courts Archives

Baltimore sued over a spike in car thefts. Can the city make Kia and Hyundai pay?

Does making cars that are easy to steal constitute a public nuisance for which a city should be awarded damages?

That’s what Baltimore and more than a dozen other cities across the United States are arguing in lawsuits against Hyundai and Kia, which for years made vehicles that did not have engine immobilizers, a relatively inexpensive and industry-standard part that prevents a car from starting without the key. A viral TikTok challenge has helped fuel a nationwide explosion in thefts of some models made between 2010 and 2021 because people can steal them with as little as a screwdriver and a USB cable.

“These cost-cutting measures employed by Hyundai and Kia at the expense of public safety are unacceptable,” Mayor Brandon Scott said in a statement. “They have left our residents vulnerable to crime and are significantly burdening our police resources.”

The lawsuit is an example of how governments are working with private law firms to seek damages from companies using a claim of public nuisance, a vague legal doctrine that dates back centuries. There has been a resurgence of these cases in recent decades with litigation against tobacco makers, the fossil fuel industry and opioid manufacturers.

And though it can be difficult to prevail in court, some of these lawsuits against product manufacturers have led to multibillion-dollar settlements.

More than a dozen cities have sued Hyundai and Kia

Seattle City Attorney Ann Davison sued Hyundai and Kia, and cities including New York, Cleveland and St. Louis have followed. The complaint from Baltimore includes some paragraphs that are identical to the lawsuit that Seattle filed against the automakers, including one that reads, “Reckless driving impacts the comfortable enjoyment of life, health, and safety of others within Seattle.”

Sara Gross from the Baltimore City Law Department and Richard Gordon and Martin Wolf of Gordon, Wolf & Carney are representing the city. The law firm is working on the lawsuit on a contingency basis, which means that outside counsel will receive a percentage if the city wins or settles the case, said Bryan Doherty, Scott’s director of communications, in an email.

The lawsuit has since been transferred to U.S. District Court for the Central District of California.

In a statement, Kia said the lawsuits are “without merit.” The National Highway Traffic Safety Administration has stated that it has not determined that the anti-theft issues constitutes a safety defect or noncompliance that requires a recall, the statement continued.

“Kia continues to take action to help our customers by making it more difficult for criminals to use methods of theft recently popularized on social media to steal certain vehicle models,” the company said.

Ira Gabriel, senior group manager for corporate and marketing public relations for Hyundai, said in a statement that, “Hyundai is committed to the comprehensive actions we are undertaking to assist customers and communities affected by the persistent theft of certain vehicles not equipped with push-button ignitions and engine immobilizers.”

Engine immobilizers, he said, are now standard on all cars.

The car manufacturers have rolled out software updates and partnered with police departments to give out steering wheel locks.

‘Low probability of success’

Historically, certain actions were viewed as public nuisances, such as blocking a road or polluting the local water supply, said Thomas Merrill, Charles Evan Hughes professor of law at Columbia Law School.

In the 19th century, Merrill said, state legislatures declared certain activities public nuisances, including gambling dens and houses of prostitution. Meanwhile, in the 20th and 21st centuries, he said, the legal doctrine has been “construed to be kind of a joker in the deck.”

Merrill said the traditional remedy in public nuisance cases was orders of abatement to stop the behavior. Now, he said, attorneys have asserted the right to sue for compensation to recover money spent on dealing with a problem.

It can be tough to win these cases.

“I think there’s probably, if it ever goes to adjudication, there’s a low probability of success,” said Donald Gifford, distinguished university professor and Jacob A. France professor of torts at the University of Maryland Francis King Carey School of Law. “Public nuisance suits against product manufacturers have very rarely been successful.”

Lawyers, he said, are trying to “throw out 100 years of well-developed product liability law” and proceed under a claim of public nuisance because it is “vaguely defined, to say the least.” A public nuisance is anything that annoys or offends, Gifford said.

The lawsuit that Baltimore filed against Hyundai and Kia is in federal court, but state law applies to the case, Gifford said. And Maryland courts, he said, have rarely been pro-plaintiff, progressive or avant-garde.

But if a settlement is reached, Gifford said, it could be significant to the city and the attorneys handling the case.

The states reached a $246 billion, 25-year settlement in 1998 with the tobacco industry as compensation for health care costs related to smoking. Three drug wholesalers, AmerisourceBergen, Cardinal Health and McKesson, as well as Johnson & Johnson, finalized a $26 billion settlement in 2022 to resolve lawsuits alleging that companies helped fuel the opioid crisis. Other cases have been less successful.

Car thefts cost the city and the people who live there in numerous ways, from taking up police resources to saddling drivers with higher insurance rates. Even if law enforcement recovers a stolen vehicle, it can take weeks for a mechanic to even look at a car because of backlogs.

“What’s happened for the last 25 years is that these attorneys go to state and city governments, and they say, ‘Look, you know we have a desperate problem, because you don’t have adequate public funds to solve the problem of rampant auto theft. And we’ve got a way that will cost you nothing,’” Gifford said.

“That’s a very attractive proposal if you’re the mayor of Baltimore or a member of the City Council,” he added. “And so I’m not sure exactly what the attorneys are thinking here, except that they think it’s a long shot chance, but it’s one worth pursuing.”

Sometimes, Gifford said, these lawsuits can make regulators aware of specific issues.

“I’m not a conservative. I’m anything but a conservative,” he said. “But you know, not all problems have solutions in courts.”

‘I certainly hope the manufacturers will do the right thing’

Andre Davis, a retired judge of the U.S. Court of Appeals for the Fourth Circuit and former Baltimore city solicitor, said though there is no assurance that these lawsuits will be successful, “it’s not so outrageous or specious or speculative, given the nature of the law of nuisance, that a city shouldn’t pursue it.”

Davis said he thinks that there is a plausible argument that Hyundai and Kia should be held liable for some amount of damages to cities that have experienced a spike in car thefts. He brought up how the automakers did not include anti-theft technology in their vehicles while a majority of manufacturers were doing so.

Though 96% of cars from all other automakers had engine immobilizers in 2015, that was only the case for 26% of Hyundai and Kia vehicles, according to the lawsuit. At the same time, the companies were installing them in all cars made for the Canadian and European markets, where they are legally required.

A critical point in the litigation, he said, will be whether a judge finds that there is enough for a claim of public nuisance to proceed. If a law firm is working on a case on a contingency basis, Davis said, there’s no financial downside to the city.

He said he’s not in a position to predict how the lawsuit will turn out.

“But I certainly hope the manufacturers will do the right thing and step up and put on their big boy pants and pay compensation to people who were harmed as a result of their reckless behavior,” Davis said.

“Giving out those steering wheel locks is not enough.”

dylan.segelbaum@thebaltimorebanner.com

NY Files Unprecedented Lawsuit Against PepsiCo

AG Letitia James’ lawsuit charges PepsiCo with harming the public and failing to warn consumers of environmental and health threats of its single-use plastic packaging.

New York Attorney General Letitia James filed a lawsuit against PepsiCo Inc. on Nov. 15 for harming the public and the environment with its single-use plastic packaging. According to a press release from the Office of the Attorney General (OAG), it found that “single-use plastic produced by PepsiCo contributes significantly to high levels of plastic pollution along the Buffalo River, pollution that is contaminating drinking water and harming wildlife.”

The lawsuit alleges that PepsiCo substantially causes public harm in Buffalo, has failed to warn consumers about the potential health and environmental risks of its single-use plastic packaging, and misleads consumers and the public about its efforts to combat plastic pollution. Through this lawsuit, AG James seeks to require PepsiCo to end practices that threaten the environment and the public and to obtain disgorgement, civil penalties, and restitution for the damage inflicted upon New York’s communities and environment.

“No company is too big to ensure that their products do not damage our environment and public health. All New Yorkers have a basic right to clean water, yet PepsiCo’s irresponsible packaging and marketing endanger Buffalo’s water supply, environment, and public health,” said AG James. “No one should have to worry about plastics in their drinking water, plastic garbage littering their scenic riverfront, or plastic pollution harming wildlife. I will never hesitate to take on major corporations that put the health and safety of everyday New Yorkers and our planet at risk.”

In response to the allegations, PepsiCo said in a statement, reported by Fortune, that it was serious about “plastic reduction and effective recycling.” However, noted the article, the company didn’t directly comment on the lawsuit’s claim that it was legally responsible for keeping garbage out of the Buffalo River.

Survey finds plastic is a major pollutant in Buffalo River

PepsiCo, which is headquartered in New York state, manufactures, produces, and packages at least 85 different beverage brands and 25 snack food brands that predominantly come in single-use plastic containers.

According to the press release from the OAG, plastic packaging has become a persistent and dangerous form of pollution along the shores of the Buffalo River and in its watershed. In 2022, the OAG conducted a survey of all types of waste collected at 13 sites along the Buffalo River and in its watershed. In total, 2,621 pieces of waste containing identifiable brands were collected throughout 2022; nearly three quarters (73%) were plastic. These items included single-use food wrappers, plastic bottles, and bottle caps used for food and beverages.

Says the OAG, PepsiCo’s plastic packaging far exceeded any other source of identifiable plastic waste, and it was three times more abundant than the next contributor, McDonald’s. “Of 1,916 pieces of plastic waste containing an identifiable brand, 328 (17.1%) were produced by PepsiCo,” it reports.

Continues the release, once in the environment, single-use plastic packaging quickly starts to break down and release dangerous microplastics. A nationwide study by NGO Break Free From Plastic aggregated 2,125,415 items of plastic waste from 2,373 separate collections across the U.S. from 2018 to 2022. In each year, the study documented PepsiCo as either the number one or number two producer of branded plastic trash collected across the country.

Large quantities of microplastics have been found in the Buffalo River, and an analysis of those fragments has confirmed the presence of microplastics from snack food wrappers and polymers of the type used in PepsiCo’s plastic beverage bottles and bottle caps.

Meanwhile, PepsiCo admits on its website that “inadequate infrastructure and low recycling rates make collection and recycling of packaging difficult and increase the likelihood of packaging leaking into the environment.”

To combat this, PepsiCo reports that from 2021-2022, it committed $50 million in investments to key partners to improve the recycling infrastructure. Says the company, “In 2022, we committed $35 million to help create the Closed Loop Local Recycling Fund to advance new small-scale, modular recycling systems in U.S. communities. We are also a founding member of the Closed Loop Infrastructure Fund and have invested in the Closed Loop Beverage Fund through American Beverage Association’s Every Bottle Back Initiative.

“Alongside industry peers, in 2023, we invested in Circular Services, a developer launched by CLP and Brookfield Renewable, whose goal is to build recycling facilities that will enable U.S. cities to abandon the costly practice of dumping waste in landfills by ensuring that valuable commodities are recycled and reused in domestic supply chains. Since 2018, PepsiCo and the PepsiCo Foundation have committed to invest more than $100 million in global recycling partnership initiatives to help elevate recycling rates and waste collection.”

OAG’s legal claims against PepsiCo

The lawsuit against PepsiCo alleges that the company has significantly contributed to, and continues to contribute to, the existence of a public nuisance that injures the community living in the city of Buffalo and the environment. It also alleges that PepsiCo has misled the public about the effectiveness of its plastic recycling and its efforts to combat plastic pollution.

“For example,” the lawsuit reads, “PepsiCo’s statements have misled consumers and the public by creating the impression that the company was making meaningful progress toward reducing the use of non-recycled (virgin) plastic in its packaging, but no such progress is being made. On the contrary, for the last four years, PepsiCo’s use of virgin plastic has increased year by year. In 2022 alone, PepsiCo acknowledged that its use of virgin plastic in its plastic packaging increased by 11 percent.”

AG James also charges that PepsiCo failed to warn its consumers about the risk of harm to human health and the environment posed by its packaging. PepsiCo’s failure to warn consumers and its misleading public statements are said to violate New York General Business Law § 349 and New York Executive Law § 63(12).

Through this lawsuit, AG James is asking the court to require PepsiCo to cease contributing to the public nuisance it is causing in the Buffalo region, remediate the contamination it caused, and identify and implement measures to reduce the quantity of PepsiCo’s plastic packaging entering the Buffalo River. The lawsuit further seeks to stop PepsiCo from selling or distributing any product in the Buffalo region in single-use plastic packaging that does not contain an adequate warning. The lawsuit also seeks disgorgement, civil penalties, and restitution. PW

Louisiana Courts Still Tidying Up After Storm of McClenny Moseley Lawsuits

In December 2022, before much was known about how McClenny Moseley & Associates in Houston was able to set up shop in New Orleans and sign-up thousands of Louisiana clients in less than a year, US District Court Judge James D. Cain shared some strong words with the law firm’s managing attorney in Louisiana.

“What I’m trying to get you to understand is you have dumped a mess on this court,” Cain told R. William Huye, who had opened up MMA’s New Orleans office in 2021.

Cain and other Louisiana judges are still trying to clean up that mess.

The 3,267 hurricane-damage lawsuits that MMA filed in Louisiana federal courts forced another wave of litigation, one that spawned lawsuits in both Louisiana and Texas that involve litigation finance investors, mortgage companies, damage estimators and property owners.

Investors who reportedly loaned the law firm $30 million sued to get their money back. MMA sued 20 mortgage companies that refuse to endorse $20 million in insurer settlement checks. Law firms that took over MMA’s cases filed lawsuits to keep MMA from interfering with their work. Property owners sued because MMA’s lawyers told insurers that it represented them and filed lawsuits on behalf of “clients” they had never met.

New Orleans insurance defense attorney Matthew Monson said the root of the matter can be traced to the investors who loaned MMA millions to finance the law firm’s “litigation harvesting.” There is no public record that shows the purpose of those loans. It is known that after securing the funding, MMA paid $13.9 million to an online marketing company based in Arizona called Velawcity for “pre-screened client leads” that cost $3,000 to $3,500 each.

“The story is not really about MMA. It’s about what is the extent of investment in illegal schemes to sign up clients in all lines of business,” Monson said.

“I think this is the future of how cases are being harvested. The days of an attorney waiting for his phone to ring because of a radio advertisement or bill board are already over.”

Disappointed investors

Equal Access Justice Fund and the EAJF ESQ Fund, both managed by B.E. Blank in West Palm Beach, Florida, filed a lawsuit against MMA in Harris County, Texas on Sept. 1. The funds claim the law firm defaulted on a total of $30 million that it borrowed through a series of loans made from September 2021 to November 2022. MMA pledged fees the attorney fees earned from its cases as collateral for those loans, the suit says.

Judge Cain effectively stripped much of that collateral away on Aug. 22 when he signed an order stating that MMA, because if its misconduct, had no right to fees from any of the lawsuits it filed in the Western District of Louisiana. B.E. Blank filed a motion to intervene in that disciplinary action, but Cain denied it. The investment house has filed a notice that it is appealing to the 5th District Court of Appeals.

B.E. Blank refused to answer questions about its investment in MMA lawsuits. It did issue a statement saying that it strives to partner with law firms that adhere to the highest ethical standards.

“While we do not believe that McClenny, Moseley, and Associates intentionally sought to undermine the Louisiana bar rules, we acknowledge that questions have been raised about the manner in which the firm brought new clients on board,” the statement says. “We admittedly don’t have all the facts, as our role was to lend funds—not litigate cases.”

‘Tableau of misconduct’

McClenny Moseley was a prolific litigator.

Federal court records show that the law firm filed 2,455 lawsuits in the Western District of Louisiana in 2022, with 1,642 of those cases filed from Aug. 23 to Aug. 26 — just before the two year statute of limitations for lawsuits related to Hurricane Ida was about to expire. MMA also filed 656 lawsuits in the Eastern District of Louisiana and 156 lawsuits in the Middle District.

Judges in the Western and Eastern Louisiana took notice when they learned that many of those lawsuits were filed against the wrong insurance company, duplicated lawsuits that had been filed by other law firms, or sought damages for claims that had already been settled. Cain in the Western District, and Judge Michael North in the Eastern District, discovered later that MMA had not even signed retention agreements with many of the homeowners they purported to represent.

Some of the homeowners had signed contracts with Apex Roofing and Restoration after being solicited by sales representatives who walked door to door in hurricane-damaged neighborhoods. Others were signed up by Velawcity, which sent thousands of text messages and emails to potential hurricane damage claimants that provided a telephone number to a call center staffed by non-attorneys.

US District Court Judge Michael B. North summed up MMA’s misdeeds in a March 16 order, saying that the numerous cases that he was forced to clean up because of the law firm’s action are an example of what happens “when ego and greed become a lawyers’ guiding principles.”

“In these consolidated cases, the court and the parties — indeed, our entire legal community — are confronted with an unprecedented tableau of misconduct by a Texas-based law firm, assisted in its misdeeds by an Alabama-based roofing contractor and an Arizona-based, modern-day case runner.”

‘Illegal barratry scheme’

At least three groups of property owners who were caught up in MMA’s marketing blitz have filed separate lawsuits seeking damages.

One of those actions was filed by Katherine Monson, the wife of defense attorney Matthew Monson. She filed a class-action complaint in the US District Court in Houston that also names Tort Network LLC, the owner of Velawcity, as a defendant. The suit seeks damages in excess of $5 million for “unlawful acts of barratry,” meaning the improper solicitation of clients.

Another lawsuit filed by lead plaintiff Wayne J. Adams and eight other Louisiana property owners in Harris County court seeks $1.8 million in penalties from MMA and Tort Network as compensation for the “illegal barratry scheme.” The lawsuit notes that under Texas law litigants who are illegally solicited can seek a $10,000 civil penalty for each solicitation.

The third lawsuit was filed by Louis Carter III in the Louisiana 21st District Court in Tangipahoa Parish. Carter alleges that he signed an assignment of benefits form after a representative for Apex knocked on is door. MMA then falsely told his insurer that the law firm was representing him even though Carter had never heard of the firm and preferred to deal with his insurer directly, the lawsuit says.

The lawsuit has been transferred to the US District Court for Eastern Louisiana. Huye, MMA’s former managing attorney in New Orleans, filed a motion to dismiss the case on May 17. He argues that Carter signed an arbitration agreement when he signed his assignment of benefits agreement with Apex Roofing.

Damage estimates

Companies that MMA hired to provide damage estimates have their own disputes with the law firm.

PCG Claims, headquartered in Franklin, Tennessee, filed a lawsuit in Harris County on Aug. 21 seeking to recover $9,354,628.46 that is says it is owed for field inspection services. The company said MMA agreed to pay $250 per hour for its services.

Global Estimating Services, filed a lawsuit in April against MMA in Harris County court seeking $9,685,862.99 for field inspection services that it provided to the law firm. The company alleges MMA failed to make scheduled payments on the debit.

Global Estimating’s parent company, Access Restoration Services, also filed a lawsuit against MMA in Harris County at about the same time. ARS says it loaned MMA $3 million after it was promised a 542% return on the investment. Instead, the law firm defaulted, the lawsuit alleges.

Curiously, 17 former field inspectors for GES have also filed a lawsuit in Harris County — but against their former employer. They allege they are owed for overtime and bonuses that were promised but never paid.

Uncashed checks

While those lawsuits move through state and federal courts, judges in Louisiana have been working to resolve the cases filed by MMA. Toward that end, Judge Cain ordered founding partner John Zachry Moseley to turn over the law firm’s financial documents.

Cain called Moseley to his court room in Lake Charles on Aug. 8 to answer questions about money held by the firm on behalf of its clients. He noted that MMA was holding on to $20,042,940 in settlement checks from insurers that had not been deposited into trust accounts.

Moseley replied that mortgage companies had refused to endorse the checks. He said MMA has filed 20 lawsuits against mortgage lenders in an attempt to negotiate the uncashed checks.

Federal court records confirm that those lawsuits were filed against multiple mortgage companies. One example is MMA’s lawsuit against Bank of America, where it alleges it is entitled to $67,707.66 in fees and $15,800.68 in costs for services provided to eight mortgage holders in Louisiana, Texas and Florida.

MMA says the bank has refused to endorse the settlement checks made out those to homeowners even though MMA provided disbursement statements showing that the firm is entitled to a portion of the money. Bank of America answered that MMA had failed to present it with a valid attorney fee lien.

“I think there’s over 900 mortgage companies in the state of Louisiana,” Moseley told Cain during the Aug. I hearing. “Some were willing to work with us, some were not.”

Cain told Moseley that he and his staff will take over the task of disbursing the settlement money.

“I’ll probably sort out with the State Bar a mechanism for a trustee to be appointed,” he said. “I’ll get with the insurance companies on getting these checks reissued.”

In the meantime, sanctions against MMA continue to pile up. On Oct. 10, Magistrate Judge Kathleen Kay in Shreveport ordered MMA to pay $8,535.52 in attorney fees and costs to Matthew Monson’s law firm. Kay said in her order that MMA filed a lawsuit on behalf of a Louisiana homeowner against Homeowners of America Insurance Co. even though the carrier does not write homeowners policies in Louisiana and did not insure MMA’s client, Johnny Venzant.

Monson said other law firms that took over MMA cases are making the same mistake. Court records show that attorney Mark Ladd with the Galindo Law Firm — another Houston law firm that set up shop in Louisiana to take on hurricane-damage claims — filed a lawsuit on behalf of a former MMA client against Homeowners of America for alleged Hurricane Ida damage.

To make matters worse, the plaintiff in the suit is named as Starwood Gwendolyn when her name is clearly Gwendolyn Starwood, Monson said. The lawsuit was filed on the two-year anniversary of Hurricane Ida making landfall, which means the statute of limitations has now expired and Starwood’s claim is now prescribed, Monson said.

“Just like MMA, Galindo law is another Houston-based firm that came to Louisiana to get on the Hurricane Ida bandwagon,” Monson said. “Unfortunately in this instance, they have deprived Ms. Starwood of the right to proceed against the proper insurer.”

Michigan’s business courts: A decade of success

Michigan’s business court legislation took effect on Jan. 1, 2013, and was implemented in 17 circuits¹ during the first half of that year. Since then, in circuits with a business court, every “business or commercial dispute” (defined broadly) goes to a special docket.² Business courts have become so much a part of the fabric of Michigan’s jurisprudence that many attorneys — those admitted to practice within the past 10 years — don’t know a time when there were no such courts in the state.

This article examines the history of Michigan’s business courts, the business court statute and how business courts have applied it, how innovations in business courts have changed litigation generally, and predictions for the future.

HISTORY OF MICHIGAN’S BUSINESS COURTS

Cyber Court

The business court act³ has roots that stretch back more than 20 years. In 2001, Gov. John Engler signed a bill for a “cyber court,” which was intended as a high-tech court with proceedings conducted by audio, video, or internet conferencing, but it was never funded. The business court act, MCL 600.8031(1), formally repealed the cyber court statute but was modeled in part on that earlier proposal.

Early Business Court Legislation

In December 2001, the State Bar of Michigan Business Law Section Council established an ad hoc committee to study whether the state should adopt some form of a business court. In April 2002, the committee identified three purposes of business courts: enhancing the consistency, predictability, and accuracy of decisions in business cases; enhancing efficiency through proactive case management, technology, and early alternate dispute resolution; and attracting and retaining businesses in Michigan.⁴

The section subsequently formed executive committee to analyze business courts in other states, arranged for a presentation on business courts by New York attorney and noted legal editor Robert L. Haig,⁵ and met with lawyers, judges, and representatives from chambers of commerce and industry associations. The committee also reviewed a comprehensive business court study by Philadelphia attorneys Mitchell L. Bach and Lee Applebaum.⁶

In 2003, the executive committee drafted a pilot proposal for a business court for Michigan and presented it to circuit court judges in Kent, Oakland, and Wayne counties. In 2005, state Rep. Brian Palmer introduced a bill in Lansing establishing a business court, but the measure never made its way out of the House Judiciary Committee.

In 2009, the State Bar established its Judicial Crossroads Task Force, which in turn created a Business Impact Committee. In October 2010, based on that committee’s recommendations, the task force urged the Michigan Supreme Court to create “pilot business dockets” in at least two circuits and “designate no more than three judges per circuit to handle the business docket[.]”⁷

PILOT PROGRAMS, PURPOSE, AND PREPARATION

Business courts finally became a reality on Nov. 1, 2011, when Macomb County Circuit Court launched the state’s first specialized business docket. Just four months later, Kent County Circuit Court established its specialized business docket. On Oct. 16, 2012, Gov. Rick Snyder signed Michigan Public Act 333, which established a business court in every Michigan county with at least three circuit judges.⁸

The purpose of business courts is to resolve commercial disputes efficiently, accurately, and predictably.⁹ The statutory mandate encouraged business courts to adopt evidence-based practices that reduce litigation waste and inefficiencies. Those practices can also serve as a model to trial courts.¹⁰

In the 17 Michigan circuits with business courts, every “business or commercial dispute” must be assigned to the business court.¹¹ The statute defines what constitutes a business or commercial dispute.¹² If at least part of the suit includes a business or commercial dispute, the entire case is assigned to the business court — even if it includes other claims that are specifically excluded as business or commercial disputes.¹³ The Michigan Judicial Institute is responsible for providing appropriate training for the business court judges.¹⁴

IMPLEMENTATION

Recipe for Success

In the 2015 budget for the judiciary, Michigan Supreme Court Chief Justice Robert P. Young Jr. noted that “[e]very trial court in this state can be a little laboratory of new ideas — a fertile ground for discovering new and better ways of doing things.”¹⁵ Business courts are a prime example of how that can be done.

Two of the keys to the business courts’ success are early (and frequent) judicial intervention and early alternative dispute resolution.¹⁶ For example, many business court judges conduct an early status or case management conference which are customized to each case and often occur within 30 days of the answer date.

Early Mediation

Under Administrative Order 2013-6, circuit courts “shall establish specific case management practices for business court matters. These practices should reflect the specialized pretrial requirements for business court cases, and will typically include provisions relating to scheduling conferences, alternative dispute resolution (with an emphasis on mediation scheduled early in the proceeding), discovery cutoff dates, case evaluation, and final settlement conferences.”¹⁷

Accordingly, most business judges encourage early mediation; some order it whether or not the parties agree. Early mediation generally occurs within approximately 90 days after the defendant answers the complaint, often after preliminary discovery is done. The discovery could be done informally or by initial disclosures or other formal discovery. If early mediation does not produce a settlement, courts may — and sometimes do — order a second round of mediation after discovery concludes.

For many reasons, business disputes are well-suited to early mediation. From a business standpoint, the quicker the parties can focus on settlement, the more they can save on legal fees and expenses.

Moreover, early mediation allows the parties to focus on a business solution. (“You buy all your lumber from me, and I will sell it to you at a lower price.”) Occasionally, early mediation can help parties save a relationship or even a family if the dispute is among owners of a family business.

Perhaps the most important reason to resolve cases early is avoiding lost executive time associated with litigation. Every hour that a business owner or executive spends consulting with counsel, responding to interrogatories, producing documents, or giving a deposition is an hour that is not spent on the business. The loss to the business is incalculable.

In the authors’ experience, approximately 50% of cases settle through early mediation. Increasingly, mediation occurs even earlier — perhaps prior to or shortly after suit is filed.¹⁸ Another option is “med/arb”: if mediation does not resolve the case, arbitration follows. In many settlements, the parties agree that the mediator will arbitrate any disputes arising from a breach of the settlement agreement.

Discovery

Short of trial, the most expensive — and often most contentious — aspect of commercial cases is discovery. Business courts sometimes address this through staged discovery, which is limited discovery before early mediation followed by full discovery after mediation if the case does not settle. Courts may also tailor discovery to meet the needs of the specific case.

Business Court Protocols Adopted Elsewhere

Proportionality of discovery is one major business court innovation that has carried over to the general civil dockets.¹⁹ Mediation of discovery disputes is another. In fact, various business courts have used volunteer attorneys in discovery mediation or discovery facilitation programs for years. Discovery mediation is now specifically provided for in the court rules.²⁰

BUSINESS COURT RESOURCES

An abundance of resources for counsel and parties exists for Michigan’s business courts.

State Court Administrative Office

The State Court Administrative Office’s comprehensive resources²¹ includes a summary of the business court statute, the full statute, and local administrative orders. It also contains published business court opinions²² organized by both business court, county, and subject matter (individual courts might also post their own opinions on their own websites) and searchable by keyword.²³Opinions show how a judge has ruled on a particular issue in the past and can provide guidance as to potential rulings in similar cases in the future. That information may cause a party not to file suit, emphasize certain claims or defenses in the suit, or not to file particular motions.

Business Court Caseload Interactive Data

Business court caseload data²⁴ is now accessible through the Michigan Courts interactive data dashboard. It allows users to view data such as the number of business claims filed since 2013, the courts where such claims were filed, case dispositions, and cases pending at year’s end. The tool is a way to quickly view important Michigan business court statistics.²⁵

Alternative Dispute Resolution

Although not limited to business courts, the “Michigan Judges Guide to ADR Practice and Procedure”²⁶ — issued by the Michigan Supreme Court, the State Court Administrative Office, and the Office of Dispute Resolution in 2015 — is a comprehensive guide to all kinds of ADR. That guide was adapted in part from the Macomb County Bar Association ADR Committee’s “A Taxonomy of ADR,”²⁷another helpful resource.

Other Resources

Court and Judge Protocols: Check the protocols for individual business courts and specific judges. This step seems obvious but is sometimes ignored. In business courts with multiple judges, each judge may have different protocols.
Interviews with Business Court Judges: Starting in 2018, the Michigan Business Law Journal has published a regular column called “Touring the Business Courts.”²⁸ It often includes interviews with business court judges and other authorities.²⁹
Advisory Committees: The SBM Business Law Section has a business courts committee. Several business courts have advisory committees of some kind.
ABA Resources: Starting in 2012, Michigan has submitted an annual report on its business courts for the American Bar Association “Review of Developments in Business and Corporate Litigation.”³⁰

CHALLENGES REMAIN

Like many courts in Michigan and across the country, addressing caseloads for many business court judges continues to be a challenge given the limited resources at hand.³¹ Another challenge is continued training for Michigan’s business court judges.

Speaking of training, one issue is training new trial lawyers in an era of virtual hearings and fewer trials. This isn’t limited to business courts, of course. There’s no perfect solution, but an intriguing possibility is a “learn by doing” training for business litigators, which is being discussed by the SBM Business Law Section.³² Nationally, Delaware Superior Court Complex Commercial Litigation Division (CCLD) judges “strongly encourage the participation of newer attorneys in all CCLD courtroom proceedings including … oral argument on motions where the newer attorney drafted or significantly contributed to the motion’s research and briefing.”³³

One major uncertainty is the effect of artificial intelligence (AI) on business litigation and business courts. It is likely that in the not-too-distant future, AI will draft complaints and answers, interrogatories, and discovery motions and continue with document and privilege review, which AI programs have done for some time.

CONCLUSION

Michigan business courts changed how business litigation — and, in some ways, how other civil litigation — is handled. While business courts are a proverbial work in progress, they have spurred many innovations. This is likely to continue. The more things change, the more things change.

The authors thank future associate Matthew Rose for his assistance.

Government lawsuits threaten consumers’ pockets and do little to help the environment

American courts cannot solve climate change — yet cities and states continue to try.

A few weeks ago, California became the latest government to file a lawsuit against major energy companies, joining New Jersey, Hoboken and more than two dozen other local and state governments around the country to file such suits. These lawsuits allege that companies that sell energy should pay billions of dollars for infrastructure upgrades, because energy is a contributor to climate change.

However, this money is not free. If these lawsuits are successful, companies will raise the price of energy for all of us.

In fact, environmental advocates and lawyers for local governments have actually stated that the goal of climate legislation is to raise the cost of energy. They believe forcing companies to raise the price of the energy they don’t like, such as from fossil fuels, will make it too expensive for people and businesses, thus decreasing the amount used.

However, this effort will harm American consumers and is not based in economic reality.

First, the elasticity of demand for gasoline is extremely low, meaning people cannot change purchasing behaviors and use less energy simply because the price goes up. Their cars, homes and businesses rely on these fuels, and they do not have the choice to avoid them. So, if these lawsuits cause energy companies to raise their prices, it will not lead to a reduction in fossil fuel use. It will just lead to higher prices. Families and businesses facing these economic pressures will skimp elsewhere.

Second, the persistent demand for energy cannot be satisfied with other fuels at a reasonable cost. There are no low-cost, renewable substitutes for the amount of energy society consumes. Despite companies diligently working to create more sustainable energy sources, the U.S. Energy Information Administration estimates that the United States’ reliance on petroleum will be about the same in 2050 as it is in 2023.

This means consumers will end up absorbing the cost of these lawsuits by paying higher energy bills. Prices have already been rising, given that inflation is up over 17% since 2021, and families and businesses can hardly afford to pay more when they are not going to see any value for these added costs.

Further, energy companies should not become the funders of local and state governments. The federal government has made billions of tax dollars available to local and state governments for climate adaptation projects, and communities can already spend money from their own budgets on clean energy. So they have other sources for the money they say they need.

In addition, climate change is a byproduct of today’s energy-intensive society. So while it may be true that climate change intensified Superstorm Sandy, as the city of Hoboken alleges in its lawsuit, that does not mean any individual energy producer can or should be assigned liability for that event. It would be akin to blaming one potato chip company for high obesity in the U.S.

Federal courts have recognized these basic legal and economic facts. In 2021, the 2nd U.S. Circuit Court of Appeals dismissed a case brought by New York City stating that even if the allegations were true, no single entity could be legally liable for global climate change. The court previously noted that “emissions in [New York or] New Jersey may contribute no more to flooding in New York than emissions in China.”

Instead of this climate litigation, lawmakers should focus on tangible solutions that can actually reduce carbon emissions. As I suggested in a piece for NorthJersey.com, The Record and the the USA TODAY Network, New Jersey can reach its goal of 100% clean energy by 2050 only if the governor and Legislature align their energy policies with economic realities. This involves supporting clean energy projects, from nuclear to wind investments. Our tax dollars can and should produce real climate dividends.

Sometimes, economics, science and facts differ from ideology. They do here. These ideologically driven climate lawsuits are not worth pursuing because they can harm people economically and produce no benefits to the fight against climate change. The elected leaders bringing these cases should reconsider them, and the courts should continue to dismiss litigation that has no factual or legal merit.

Danielle Zanzalari is an assistant professor of economics at Seton Hall University, a Garden State Initiative contributor and a Young Voices contributor. She researches bank regulation and personal finance.

Bogus Claims Threaten to Taint US Toxic Water Payout to Veterans

(Bloomberg Law) — The government plan to pay billions of dollars to victims of toxic water at Camp Lejeune has unleashed a wave of fraudulent claims that threatens to disrupt or taint what could be one of the largest-ever mass tort cases.

Mikal Watts, whose Texas firm has 6,000 Camp Lejeune clients, said its internal auditors determined hundreds of referrals from other lawyers for Camp Lejuene and other cases were bogus, often based on doctored medical records and fictional reports of diseases or other sickness. Some of the would-be plaintiffs, he said, had been recruited through call centers based in India.

Another lawyer, Donald Marcari, said his Virginia-based firm has rejected scores of suspicious Camp Lejeune claims, including a few from people who listed home addresses that turned out to be a Burger King or a local chapel, or who offered confusing or illogical replies to routine questions about their time at the base or how they got sick.

“As soon as you go outside the script, they can’t answer,” said Marcari, a former Navy attorney.

Grifters trying to cash in on a sprawling public injury case isn’t new, but the Camp Lejeune litigation has qualities that make it particularly vulnerable.

The government has already acknowledged its responsibility—and willingness to pay—for contamination at the North Carolina Marine base that over decades may have exposed as many as 1 million people to toxic water.

A surge in available litigation funding means extra resources for law firms to find and register as many potential plaintiffs as they can before the window to file claims ends next August.

And social media and technology have made it easier than ever for legal advertising and lead-generating firms to find those people and sell their names to lawyers. One telecom executive, David Frankel, said his robocall surveillance company had identified more than 10,000 robocalls seeking Camp Lejeune claimants since Congress approved the payout program in August 2022.

“It pains me to see what the industry has become,” said Bob Goldwater, who was among the first mass tort lawyers to use national advertising to find clients.

“Unfortunately, fraud is becoming increasingly more prevalent. It stems from lawyers taking shortcuts and using newer marketing companies without properly vetting them or doing any due diligence.”

Veterans advocates and lawyers also say the fake claims—and the time and effort to identify and weed them out—could dilute the empathy for legitimately ill victims and slow the process of compensating them.

“You’ve got people who are ripping off the government and the attorneys,” said Mike Partain, 55, who was born on the base and developed breast cancer as an adult. “And in the end it’s going to victimize the entire community, because people will look at us and wonder if we are real.”

All claims must first be vetted by the Navy, which oversees the base. A Navy spokesman said it had received about 117,000 claims by mid-October and “is working diligently to identify potential fraud during the claims review process.” He declined to elaborate.

But the government has projected it could receive hundreds of thousands of compensation claims—from anyone who spent at least 30 days on the base between 1953 and 1987—and that the payout could ultimately top $21 billion.

Some claimants will qualify for a settlement under an early resolution program announced last month. Thousands more are likely to end up in litigation in the Eastern District of North Carolina.

While court-approved settlements and judgments might take years to be distributed, lead-generators typically get paid up front for delivering potential clients, sometimes thousands of dollars for each name.

Demand for their services has grown in part because of a surge in litigation funding available to law firms. One consultant told Bloomberg Law that lenders by mid-year had committed nearly $2 billion to firms filing Camp Lejeune lawsuits. Industry veterans understand “an influx of capital invites greed,” said Brian Roth, CEO of Rocade Capital, a litigation funding firm. The key to preventing fraud in the industry, he said, is understanding the roles and backgrounds of all the parties.

“Where you have issues is when you have leads being marketed to multiple different buyers, you have call centers without oversight,” Roth said.

One person who said they were randomly phoned and coached by a call-center employee on how to file a bogus Camp Lejeune claim said the coach provided a backstory to make them seem credible.

In recorded calls shared with Bloomberg Law, the coach explained to the would-be claimant the dates and cancer types they should cite, suggested excuses for being unable to provide medical records, and directed the person to say their father worked as a plumber at the North Carolina base and had a DD Form 214, a government document that proves military service.

At one point, the coach chided the would-be claimant for “goofing up” their responses after they had practiced them multiple times, the recording shows.

Tracking down the actual operators of the call centers can be difficult, and proving their practices violate some law even tougher, said Brandon Lewis, a forensic accountant who previously investigated call center fraud with the Arizona Attorney General’s office.

“Even though it’s predicated on fraud, they say, ‘Hey we delivered you these leads,’ ” said Lewis. “The criminal prosecutors will start looking at this and say, ‘Well, this is just real messy and it’s not clear-cut.’”

The person who provided the recordings to Bloomberg Law asked not to be named out of privacy concerns.

They said the call came from an operation run by Revolts PI LLC, which was formed in March and listed as its address as an office in Sheridan, Wyo., that is commonly used to register businesses, according to state records.

The address was also listed on the company’s website, which promised “top quality Camp Lejeune leads” as well as leads for other prominent personal injury cases, including lawsuits involving talc powder and the weed-killer Roundup.

Revolts employees or officials could not be reached for comment. No one answered calls to the phone number on the company’s website or messages sent to email addresses on the LinkedIn resumes of two people claiming to be Revolts executives. Earlier this month, Revolts filed dissolution papers in Florida, records there show.

Lead-generating firms have long existed, but they’ve flourished amid the explosion of legal advertising and litigation funding. More than $145 million had been spent last year on legal advertising related to the Camp Lejeune litigation.

Good lead-generating companies do exist, but are hard to come by, said Alabama attorney Fob James IV.

“Most of them suck,” James said. “And their leads are like fool’s gold.”

The practice also has entangled unsuspecting victims like Eileen Adamo, a western Pennsylvania widow whose husband, a Marine, died of kidney cancer in 2020.

Adamo said she received a call from a lead-generating company in March and she shared some information about her husband, Santo Adamo, who once was stationed at Camp Lejeune.

In October, a New York lawyer called and introduced himself as her attorney, Adamo said, and instructed her to file a claim on behalf of her deceased husband. When she told the attorney that she never signed up with a law firm, he insisted she had and emailed her paperwork that appeared to show her electronic signature, she said.

A lot of the information about her husband was incorrect, according to Adamo, who first posted her concerns about the call in a Facebook group for Camp Lejeune veterans and their relatives.

“I said these documents are fraudulent. You need to destroy them,” Adamo said.

She said the attorney agreed.

Watts is prominent among mass tort lawyers, and also has high-profile experience with false claims.

In 2015, he was among seven people charged with fabricating thousands of clients in a bid to collect payouts from the 2010 BP Deepwater Horizon oil spill in the Gulf of Mexico. Watts and four co-defendants were acquitted.

He said that experience has made him hyper-vigilant on the issue, and this month he hosted a session on the topic at a lawyers’ conference in Las Vegas. (The twice-yearly event, called Mass Torts Made Perfect, draws personal injury lawyers from around the country; October’s gathering also included appearances by Sting and Paris Hilton.)

In his session, titled “Client Acquisition: What You Need To Know About Protecting Your Law Firm,” Watts outlined the money trail that starts with litigation funders, then travels from law firms to legal advertising companies to lead-generating companies and brokers and finally to call centers. He said his firm, Watts Guerra, spent months auditing all of the plaintiff leads referred by other lawyers, and determined “hundreds and hundreds” were bogus.

A Marine on his staff found names on the list of Camp Lejeune leads with identical and disqualifying problems: the parents of the claimants were dead, they did not live on the Marine base but visited during the summer, or they were too young at the time of exposure to remember anything except they drank the water.

Watts also said his firm’s audit identified 105 call centers in India and other Asian countries tied to fake leads in mass tort cases including Camp Lejeune. Overseas call centers typically take advantage of cheaper labor and less regulation.

Watts said he shared his information with the US Justice Department and the FBI, but, in an interview, declined to elaborate. A representative of the FBI would not confirm or deny the existence of any investigation.

Watts, who has previously estimated his firm represents more than 200,000 mass tort clients, said that it continues to accept plaintiff referrals from other lawyers, but gives them deeper scrutiny. “We have held back all claims in all torts pending independent third party review,” he said in an interview.

Marcari, the Virginia lawyer, said fake claims would slow down the filings and eventually the payout to victims, with the government already struggling to handle thousands of claims.

Vetting a Lejeune claim is time-consuming, as attorneys have to check information from decades ago, he said.

Some mass tort lawyers say fraud simply comes with the territory.

“The law of large numbers means that there will always be some clients who retain lawyers without a basis for doing so,” said Zina Bash, a Keller Postman partner who was named the plaintiffs co-lead counsel and government liaison by the North Carolina judges overseeing the lawsuits there. “That’s why we thoroughly vet all clients’ claims before filing.”

Texas Supreme Court Hears Arguments in Challenge to Public Adjuster Law

Insurers and the Texas Department of Insurance hope to persuade the state Supreme Court to block a constitutional challenge to a law that prohibits roofing contractors from acting as public adjusters on their customers’ damage claims.

The high court heard oral arguments last week in a lawsuit filed by Stonewater Roofing Ltd. that charges the public adjuster licensing law, first adopted in 2005, infringes on its First Amendment right to free speech and its 14th Amendment right to due process. TDI hopes to overturn a decision by the Seventh Court of Appeals in Amarillo that found the law’s restrictions on free speech should be subject to strict scrutiny and allowed Stonewater’s challenge to proceed toward trial.

The American Property Casualty Insurers Association, National Association of Mutual Insurance Companies and the Texas Insurance Council filed a joint amicus brief on Wednesday urging the Supreme Court to grant TDI’s petition to dismiss Stonewater’s lawsuit.

“If Stonewater’s position is accepted by this Court, the Texas insurance marketplace could soon join other states in experiencing an insurance crisis,” states the brief, written by Steve Badger, a partner with Zelle Law in Dallas.

The brief says Texas lawmakers adopted the public adjuster law to protect the public from “two-Chucks-in-a-truck” contractors who walk door to door in storm-damaged neighborhoods after every major storm event.

“Unquestionably, Texas policyholders who may fall victim to unscrupulous contractors and others acting as unlicensed and unregulated claim advocates will be the ones most directly affected by the outcome of this appeal in thousands of Texas property insurance claims each year,” the brief says.

Stonewater is a family-owned roofing contractor headquartered in Tyler that operates five offices in Texas. A customer filed a lawsuit against the company alleging that Stonewater had acted illegally as a public adjuster. The suit sought to recover the nearly $1 million that the customer spent on a commercial roofing project plus treble damages and attorney fees, according to a brief that Stonewater filed with the court.

Stonewater filed a lawsuit seeking a declaration by the court that the public adjuster law violates its constitutional rights. “Though Stonewater wants to speak openly with its clients and their insurers, the Texas Legislature has made doing so a potential criminal act subject to crippling civil and administrative penalties,” the company said in a brief filed with the court.

Judge Lora J. Livingston, with the 201st District Court in Travis County, dismissed the lawsuit without writing an opinion. Stonewater appealed.

The appellate panel ruled that the trial court erred by dismissing Stonewater’s complaint without explaining why in writing. The panel said the restrictions in the law are subject to strict scrutiny by the courts because they are based on the content of communications and apply to specific individuals, roofing contractors. The panel did not rule on the merits of the claims, but found that Stonewater should have been allowed to proceed with its lawsuit.

Stonewater has gained support from a well-known expert in constitutional law, Vermont Law and Graduate School President Rodney A. Smolla. In an amicus brief, Smolla said that a 2018 US Supreme Court decision in National Institute of Family and Life Advocates v. Becerra supports Stonewater’s arguments.

In that 5-4 decision, the US Supreme Court ruled that a California statute that required licensed health care clinics to disseminate information about low-cost family planning services, including abortion and contraception, violated free speech rights. The majority said that professional speech is not excepted from the rule that content-based regulation of speech is subject to strict scrutiny, meaning that states must show a compelling public purpose for such restrictions.

“NIFLA correctly refused to treat licensure as a talisman working voodoo to undermine constitutional protection of free speech,” Smolla’s brief says.

A separate amicus brief filed by attorney Arif Panju on behalf of the Institute for Justice says federal Circuit Courts have invalidated laws and rules that are similar to Texas’ public adjuster law. The 5th Circuit upheld the right of a retired veterinarian to give verbal and written advice about pet healthcare, despite professional licensing rules. The 9th Circuit ruled that South Carolina could not use its rules on post-secondary education to bar a farrier from offering classes on horseshoeing.

TDI argues that restrictions similar to Texas’ public adjuster law have been adopted by 46 states without creating any undue burden on free speech or due process rights.

“Under Stonewater’s logic, most, if not all, professional licensing and practice regulations would be subject to strict scrutiny because nearly all professionals must speak to perform their jobs,” the department’s brief says.

The Supreme Court began hearing oral arguments in Stonewater’s case on Oct. 26 at its courthouse in Austin.

Texas judges must retire at age 75. Voters could give them four more years on the bench

State judges in Texas are on average in their late 50s. But several prominent Texas judges would benefit immediately from the age change, according to a Hearst analysis.

That includes Hecht, who would regain a couple years of service left on his six-year term. Hecht declined to comment, and a court spokesperson said he was “not involved in the bill or consulted in any way on it.”

Five other high appellate court justices will turn 75 in their next term, if reelected: Texas Supreme Court Justice Debra Lehrmann and Court of Criminal Appeals Justices Sharon Keller, Barbara Hervey, Bert Richardson and Scott Walker. Keller and Hervey are up for reelection next year.

The proposed age change, which will go before voters in the Nov. 7 election, already has prompted at least one judge to reassess his plans.

Judge Doug Woodburn, who is 74 and serves in the 108th District in Amarillo, said he was planning his retirement when a lawyer came by his office and let him know that Proposition 13 would be on the ballot. The news made him “rethink” his long-term plan, and he decided that he wanted to stay to continue clearing up the overload of criminal cases in his county.

Woodburn already has begun fundraising and preparing to run for another term on the chance the proposal passes. He added that he thought 79 was an appropriate cap.

“Things have changed,” he said “People live longer now. People stay healthy and are more capable now than they might have been many years ago when that constitutional provision was originally written. We do a lot better than we used to.”

Woodburn said there are safeguards in place to prevent a judge from staying on the bench for longer than they’re physically or mentally able, he said. Judges must go before voters every four to six years and face oversight from a judicial conduct commission.

“I think if a judge is losing it, if they’re in a position where they’re really not competent any longer, I think that word gets out pretty quick,” he said.

Of the 32 states that set mandatory retirement limits, just over half set their cutoff at 70, according to the National Center for State Courts. Eight states, including Texas, set theirs at 75; Vermont is at 90; and the remainder plus the District of Columbia’s range from 72 to 74. Eighteen states have no caps.

In Texas, state district judges who turn 75 during their four-year term can finish it out, while appellate judges who turn 75 midterm can stay until Dec. 31 of the fourth year of their six-year terms.

Proponents of age limits say they create opportunities for younger, more diverse judicial candidates to run for office.

“The Judiciary has garnered more authority than our Founders had ever anticipated,” said Rep. Steve Toth, a Republican from The Woodlands who was one of a handful of state lawmakers to vote against raising the retirement age. “Turnover is a good thing in government, especially in the Judiciary.”

Bill Raftery, a senior analyst with the National Center for State Courts, said states have been increasingly considering measures that would raise judicial mandatory retirement ages, but they have tended to be unsuccessful. Raftery was unsure of the reason since the measures typically don’t attract major political interest or funding on either side.

“I think there’s a sense that nobody wants to give any elected official any more time in office,” Raftery said. “You see that when there are pushes to expand legislative terms from four years to six, once you lift term limits for legislators and others — generally speaking, adding terms, years for any elected official usually doesn’t work.”

Texas’ proposed amendment sailed through the state Legislature with virtually no opposition.

Jack Walker, vice president of the Texas Trial Lawyers Association, invoked Alexander Hamilton when speaking in support of the proposition at a Texas House committee hearing earlier this year.

In Federalist Paper 79, the founding father wrote in opposition to his home state of New York’s judicial retirement age of 60 years old. He called concerns about aging judges working beyond their ability an “imaginary danger.” Walker agreed and said there are “good reasons not to force retirement” on judges.

“We will likely be losing some great jurists with decades of experience and stable judgment,” Walker said. “We also have the benefit of electing our judges in Texas, thus any instability issues with a particular judge can be taken care of by our electorate.”

State Rep. Cody Vasut, R-Angleton, has unsuccessfully pushed in the last two sessions to remove the limits altogether.

The considerations during the Revolutionary period are much different than those of today, Raftery said. At the time, aside from impeachment or, in the states that hold them, elections, there was no other recourse for removing an incompetent judge.

Now, he said there are judicial oversight agencies, such as Texas’ State Commission on Judicial Conduct, which handles complaints and doles out sanctions.

No one spoke against the Texas proposition during public hearings or legislative debate this year. Contacted by Hearst Newspapers, neither the Mexican American Legislative Caucus nor the Texas Legislative Black Caucus took an official stance.

Texas’ judicial population is predominantly white. Sixty-five percent of district judges and 71 percent of appellate judges are white, according to the most recent data released in September.

The average ages of the Texas Supreme Court, the state’s highest civil court; the Court of Criminal Appeals, the state’s highest criminal court; and the intermediate state appellate courts judges are 59, 59 and 54, respectively. The average age of state district judges and criminal district judges is 54 and 60.

Eva Guzman, 60, a former Texas Supreme Court justice who supports the proposition, said that many judges don’t stay on the bench past 70, well before reaching the current retirement age.

“I think the system works,” she said. “I think it strikes the right balance. If you look at the things critical to a strong justice system, you want stability, you want expertise, you want experience, and then most importantly, you want judicial independence.”

Guzman, who left the bench to run against Attorney General Ken Paxton in the 2022 Republican primary, said she hasn’t ruled out a future campaign in some yet-to-be-determined office. She noted that many Texas state officials and lawmakers commonly run well into their 70s these days.

“I’m a youngster,” Guzman joked.

New ILR Research Looks at Increase of Punitive Damages

Punitive damages awards are intended to punish a defendant’s misconduct and deter future incidents of the same behavior. But over the years, plaintiffs’ lawyers have found ways to exploit the original intent of these awards for bigger paydays. A new ILR study, Unfinished Business: Curbing Excessive Punitive Damages Awards, examines how punitive damages have accelerated since the 1970s and have become increasingly large and disproportionate. Punitive damages awards have far outgrown their purpose, and the awards are often much larger than necessary to serve any legitimate interest in punishment and deterrence.

The study found alarming trends in the frequency of these massive verdicts between 2016 and 2022:

The number of punitive damages awards over $25 million varied from 16 to 33 annually.
The median punitive award increased from $35 million in 2017 to more than $87 million in 2022, with the mean topping $690 million that year.

There are hidden costs to rising punitive damages for consumers and businesses. Insurance becomes more expensive and harder to buy for businesses of all sizes, prices of goods and services increase for consumers as businesses pass along unexpected costs, and the added uncertainty of huge, arbitrary damages awards has a chilling effect on the market.

The study highlights many reasons behind this growing litigation trend. Plaintiffs’ attorneys use “reptile” courtroom tactics to target jurors’ emotions and propose astronomical damages awards to juries that become anchored in their minds—making smaller, but still huge verdicts seem reasonable. Plaintiffs’ attorneys often also use a defendant’s finances to convince juries to justify awards based on how much money a defendant might have, rather than focusing on the conduct at issue. And judges frequently fail to prevent excessive damages awards or meaningfully reduce them when they occur.

That is not to say that courts and state policymakers haven’t attempted to address the issue. Many states have imposed limits of various kinds on punitive damages, and some have been able to put a ceiling on out-of-control verdicts. But even in those cases, the ceiling is often very high. The U.S. Supreme Court has also ruled in a series of landmark decisions on punitive damages awards to provide reasonable limitations and guideposts on punitive damages. Still, these have had mixed results, as ILR’s research shows, and the Court has so far declined to define a bright-line rule or formula to identify a given punitive damages award as unconstitutionally excessive.

Fortunately, courts and state legislators can implement solutions to rein in excessive punitive damages awards. Some suggested reforms from the study include providing more guidance to jurors, increasing procedural safeguards, and banning certain tactics used to inflate awards.

If punitive damages are intended to serve a legitimate public interest in punishing and deterring reprehensible behavior, the current trajectory is unsustainable. It is time for courts and state policymakers to take the increase in the size of punitive damages seriously and enact reforms to right-size them. Businesses and consumers deserve a fairer, more stable, and more predictable civil justice system. Only plaintiffs’ lawyers benefit from the status quo.

Accident Litigation Expert: Beware the Nuclear Settlement

Nuclear Jury Verdicts Are Not the Only Industry Concern

WASHINGTON — While nuclear verdicts in accident litigation are obviously a major concern in the trucking industry, it’s actually the nuclear settlements that litigation expert Steve Wood said are even more problematic.

“What doesn’t get talked about enough is the idea that carriers are settling cases for an amount that is much more than they need to,” said Wood, a senior litigation consultant with Courtroom Sciences, an Irving, Texas-based firm that advises law firms and legal departments on litigation matters. “That’s really the danger in this industry that should be focused on — in addition to nuclear verdicts.”

Wood spoke on the matter during an Oct. 4 session at American Trucking Associations’ Safety Management Council’s 2023 conference.

“Although nuclear verdicts are the ones that get in the paper, the truth of the matter is that only about 3% of lawsuits go to trial,” he said. “Nuclear verdicts actually are exceedingly rare.”

Still, concerns over nuclear verdicts are causing motor carriers to settle out of court for a heavy amount of money. “This is the world we live in,” Wood said.

While generally defined as jury awards of $10 million or larger, Wood defines a nuclear verdict as any that is larger than expected. “If you have a case that should be worth $500,000, and it comes in at $5 million, that’s a nuclear verdict,” he said.

But whether an accident lawsuit goes to court or gets settled in the offices of large law firms, there are a number of actions a motor carrier can take to help their chances for a better outcome, according to Wood.

Sometimes the damage for a reasonable settlement or trial verdict occurs at the video deposition level, especially when drivers or safety managers give their testimony prior to mediation, settlements or trial, he said. That’s where plaintiff attorneys are very aggressively focusing on hot-button words like “risk, safety, danger, harm, always, never, must, should” to get witnesses to agree to a “heightened duty of safety.”

“The reason they do that is because it’s the old adage that ‘It’s not what you say, it’s how you say it,’ ” Wood said.

They’re trying get carrier witnesses nervous, angry, flustered and looking defensive, he said. They want these witnesses to appear evasive, emotional and uncomfortable, he said.

“They love to show those responses to a jury,” Wood said. “Bad depositions can lead to large verdicts when a lawsuit goes to trial.”

Another problem can simply be what’s found on a carrier’s website.

“Your corporate websites are ripe for the taking,” Wood said. “Assume that in any litigation, plaintiff counsel is going right to your company website and are looking for anything they can use. His hit list is certainly on your website.”

Count on a plaintiff attorney asking your safety manager questions based on such company statements as “safety is our top priority or safety is our No. 1 priority.”

If asked by a plaintiff attorney if safety is your top priority, a safety manager or top executive who says anything but yes is trapped, Wood stressed.

“They can say, ‘Well, let’s pull up your website. Doesn’t your website say this?’ Now you’re stuck,” Wood said.

“Eliminate all the safety language from your website. It’s 100% unnecessary,” he said. “There’s no reason for it, and it opens you up for attack. At the end of the day, we know that people want to operate safely. You don’t have to tell them that.”

Wood said to instead focus website language on such subjects as company history and customer service, for example.

A carrier’s goal overall in a trial should be to convince juries that reasonable monetary awards are all that’s needed to make a victim whole. Be aware that plaintiff attorneys will try to convince juries to inflict punitive damages requiring companies to make changes, and send a message to the industry that all carriers — not just the one on trial — must change their behavior.

The bottom line with plaintiff attorneys is ‘Show me your money,’ ” Wood said. “They look at you like an ATM machine. They hate the trucking industry because they’re the big bad company that everybody is afraid of. So I’m going to hit them for quick, easy money.”