Court upheld a $250,000 limit on subjective noneconomic damages in personal injury cases, including medical malpractice claims. Noneconomic losses include claims for pain and suffering, mental anguish, and losses that cannot be objectively expressed in dollars and cents. The Kansas law does not place any limit on recovery of economic damages, such as expenses for medical bills or lost income due to an injury. Healthcare providers in Kansas sought to keep the limit in place, arguing that its elimination would lead to higher malpractice insurance premiums and reduced access to healthcare as discouraged doctors retire early or otherwise move their practices to other states. The law has been in place since 1988. This was not the first time the state’s high court upheld the constitutionality of the noneconomic damages limit. The court upheld the limit in 1990 with a ruling largely relied upon for precedent in this year’s decision. The ruling reaffirms Kansas’s standing among the majority of states that have upheld similarly reasonable limits on noneconomic damages. No one should be surprised when Missouri doctors move to Kansas.

Mississippi Supreme Court Reins in Attorney General’s Alliance with Plaintiffs’ Lawyers.

Mississippi Attorney General Jim Hood, possibly the most storied user of contingent-fee agreements in the hiring of private-sector personal injury lawyers to enforce state law, will now need to comply with good-government safeguards if he intends to persist in the controversial practice. In a pair of rulings this year issued in a consumer protection lawsuit against Microsoft and a tax collection case against MCI, the Mississippi Supreme Court ruled that the attorney general may not enter settlement agreements that require defendants to pay the fees of contingent-fee lawyers directly. Settlements are public funds that must be deposited into the state treasury, the court found. Agreeing with the state’s auditor, the court found that the attorney general may only pay private attorneys fees out of his approved legislative appropriation or contingent fund. The auditor had challenged respective payments of $10 million and $14 million to private lawyers in the two cases. It remains to be seen whether the rulings will provide needed oversight of the attorney generals’ ability to bypass the legislative appropriations process or will simply lead him to take the extra step of depositing settlement money in a state account, then writing a multi-million dollar check to the private lawyers. As noted in the legislative Points of Light, the Mississippi Legislature’s enactment of the Transparency in Private Attorney Contracts Act this May also should help safeguard the public and protect the due process rights of defendants by requiring the private lawyers to keep detailed time records, placing reasonable limits on contingent fees, precluding private lawyers from being compensated based on the amount of fines they impose, and establishing an “Outside Counsel Oversight Commission,” comprising the governor, lieutenant governor and secretary of state.

New Jersey Superior Court Recognizes that Brand-name Manufacturers Are Not Liable for Injuries Caused by Generic Products.

Last year’s Judicial Hellholes report placed Atlantic County, New Jersey on the Watch List because of its reputation as a magnet for massive lawsuits against the very drug makers that form the state’s economic backbone. As promised, ATRA has watched the Superior Court there closely and is pleased to report positive news. In June 2012, Judge Carol Higbee issued a particularly strong and well-reasoned ruling rejecting an invitation from plaintiffs’ lawyers, made in several cases before her court and in courts across the country, to hold a brand-name drug manufacturer liable for injuries allegedly resulting from a generic version of its drug made and sold by a competing company. Judge Higbee logically concluded that, regardless of how artful and creative the plaintiffs’ claims may be, a brand-name drug maker cannot be liable for allegedly harmful generic products it did not make. Judge Higbee took a strong stance against altering fundamental principles of law merely to allow recovery against a business viewed as a deep pocket. While Judge Higbee recognized that a U.S. Supreme Court decision did not permit individuals to sue generic drug makers for allegedly inadequate product labeling, she found that ruling “does not change New Jersey law,” including the “essential element of a plaintiff’s prima facie products liability action [that he or she show]. . . proof that the manufacturer actually produced the product which gave rise to the plaintiff’s injury.” Only two courts, in outlier decisions, have permitted these types of claims to move forward, while about 70 courts have applied reasoning similar to Judge Higbee’s in declining to adopt such novel theories. Her welcome decision keeps the Garden State firmly within the mainstream of product liability law.

Pennsylvania Supreme Court Rejects ‘Any Exposure’ Lawsuits.

In May the Pennsylvania Supreme Court reinstated a trial court judge’s decision to reject as scientifically unsupported expert testimony offered by the plaintiff in an attempt to argue that exposure to any amount of asbestos fibers, no matter how small, can be a substantial factor in causing an asbestos-related disease. The trial judge, Robert J. Colville of Alleghany County (Pittsburgh), was one of the first judges in the country to pull the curtain back on this “any exposure” theory. What he saw was not pretty. In an apparent attempt to draw as many companies into asbestos litigation as possible, the plaintiff’s expert was relying on illogical and unscientific guesswork that is not supported in any published literature. After reviewing an extensive record and holding a three-day hearing in which the plaintiff’s expert and others testified, Judge Colville exposed the logical and scientific flaws in their theory. He concluded that the expert should not be permitted to testify without at least some reasonable attempt to quantify the plaintiff’s dose (exposure to asbestos fibers) and demonstrate that said dose exceeded a dangerous level. An intermediate appellate court, however, reversed Judge Colville’s ruling, finding that he abused his discretion in making such a judgment. In reversing the appellate court, the Pennsylvania Supreme Court concluded, “Simply put, one cannot simultaneously maintain that a single fiber among millions is substantially causative, while also conceding that a disease is dose responsive.” As legal commentators have observed, “The any exposure theory is the engine driving most of today’s asbestos cases. Without it, most of the low-dose asbestos cases pending in today’s courts would have no causation support and could not reasonably be prosecuted.” Appropriately, at least 20 courts have now rejected the any exposure theory or similar approaches in asbestos and other toxic tort litigation. The issue is now before the Virginia Supreme Court and on a petition for review to the Maryland Court of Appeals.

Supreme Court of Texas Adopts ‘Learned Intermediary’ Doctrine.

In June the Texas Supreme Court adopted the learned intermediary doctrine, recognizing that prescription drug makers have a duty to accurately educate physicians on the potential risks and benefits of drugs. A prescribing doctor then can discuss that information with his or her patients based on each patient’s specific medical history and health condition. Under the learned intermediary doctrine, so long as a drug company conveys adequate warnings and instructions regarding use of its products to doctors, it does not have an additional duty to attempt to explain that information directly to consumers. Texas was the largest state lacking clear law on the application of the learned intermediary rule. As the high court recognized, its decision to adopt the learned intermediary doctrine “places us alongside the vast majority of other jurisdictions that have considered the issue.” It reasoned, in part, “Because patients can obtain prescription drugs only through their prescribing physician or another authorized intermediary and because the ‘learned intermediary’ is best suited to weigh the patient’s individual needs in conjunction with the risks and benefits of the prescription drug, we are in agreement with the overwhelming majority of other courts that have considered the learned intermediary doctrine and hold that, within the physician-patient relationship, the learned intermediary doctrine applies and generally limits the drug manufacturer’s duty to warn to the prescribing physician.” In adopting the learned intermediary doctrine, the Court reversed a poorly-reasoned appellate court ruling that would have made Texas, which has made great strides to improve its litigation climate, an outlier in product liability law. West Virginia, a perennial Judicial Hellhole, remains the only state that wholly refuses to apply the learned intermediary doctrine.

In the Legislatures

As anemic economic growth and high unemployment continued to plague much of the country for yet another year, many governors and state lawmakers remained determined to improve their states’ competitiveness. Though the number of positive new tort reforms enacted in 2012 falls well short of that in the banner year of 2011, smart states kept working to make themselves more attractive to employers.

Two trends are of particular note. First, as part of a healthy move toward greater transparency, three states enacted good-government laws placing safeguards on the hiring of private personal injury attorneys by state officials on a contingent-fee basis. These laws are designed to reduce the incentives in such pay-to-play arrangements to position lawyers’ self-interest in profits ahead of the public’s interest in justice. Such questionable practices have contributed to the poor reputations of several jurisdictions featured in this report, including Louisiana, Nevada, Pennsylvania and West Virginia.

The second trend, continued in five states in 2012, is toward enactments that preclude courts from radically expanding the liability of home or business owners to trespassers, as proposed by the American Law Institute’s (ALI) most recent Restatement of Torts. Six states took such action last year by similarly codifying the traditional rule that a possessor of property generally owes no duty of care to a trespasser, with certain well-defined exceptions.

Following below in alphabetical order is a state-by-state listing of positive new reforms:

Alabama

  • Codified the traditional scope of liability to trespassers (S.B. 342).

Arizona

  • Provided that businesses in compliance with state or federal laws regulating their products or services are not subject to punitive damages absent a showing of misconduct in the regulatory process (H.B. 2503).
  • Placed safeguards on state hiring of private lawyers on a contingent-fee basis (S.B. 1132).
  • Promoted representative juries by making additional pay available to jurors serving on lengthy trials who are not otherwise compensated by their employers (S.B. 1142).
  • Codified the traditional scope of liability to trespassers (S.B. 1410).

Colorado

  • Amended the Colorado Open Records Act to clarify that civil government investigatory files are generally protected from disclosure, overturning the 2011 Colorado Court of Appeals decision in Land Owners United LLC v. Waters. Without this law, personal information about consumer victims and proprietary information of businesses could be subject to open records requests (H.B. 1036).

Iowa

  • Placed safeguards on state hiring of private lawyers on a contingent-fee basis (H.F. 563).

Louisiana

  • With key leadership from Neil Abramson, Chairman of the House Civil Law and Procedure Committee, the Pelican State enacted long sought class-action venue reform that will stop the gamesmanship of plaintiffs’ lawyers, who would file multiple, identical class actions in Louisiana courts until one was assigned to a friendly judge, then dismiss the others (H.B. 464).
  • Enacted “legacy lawsuit” reform, providing oil and gas producers with some protection from extortionate lawsuits that have hindered onshore energy production. It provides energy producers the chance to admit responsibility for cleaning up pollution related to past drilling without conceding larger damages.  The law also creates a system wherein the Department of Natural Resources will develop a cleanup plan for polluted lands with input from the public before submission to departments of Environmental Quality and Agriculture for their analysis (H.B. 618).

Mississippi

  • Led by Mark Baker, Chairman of the House Judiciary A Committee, with key support from House Speaker Philip Gunn and Senate Judiciary A Committee Chairman W. Briggs Hopson III, Mississippi safeguarded state hiring of private lawyers on a contingent-fee basis (H.B. 211). Not surprisingly, current Attorney General Jim Hood fought final passage of the legislation with everything he had, including campaign communications designed to scare citizens and rally them against the much needed good-government legislation.

Missouri

  • Codified the traditional scope of liability to trespassers (S.B. 628).

Ohio

  • Codified the traditional scope of liability to trespassers (S.B. 202).
  • Shortly before this report went to press, lawmakers passed asbestos transparency legislation (H.B. 380) that will keep asbestos claimants’ from so-called “double-dipping” – seeking compensation both from bankruptcy trust funds and separate lawsuits. Gov. John Kasich is expected to sign the bill into law, reportedly the first of its kind in the nation.

Rhode Island

  • Expanded the type of medical services and expense affidavits that can be introduced into evidence without the provider being required to testify in court (H.B. 7559).

Tennessee

  • Reduced the state’s excessive interest rate on court judgments to the Federal Reserve’s weekly average prime loan rate so long as the rate does not exceed 10% (H.B. 2982).
  • Codified the traditional scope of liability to trespassers (S.B. 2719).

Wisconsin

  • Eliminated civil punitive and compensatory damages under the Wisconsin Fair Employment Act (WFEA) of 2009. WFEA essentially obligates Wisconsin employers to defend employment claims both administratively and again in civil courts where plaintiffs’ attorneys had sought lucrative contingency shares of punitive and compensatory damages beyond what was administratively available by statute. Those with claims can still opt to pursue them in state and federal civil courts, but they can no longer seek to double-dip after making an administrative claim (S.B. 202).