Coyote Blog

I could fill this blog with litigation horror stories, but there is no need when Walter Olson does such a good job.  If you read his blog much, one of the themes than runs through the cases he highlights is the ever widening search in every case to find the deep pockets.  Unfortunately for trial lawyers, the person who is truly at fault, ie the drunk driver that runs down a pedestrian, seldom has deep enough pockets to produce a really satisfying fee.  So you gotta be creative.  This is to be expected.  What is not to be expected is the lengths to which the judicial system goes to validate this search (via Overlawyered):

The state Supreme Court has ruled that store owners can be sued for causing
injuries in a drunken driving accident if they sold gas to an intoxicated
driver.

The court ruled in a lawsuit filed by two men who were severely
injured in 2000 when they were struck head-on by Brian Lee Tarver, who later
pleaded guilty to vehicular assault and driving under the influence.
Before the accident, Tarver bought gas at an Exxon owned by East
Tennessee Pioneer Oil Company.

Fortunately, I guess, Exxon is used to getting sued for damages by drunk drivers. 

This case I wrote about previously is one of the best examples I have seen of how liability goes to the deep pockets, not the guilty:

Car veers into
truck's lane...and so a jury has ordered the trucking company, Auction
Transport Inc., to pay $22.5 million over the resulting injuries to a
young passenger in the accident, which occurred at rush hour on Kansas
City's I-435. Mary Coleman's car, allegedly sideswiped by a third
vehicle, had careened in front of the truck, but attorneys argued that
the truck driver had been "driving too fast in congested traffic and
not watching the road." The jury found the trucking company responsible
for just less than half the fault of the accident -- a greater share of
fault than the allegedly sideswiping driver -- and Coleman for hardly
any of it.

So, surprisingly enough, three
vehicles involved, two with limited resources and one with deep
pockets.  Guess who is liable - the deep pockets of course, despite the
fact that he was the only driver among the three who stayed in his lane!

Now, here is the thought experiment.  Move the truck with
deep pockets into any of the other two roles.  Imagine first that it
was the car that nudged the plaintiff into the other lane.  Imagine
next that the truck was the one nudged into oncoming traffic and hit
the plaintiff.  In these two cases, if they had gone to trial, who
would have gotten the blame?  I would bet you that in either case, the
truck with the deep pockets would have been given most of the blame in
either of these cases.

So where is the fairness?  Why should blame be based on
bank account size, and not actual actions?  Is there anything more than
coercive wealth transfer going on here?  Does this constitute justice?

Law

The town of New London, CT, is assessing nearly 5 years back rent on Susette Kelo and other property holders whose land the Supreme Court recently allowed the city to confiscate.  As it stands, if New London has its way, Kelo will not only lose her house, she will also be wiped out financially, all for the crime of owning the land where New London wanted condos and hotels.

The U.S. Supreme Court recently found that the city's original seizure of
private property was constitutional under the principal of eminent domain, and
now New London is claiming that the affected homeowners were living on city land
for the duration of the lawsuit and owe back rent. It's a new definition of
chutzpah: Confiscate land and charge back rent for the years the owners fought
confiscation.

In some cases, their debt could amount to hundreds of thousands of dollars.
Moreover, the homeowners are being offered buyouts based on the market rate as
it was in 2000...

The New London Development Corp., the semi-public organization hired by the
city to facilitate the deal, is offering residents the market rate as it was in
2000, as state law requires. That rate pales in comparison to what the units are
now worth, owing largely to the relentless housing bubble that has yet to burst.

"I can't replace what I have in this market for three times [the 2000
assessment]," says Dery, 48, who works as a home delivery sales manager for the New London Day . He soothes himself with humor:
"It's a lot like what I like to do in the stock market: buy high and sell low."

And there are more storms on the horizon. In June 2004, NLDC sent the seven
affected residents a letter indicating that after the completion of the case,
the city would expect to receive retroactive "use and occupancy" payments (also
known as "rent") from the residents.

In the letter, lawyers argued that because the takeover took place in 2000,
the residents had been living on city property for nearly five years, and would
therefore owe rent for the duration of their stay at the close of the trial. Any
money made from tenants, some residents' only form of income, would also have to be
paid to the city....

An NLDC estimate assessed Dery for $6,100 per month since the takeover, a
debt of more than $300K. One of his neighbors, case namesake Susette Kelo, who
owns a single-family house with her husband, learned she would owe in the
ballpark of 57 grand. "I'd leave here broke," says Kelo. "I wouldn't have a home
or any money to get one. I could probably get a large-size refrigerator box and
live under the bridge."

I want to barf.  Hat tip to Reason's Hit and Run.

Yesterday I mentioned employment at will in this post about police officers who were fired for assaulting a handcuffed man and who successfully sued for wrongful termination.

Via George's Employment Blawg comes this article on employment at will and things a small business should consider to reduce the possibility that fired employees will sue:

Here's where things get tricky. In between employment at will and the law is a whole mess of claims, counterclaims, lawsuits, disputations and confusion. It's enough to make anybody scratch their head.

We have had several instances where employees have threatened legal action over termination.  I have observed at least three reasons for this:

• Employees sometimes have a skewed view of the termination process, thinking that a company must hold to some kind of courtroom "beyond a reasonable doubt" standard in amassing reasons for termination.
• The most inept employees never seem to know that they are inept
• Some employees are far more adept at working the system than they are at their jobs.

We do several things to help make things go smoother:

• Unless the violation was outrageous, where we fire on the spot, we try to give employees written warnings and coaching before they get terminated
• Every new employee signs a 60/90 day probationary period letter.  If there are problems, they almost always occur in the probation period -- ie they turn up quickly -- and the probationary period gives us more leeway to quickly terminate.  Update:  This article says why this policy can be a mistake, or at least you have to be careful with it.  This is less of a problem for us since most of our employees only work a 5 month season anyway.
• We don't give references.  I have said that this makes me feel guilty, but negative references about fired employees are a big source of litigation, and frankly, I am sorry to admit, the treat of wrongful termination suit is greatly reduced if the ex-employee finds a good job somewhere else.  Kind of the business version of hot potato.
• Being a seasonal business saves us.  For many employee problems, we limp along until the end of the season when we can terminate the person for lack of work, then we make sure not to rehire them in the spring.

Update: Via Overlawyered, this story in the New York Post (gotta love the headlines) about a teacher fired 17 years ago and still filing suits:

But the Clifton, N.J., instructor never got over it. Instead, he has filed 15 lawsuits in Manhattan federal court and three others in Brooklyn and New Jersey courts, seeking reinstatement and millions of dollars in damages.

Each lawsuit has been tossed out as meritless. But a defiant Malley hasn't gotten the message or doesn't care.

I must be going crazy.  First this, and now comes this story, via Overlawyered.com:

A former Inglewood police officer [Jeremy Morese] who was fired for punching a black teenager and slamming him against a patrol car was awarded $1.6 million Tuesday by the jury in a discrimination lawsuit he and his partner brought against the city [note that the teenager was handcuffed at the time]

OK, we won't even get into the fact that employers should be able to fire "at-will" employees for just about any old reason.  How, though, have we gotten to a world where a police department can't fire an officer who abused a handcuffed man? 

It gets better, though:

the jury was unanimous in awarding $810,000 to Morse's partner, Bijan Darvish, who had been disciplined in connection with the 2002 incident.

Darvish was suspended 10 days (presumably without pay) for falsifying a report to cover up for his partner's abusive actions.  Ignore for a moment whether a 10 day suspension is the right punishment for his actions (I would have fired the guy), but ask - how is $810,000 proper recompense for a 10 day suspension, even if the suspension was totally invalid?  The main damage was lost pay -- but on this basis the $810,000 for 10 days pay would represent $29,565,000 for a whole year.   I guess I need to quit my job and go sign up as a police officer in Inglewood, because they sure as heck make more money than I do.

By the way, if I was an African-American, I would sure as hell stay away from Inglewood, or any other community that pays million dollar rewards to cops that beat the hell out of black people.

My company operates campgrounds and other recreational facilities on government lands, and the US Forest Service is our most important partner.  We work day-to-day with about 20 or so district rangers, who are the front-line general managers of the Forest.

My observation over time is that USFS district rangers have a nearly impossible job.  By their enabling legislation, the USFS is tasked with balancing logging, mining, ranching, recreation, forest health and environmental stewardship in running the forest.  In our modern day age of uncompromising special interests and conflict resolution by lawsuit, it is absolutely impossible to make any decision  without sending some party scurrying to the courts.  In particular, environmental groups have become expert at tying up any decision in court, and attempting to block any of the other competing interests.

The current Administration has introduced new rules intended to make this job easier.  As reported in the New York Times via the Commons Blog,

Forest Service officials said the rules were intended to give local foresters more flexibility to respond to scientific advances and threats like intensifying wildfires and invasive species. They say the regulations will also speed up decisions, ending what some public and private foresters see as a legal and regulatory gridlock that has delayed forest plans for years because of litigation and requirements for time-consuming studies.

I hope this is true, because I feel for front line forestry personnel who joined the service mostly because of their love of the outdoors and the environment, and have been forced instead to become amateur lawyers.  However,  I doubt much will change.  I think that intelligent planning and negotiation may be gone forever in working on environmental issues in favor of litigation.

This post could also be titled Reason #634 to be scared of doing business in California.  In a frightening trend, California passes yet another law giving citizens and their lawyers seeking unearned windfalls to police small, picky violations of regulations by filing large and expensive-to-fight suits (see also sue-your-boss law)  From the central Californian Santa Maria Times the story of Jarek Molski, who makes a very good living for himself suing public businesses over tiny, technical ADA violations:

Molski's suit against the Hitching Post in Casmalia alleged a wheelchair ramp was too steep, and the bathroom wasn't accessible because the toilet was a half inch too close to the wall; and the sink was three inches too high, and the soap dispenser was too high.

What do such picayune violations cost?  Mr. Molski averages a $20,000 settlement in such cases, though usually demands much more at first.  And, by the crazy Unruh law in California, targets get no time to redress these faults before up to $4000 per day per violation can be extorted sued for.

So is this an isolated incident?  Well, Mr. Molski is but one person in the ADA lawsuit business, and

As of Friday, 528 cases were listed under Molski's name in federal civil courts

Without reasonable standards, and with huge gains to be made for picayune rules interpretations, one victim summed it up this way:

"I've talked to about five people in Solvang and Cambria who have been sued twice in the last year," Stricklin said. "They're stuck. Unless you close your doors, somebody else can come along and sue you, and that's why we're fighting. If they can see that we're not going to roll over and settle, they'll think twice about going to trial."

My Proposal

So, I would like to propose my own Unruh II law.  I propose that in California, every citizen now has the right to sue any other person they observe violating any sort of traffic law.  If you observe someone speeding, doing a rolling stop at a stop sign, failing to signal a lane change or turn, with a burned out tail light, not wearing a seat belt, jaywalking, etc, you may now sue them for $4000 per occurrence. 

Coming in future posts, I will propose Unruh III to empower citizens to sue over health code violations, Unruh IV to empower citizens to sue over fire code violations, and Unruh V to sue anyone for any reason if they have a net worth higher than you do.

From Overlawyered:  Another lawsuit where customers get the coupon, and lawyers get the cash.  I would love to see the use rate on the coupons out of these suits. I have gotten a few for like $1.24 off something that I threw away.  I mean, in several cases, the company was offering better coupons in the Sunday circular.

Though I thought it was kind of silly at first, I am coming around to supporting legislation that attorneys should get paid in the same currency as customers.

Also from Overlawyered is this good news about courts finally taking legal action against people who file fraudulent suits and claims:

A Fayette minister and a teacher are going to prison for their role in submitting phony Fen-Phen drug settlement claims in Jefferson County

Good, though we might have to have a massive amnesty in Mississippi or half the state could end up in jail.

For those who still hold out belief that the tort system today is still primarily about justice rather than just hijacking deep pockets, read this post at overlawyered.com.  From an online ad:

We will show you how to prove you had taken Vioxx, to prove that you had related side effects, and to find a good lawyer to win your case. There are still places selling Vioxx after the recall, you can find them online. Merck is still 100% fully responsible for any side effect. If you purchase Vioxx now, not only you can sue Merck, you can also sue the pharmacy store for selling recalled products. The purchase is risk free, as Merck will pay you every penny you spend on Vioxx including tax and shipping fees.

Quick, buy some before they take it off the shelf, so you too can get in on the lawsuit!

By the way, this little tidbit, also via Overlawyered.com, gave me a chuckle.  A woman is suing a railroad for hitting her when she was walking down the railroad tracks.  In part, she is suing the train for "failure of its engineer to...yield the right of way".  LOL - I can't believe the train didn't swerve out of the way.

UPDATE #1

Legal Underground has a post critical of this article:

As grist for its anti-lawyer message, Overlawyered.com is featuring this obvious Internet hoax: "Get Your Million Dollars from Vioxx Lawsuit."  Does Walter Olson really think his readers are so gullible?

In the comments section, I responded as follows:

Hmmm. I am one of the listed disciples (lol). I am willing to believe the ad is non-serious, meaning that it was aimed more at getting traffic and probably was not written by a law firm, and am posting an update as such with a link to this site.

Hoax? In my mind, its a hoax only if the legal advice is wrong or if you think no one would respond to the plea. I can't tell you if Vioxx can still be bought nowadays (that may be a hoax). However, if it was still on the shelf somewhere, ask yourself two honest questions:

1. Is there a lawyer out there who would happily try to make the case that a person who bought Vioxx after the recall can still be awarded damages?  Even if the attorney knew the person bought the Vioxx mainly to get in the class action?
2. Are there people out there who, if they thought it would get them in on a big class action, would go out today and load up on Vioxx solely to get a chance at having a lawsuit?

The honest answer is yes to both (just read the billboards in Florida). I mean, I would bet about any amount of money that someone out there has read this on the Internet and has tried to go buy Vioxx to get in on the jackpot. Guaranteed. Would any of you take the other side of this bet?

The fact that this ad may not be from a real lawyer does mean that I may have overstepped in painting law firms as being this bad (sorry), but I don't think its being fake in any way hurts the case that the notion of individual responsibility is on life support in this country.

By the way, after looking at Walter Olson's original post, I think he was pretty careful not to claim that the page was from a real law firm, and basically pointed to the same issues with the page's provenance that Legal Underground pointed out.

In the companies I have run, I have spent an inordinate amount of time dealing with a few really ridiculous lawsuits.  Here are two examples (that happened to companies I ran - this is not Internet hearsay or friend of a friend):

1. A visitor to one of our facilities claims to have stepped, while walking in his bare feet, on a nail that was on the ground.  He did not come to us for first aid, but called us later after he had left our facility.  He never could produce the nail, nor could we ever find one in the area, but we agreed to pay any small bills he had -- we assumed he might have gone to the emergency room for a tetanus shot or maybe to get a band-aid.  It turns out he eventually claimed that the injury caused him to - get ready -  experience sexual dysfunction, which he eventually sued us over when we refused to pay any treatment costs.
2. A woman came to our office at our facility limping, claiming to have fallen down the stairs and saying that we were gonna pay.  Despite the fact that it was a crowded area, no witnesses could be found.  We offered her a ride to the hospital which she refused.  Several of our employees thought we saw her come into the facility limping already.  Within the week, she was threatening to sue us for the cost of her knee operation.  Fortunately, since our employees saw her limping coming in, we did some more research, and members of her family told us she was also suing a restaurant she had visited the week before for the same injury.  It turns out she was uninsured, and had hurt her knee elsewhere, and was out trying to find some public business that she could get to pay for her operation. 

Given this experience, I am not going to apologize for believing that the referenced ad might be real.

UPDATE #2:

By the way, I don't think that Legal Underground was calling the train story a hoax, only the Vioxx.  By the way, the exact wording on the complaint against the railroad is even better than I thought:

"The [engineer] did not stop the train in a timely manner, and failed to yield the right of way to a pedestrian walking along the tracks in plain view"

A freight train's topping distance is measured in miles, even with full emergency braking.

She and her attorney's further argue:

that the railroad was negligent for failing to post signs warning 'of the dangers of walking near train tracks and that the tracks were actively in use

Lets leave aside the obvious point about individual responsibility, and ask what would happen if this were the legal standard, to have such signs.  To make sure someone saw one, you would have to have one say every 30 feet.  Since there are just over 200,000 miles of freight railroads in the North America that works out to a bit over 35,000,000 signs that need to be posted.  At $100 per sign this would cost $3.5 billion.

Here is the serious point:  Never would any legislature pass a law that said there had to be warning signs every 30 feet on railroads.  It would be way too costly for little benefit.  At grade crossings today, we have signs and flashing lights and even gates and still thousands of people a year drive in front of trains on grade crossings.  So, if we would never require it legislatively, how have we gotten to a point where a jury might effectively retroactively require such signs, and assess a multi-million dollar penalty for not doing it?

Today, we had another $300 workers compensation claim.

First, I will begin by saying "Thank God for the workers comp system in this country". Basically the philosophy of the system is this: Workers give up their right to sue their employer over workplace injuries in return for a guarantee of medical care and a defined benefit compensation system. Yeah, some states (like Florida, in particular) have some real fraud and management problems. In California last year, before reform, I was paying $20 in workers comp premiums for every $100 in wages -- and this despite having no claims the last few years. But, given the state of the lawsuit industry in this country, imagine the effect if workers could sue over every injury, large or small. Shudder.

As an aside, this issue has greatly affected the whole asbestos litigation situation, as detailed here. It can be argued that most workers' asbestos injuries are more likely due to poor protections on the job site, rather than any product problems from the asbestos makers. Asbestos using companies, after all, have known asbestos is dangerous since before WWII. In fact, navy shipyards in WWII were some of the worst offenders in terms of not using masks, poor ventilation, etc. But, since employers generally can't get sued over injuries (and its hard to sue the feds), lawyers concentrate on the "product labeling" argument and sue the asbestos makers into bankruptcy, which explains why litigation attorney's coach their clients like this.

Anyway, in many states, workers comp needs reform. Ahnold, for example, did a nice job of attacking this issue in California, and our company got an immediate 10% discount on our rates once the legislation passed. One thing that is never discussed and frustrates the heck out of me is the issue of deductibles. We get a lot of small claims (e.g. went to emergency room, got checked out, all was OK, went home). As with any kind of insurance policy, filing a lot of small claims this year is death on premiums next year. Workers comp is worse than most, as it has an experience mod system that guarantees that for every dollar in claims that goes out this year you pay an extra $1+ next year in premiums (in the next few days Coyote Blog will be starting a new series called "things they didn't teach me in business school" and the mechanics of workers comp will be one of the first posts).

Unfortunately, many states, such as Arizona, do not allow you to have a deductible on your workers comp policy. This is not an insurance company practice that might change with new competitors, but the law. So, we keep paying out small claims that probably drive up our premiums $2 for every dollar in claims.