Patrick Higginbotham 
Patrick Higginbotham started his service as a federal judge in 1975. 

In Huss v. Gayden, 571 F.3d 442 (5th Cir. 2009), a panel split 2-1 on whether the district court erred in blocking part of a defense expert's testimony in a med mal case.  The trial judge ruled that the expert lacked the knowledge and experience necessary to opine that Terbutaline sulfate, which stops birth contractions, did not weaken Barbara Huss's heart.  The jury awarded Ms. Huss $3.5 million against the prescribing doctor and clinic.  The majority held that the exclusion of the expert's opinion on "specific causation" required a new trial.

Senior Circuit Judge Patrick E. Higginbotham dissented from the panel decision and, this week, from the full court's refusal to reconsider.  He wrote: 

I speak only of the objective message given by the court's handling of this case.  Whatever the impulses of individual judges, about which I am silent, that message is clear.  To leave this opinion on the books unsettles the law of the circuit and delivers a gross injustice.  There is a large policy debate in this country over the wisdom of providing a patient a claim against his doctor for negligence.  Whatever the relative merits of the contending forces, there is an abandonment of judicial roles when judges allow their private view on jury trials and the divisive issues of health care to guide their judicial hand.  The appearance cast by objective recitation of the history of this case is more than judges seeing a case as an opportunity to reach preferred social ends, it is an unwitting loss of place that disserves the judicial duty of disinterest, essential to the integrity of any court.  Ms. Huss had a legal right to pursue her claim and a legal right to a jury trial.  Not only has this court taken that away, it has volunteered suggestions to the district court that he should exclude the testimony of the plaintiffs' experts, this after reversing him for excluding evidence offered by the defendants.

This court has drifted to a seriously flawed view of the role of an en banc court.  That half of the active judges would first refuse to consider the panel ruling that the case was barred by limitation and then years later refuse to consider en banc the panel majority's present ruling exposes the court's new vision.  This is a court of error.  It is not the Supreme Court.  It does not have "discretion" to just "decline to rule."  Unlike the Supremes, it does not have the discretion to decide what it will decide, a powerful tool for implementing social poicy.  This is no lonely view.  It is shared by distinguished scholars.  There can be no offhand dismissal such as — no great injustice here, the plaintiffs' science is weak, I think.  This leaves litigants at the mercy of panel routette — the "law" being the unchartered and legally indefensible view of two judges.  There is sad irony in this court's handling of the limitations question.  The same judges prepared to hold that the Husses lost all their rights to sue when they did not file within two years of her diagnosis now, after nine years in federal court, hold that the case should start over, with a large suggestion that the trial judge should not let this case get to a jury again.  Trials of civil cases are disappearing in federal courts.  Litigation is fleeing the courts.  Much is being written about this phenomenon and why it is occurring.  To those students I say:  read this case.

Huss v. Gayden, No. 04-60962, slip op. at 18-19 (5th Cir. Oct. 14, 2009).

Blawgletter has fussed before about judicial noticing of facts on the basis of wishful thinking.  Our prime targets have included the idea that class certification exerts "hydraulic pressure" for settlement and the notion that class actions involve little or no risk for plaintiffs' counsel.

Yesterday brought another instance — although, with the decision pending and therefore in doubt, we can yet hope for a sensible outcome.

The case involved civil rights lawyers who did a world-class job against the State of Georgia.  The district court found for the plaintiffs and awarded their lawyers a fee above their "lodestar" — hours times rates — of around $6 million.  The Court heard argument on the Peach State's appeal from the award October 14.

We have court this morning and so can't give details on the back and forth but note, briefly, that the questions from several individual justices highlighted their inexperience with (a) working on a non-hourly basis, (b) representing plaintiffs, (c) how the market for legal services works in contingent fee settings, and (d) the imperfection of lodestars in reflecting a reasonable fee. 

One justice, for example, marveled that a law firm might pay a bonus, above hourly rates, for superior performance and results.  Another wondered how hourly rates could ever fail to capture the true value of lawyers' work.

The issue, as we understand it, turns on whether a "reasonable fee" means no more than the lodestar.  We tend to think Justice Sotomayor's questions aimed at the right answer.  If the market pays a premium for superior results, that premium reflects a reasonable fee.

The Dallas Morning News reports that long-time U.S. District Judge William Wayne Justice passed away yesterday.

Update:  Judge Justice served as U.S. Attorney for the Eastern District of Texas before taking the bench in 1968.  Thirty years later, he took senior status and moved to Austin.

The Austin Statesman-American carries a mostly glowing obituary.  Blawgletter found it worth reading. 

We recall Judge Justice in our youth from spiteful things that adults in our East Texas home town said about him.  His orders desegregated the middle school we started going to in sixth grade — 16 or so years after Brown v. Board of Education, 347 U.S. 483 (1954).  People who didn't know him seemed to hate him for that.

In college, we wrote a seminar paper on why whites in the South resisted school integration so much.  We posited that coercion by federal power made mixing races in classrooms an unnecessarily bitter pill.  The impoliteness and presumptuousness of the feds seemed to us partly to blame for white push back.

Judge Justice didn't share our naiveté.  All carrot and no stick doesn't work all the time.  Many today thank God he understood that.

Arctic Glacier, the U.S. unit of a Manitoban outfit, pleaded guilty to violating section 1 of the Sherman Act.  It confessed to conspiring with rival ice-makers not to vie for customers in Detroit and southeastern Michigan.  The Antitrust Division of the U.S. Department of Justice said:

FOR IMMEDIATE RELEASE
TUESDAY, OCTOBER 13, 2009
WWW.USDOJ.GOV

AT
(202) 514-2007
TDD (202) 514-1888

 

MINNEAPOLIS PACKAGED-ICE COMPANY AGREES TO PLEAD GUILTY AND
THREE FORMER EXECUTIVES PLEAD GUILTY TO CUSTOMER ALLOCATION
CONSPIRACY

Company Agrees To Pay $9 Million Criminal Fine

WASHINGTON — A packaged-ice company, headquartered in St. Paul, Minn., has agreed to plead guilty and to pay a $9 million criminal fine for allocating customers, the Department of Justice announced today. In addition, three of the company’s former executives pleaded guilty for their roles in the conspiracy to allocate customers.

According to a one-count felony charge filed under seal on Sept. 10, 2009, and unsealed today in the U.S. District Court in Cincinnati, Arctic Glacier International Inc. engaged in a conspiracy to suppress and eliminate competition by allocating packaged-ice customers in the Detroit metropolitan area and southeastern Michigan, beginning Jan. 1, 2001, and continuing until at least July 17, 2007. Under the plea agreement, which must be approved by the court, Arctic Glacier has agreed to cooperate with the Department’s ongoing investigation.

According to separate one-count felony charges, also filed under seal on Sept. 10, 2009, and unsealed today in the U.S. District Court in Cincinnati, Frank Larson, Arctic Glacier’s former senior vice president of operations, and Keith Corbin, the company’s former vice president of sales and marketing, participated in the same conspiracy beginning at least as early as March 1, 2005, and continuing at least until July 17, 2007. According to an additional one-count felony charge filed under seal on Sept. 10, 2009, in the U.S. District Court in Cincinnati and unsealed today, Gary Cooley, the company’s former vice president of sales and marketing, also participated in the conspiracy from at least as early as June 1, 2006, until July 17, 2007. Under the three separate plea agreements, which must be approved by the court, the former executives have agreed to cooperate with the Department’s ongoing investigation.

In court documents, the Department said that the three former executives and Arctic Glacier, conspired with another packaged-ice competitor to allocate packaged-ice customers in southeastern Michigan and the Detroit metropolitan areas. As a part of the conspiracy, Arctic Glacier, its former executives and other co-conspirators exchanged information for the purpose of monitoring and enforcing adherence to the agreed customer allocations and refrained from competing for the allocated customers.

Arctic Glacier, Larson, Corbin and Cooley are each charged with allocating packaged-ice customers in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and a $100 million fine for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the Sherman Act maximum fines.

These charges stem from an ongoing antitrust investigation into the packaged-ice industry. As a part of the same investigation, Home City Ice Company pleaded guilty on June 17, 2008, for its participation in a conspiracy to allocate customers and territories in the packaged-ice industry. The investigation is being conducted by the Antitrust Division’s Cleveland Field Office and by FBI offices in Ann Arbor, Mich.; Indianapolis, Ind.; Dallas, Texas; and Cincinnati and Toledo, Ohio.

Anyone with information concerning customer or territorial allocation agreements, or other anticompetitive conduct in the packaged-ice industry, should contact the Cleveland Field Office of the Antitrust Division at 216-687-8400.

Blawgletter notes that the Antitrust Division raided the other major ice-maker in the U.S., Reddy Ice of Dallas, earlier this year.  The Judicial Panel on Multidistrict Litigation centralized civil antitrust cases against Arctice Glacier, Home City Ice, and Reddy Ice in Detroit federal court.

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JeffSkilling 

The U.S. Supreme Court granted certiorari today to review the 2006 criminal conviction of former Enron CEO Jeffrey Skilling on charges of securities fraud, insider trading, conspiracy, and lying to auditors.  WSJ article here

The Fifth Circuit upheld the verdict on January 6, 2009.

Update:  SCOTUSBLOG says:

The Supreme Court agreed on Tuesday to rule on claims that “searing media attacks” on longtime Enron executive Jeffrey K. Skilling tainted his criminal trial and conviction on various fraud charges.  The case of Skilling v. U.S. (08-1394) also raises an issue on the scope of the federal law punishing the failure to provide “honest services” as a corporate executive.

The Nobel Prize in Economic Sciences 2009 went today to a couple of American profs — Elinor Ostrom (at Indiana U. and the first woman to win!) and Oliver Williamson (a Berkeleyite).  According to the Royal Swedish Academy of Sciences, both "Laureates have been instrumental in establishing economic governance as a field of research."

Dr. Williamson's work caught Blawgletter's eye because it looks to reflect an antitrust-friendly view of corporate bigness.  As the Academy summarized the professor's work:

Large corporations may of course abuse their power.  They may for instance participate in undesirable political lobbying and exhibit anticompetitive behavior.  However, according to Williamson's analysis, it is advisable to regulate such behavior directly rather than through policies that limit the size of corporations.

We can't tell what Dr. Williamson means by regulating "directly" but suspect that he favors active use of antitrust law to prevent, stop, remedy, and punish abuses of market power by dominant firms.  Good.

The Judicial Panel on Multidistrict Litigation met in Richmond on September 24.  It has so far issued 19 orders — 14 granting transfer and centralization of multidistrict cases and five not.

Blawgletter couldn't help noting that the Panel has lately added a seventh member – bringing it (at last) back to full strength.  U.S. District Judge David G. Trager has sat in the Eastern District of New York since 1993.  He took senior status in 2006.

Judge Trager joins JPML Chairman John G. Heyburn, II (W.D. Ky.) and members Robert L. Miller, Jr. (N.D. Ind.), David R. Hansen (8th Cir.), Frank C. Damrell, Jr. (E.D. Cal.), Kathryn H. Vratil (D. Kan.), and W. Royal Furgeson, Jr. (N.D. Tex.).

The MDL Panel hasn't posted notice of its next hearing session, but Blawgletter expects the venue to wander southward (and likely palm tree-ward) as autumn marches towards winter.

The September session produced these rulings:

Transferred Litigations (.pdfs)

 MDL No. 2084 — IN RE: AndroGel Antitrust Litigation (No. II)
 
MDL No. 2085 — IN RE: Air Crash Near Clarence Center, New York, on February 12, 2009
 
MDL No. 2086 — IN RE: Pre-Filled Propane Tank Marketing and Sales Practices Litigation
 
MDL No. 2087 — IN RE: Hydroxycut Marketing and Sales Practices Litigation
 
MDL No. 2088 — IN RE: Fairfield Greenwich Group Securities Litigation
 
MDL No. 2089 — IN RE: Airline Baggage Fee Antitrust Litigation
 
MDL No. 2092 — IN RE: Chantix (Varenicline) Products Liability Litigation
 
MDL No. 2093 — IN RE: DIRECTV, Inc., Early Cancellation Fee Marketing and Sales Practices Litigation
 
MDL No. 2094 — IN RE: Cheerios Marketing and Sales Practices Litigation
 
MDL No. 2096 — IN RE: Zicam Cold Remedy Marketing and Sales Practices Litigation
 
MDL No. 2098 — IN RE: Kitec Plumbing System Products Liability Litigation
 
MDL No. 2099 — IN RE: Stanford Entities Securities Litigation
 
MDL No. 2100 — IN RE: Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Products Liability Litigation
 
MDL No. 2102 — IN RE: Sony Corp. SXRD Rear Projection Television Marketing, Sales Practices and
Products Liability Litigation

Litigations Not Transferred (.pdfs)

 MDL No. 2091 — IN RE: Children's Personal Care Products Liability Litigation [Denied]
 
MDL No. 2095 — IN RE: Porcine Circovirus (PCV) Vaccine Products Patent Litigation [Denied]
 
MDL No. 2097 — IN RE: Listerine Agent Cool Blue Products Liability Litigation [Denied]
 
MDL No. 2101 — IN RE: Wells Fargo Checking Account Overdraft Litigation [Denied]
 
MDL No. 2114 — IN RE: ProShares Securities Litigation [Motion Withdrawn]

Feed-icon-14x14 Our feed limits its remarks to the Panel to fewer than five minutes.

LionelHutz 
Attorney Lionel Hutz graduated from Princeton School of Law.  He seldom won and cobbled shoes to pay the bills. 

The Third Circuit today affirmed orders that awarded about $567 million in "common fund" fees.  The money goes to law firms that helped win $6.44 billion in settlement funds.  The claims asserted that Wyeth's weight loss drugs, fen-phen (fenfluramine and phentermine) and dexfenfluramine, caused class members to develop valvular heart disease.  In re Diet Drugs (Fenfluramine/Phentermine/Dexenfluramine) Product Liability Litig., No. 08-2363 (3d Cir. Oct. 8, 2009).

The court made some points on matters that tend to confuse people about fees in class actions.  These include:

  • In common fund cases, the court awards fees out of the valuable things — usually cash — that class counsel obtain for class members.  Common fund cases differ from fee-shifting cases, where a losing party has to pay the other side's fees on top of damages.  The court pointed out that Diet Drugs involved a common fund, rejecting an objector's argument to the contrary.
  • The risk of a class action case varies over time.  At the outset, with uncertainty at its height, the risk of receiving nothing for pursuing class claims hits a peak.  But it doesn't go away.  As Diet Drugs shows, bad things can happen even after you ink a settlement.
  • A risk multiplier in big class cases — the successful ones anyway — often ranges up to four times the "lodestar" (the lawyers' hours times their hourly rates).  The boost compensates for all manner of risk – of losing on the merits, of losing on procedural grounds, of non-collection, and a great many other bad things that could thwart a recovery.

The First Circuit yesterday approved rulings by district courts coast to coast on the scope of Internal Revenue Service probes into potentially abusive tax shelters – in these cases involving write-offs of bad Brazilian debt.  The court held that the merits of the tax deductions don't matter so long as the IRS offers a "legitimate tax determination purpose".  Sugarloaf Funding LLC v. United States Dep't of Treasury, No. 08-2515 (1st Cir. Oct. 7, 2009).

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