Here’s the update on Oregon National Guard soldiers case against KBR. By way of background, members of the Oregon National Guard who served in Iraq in 2003 were exposed to sodium dichromate while protecting KBR employees at the Qarmat Ali water treatment plant. We filed the case this summer.

It has grown. We filed an amended complaint a few weeks ago. I’m still having problems with uploads, so I can’t seem to get the pdf to load. Apologies. Once we get the bugs ironed out, I’ll update.

For those tracking this case, it’s Bixby, et al v. KBR, U.S. District Court Case No.  3:09-CV-632-PK (D. Or.)  The other update is that the KBR defendants have filed a motion to dismiss for lack of personal jurisdiction.

Jurisdiction is one of those dry but important issues.  KBR believes that it should not have to defend this case in Oregon. We’ll be doing discovery over the coming month and then responding and should have a ruling in late fall.

David Sugerman

Only occasionally do I really enjoy a meeting room full of lawyers. Last night was one of those occasions. My partner of 14 years was honored with the likes of Hardy Myers, Greg MacPherson and colleagues from across our state. The reason: The Oregon State Bar’s Annual President’s Award, given for meritorious service to the profession. Not just our clients, but the profession.

In large part, this award recognized work in support of access to justice, and in support of contingent fee representation. But really, there was more.  The years of dedication that David has demonstrated in fighting for the rights of employees, injured people and consumers culminated in this well-deserved award.He is also a mentor, formally and informally to younger lawyers. Well, older lawyers like me as well.

It is easy to get lost in the day to day work we do. We face piles of papers and loads of arguments. Last night allowed a bit of a vitory lap, together with many others who practice the profession.  Sure, I could list them all, but only one has been a friend for over 25 years and a mentor to me…..So congrats to David Sugerman from the staff and partner here at Paul & Sugerman, PC.

David Paul

What starts out as a blah-blah Wall Street Journal editorial supporting Illinois’ damages caps on medical error cases, turns ugly.

Look at what’s underneath, as the editors at the Journal are fairly frank about their goals:

“We’d prefer a ‘loser pays’ rule as in the British system. But without such a deterrent to frivolous suits, limiting damage awards is the only way to stop jackpot judgments that drive doctors away and hurt the quality of medical care.”

It’s a nasty bit of rhetoric for several reasons. First, there’s the urban myth of doctors driven away. There are no names, and there is no data. It’s just the bald “fact” that this happens. But the more unfortunate and intellectually dishonest piece is the “jackpot justice” rhetoric. The Journal editors know that they’re being disingenuous as a number of high-profile studies confirm that the system works fairly well, with one important flaw. Here’s a widely-publicized study from the New England Journal of Medicine on the topic of medical errors and litigation. Here’s another slightly-dated summary from AARP.

Here’s the bottom line from the New England Journal article: “Claims that lack evidence of error are not uncommon, but most are denied compensation. The vast majority of expenditures go toward litigation over errors and payment of them. The overhead costs of malpractice litigation are exorbitant.”

That overhead cost thing at the end is also important. What the Wall Street Journal wants to do is make litigation more expensive by importing from England the loser pays rule. What that means is that lawyers on both sides get paid by the loser.

Under the current system, most patients’ cases are handled on a contingent fee basis. That means that the lawyers get paid if and only if we make a recovery for the injured patient. That system does several things. First, it keeps open the courthouse to meritorious claims, regardless of the wealth of the patient. The patient that wins pays his or her lawyer based on a percentage of the recovery.

Under the contingent fee system, lawyers who represent patients simply can’t afford to take losing cases because when they lose, they don’t get paid.  As well, middle-income patients are able to locate and hire top-flight legal talent because they don’t have to pay by the hour for the lawyer’s work.

But the second thing is that I imagine that loser pays will drive up the costs to both sides. While I don’t have any data, the costs are apt to increase because both sides have an incentive to do more work and stick the loser with the bill.

Underneath, the Wall Street Journal wants us to believe that juries can’t be trusted, and our founders were wrong to set up a jury system. The Wall Street Journal apparently believes that legislatures that pass one-size-fits all rules are better suited than juries to determine case outcomes. [Snark alert:] I’m sure this has nothing to do with the fact that lobbyists roam through the various hearing rooms and halls of various legislatures but are barred from jury rooms.

In the end the editors of the Wall Street Journal sipmly ignore the reality of injured patients. I have to assume that they simply close their eyes because no one should be so jaundiced in the face of profound injury.

David Sugerman

Unless you enjoy reading court cases, no sense in looking at this new Oregon Court of Appeals opinion. It’s an interesting case, even if it’s a bit long. In it, the Court took two lawyers to task over their conduct.

In the underlying case, Tahvili v. Washington Mutual, the Court affirmed a trial court’s ruling barring a California lawyer–one Burton McCullough–for his conduct at trial. Mr. McCullough was specially admitted to practice in Oregon for a trial. According to the Court of Appeals opinion, Mr. McCullough vioalted a trial court order, repeatedly violated trial court rulings and kept trying to get inadmissible evidence before the jury. In the middle of the trial, the trial judge got so angry with Mr. McCullough’s repeated violations that he revoked Mr. McCullough’s permission to specially appear.

The trial judge, Sid Galton, has since retired. Mr. McCullough’s conduct reads like a point-by-point primer on how not to try cases. Or at least how not to try cases in Oregon.

The Court of Appeals took a dim view of Mr. McCullough’s conduct. But it seemed more annoyed by the brief submitted in the Court of Appeals. In their brief, Mr. McCullough and the Portland firm of Greene & Markley argued that the trial judge–Judge Galton–suffered from mental health problems and had anger issues. The appeal brief even denied that Judge Galton had entered an order and kept referring to a “phantom order.” While the Court of Appeals spared details of more wreckage but made clear that the arugment  went further with hyperbole and distortion.

Writing for the unanimous court, Judge Haselton had this to say:

“We pause to express our collective disapproval of such methods of appellate “advocacy.”  We have repeatedly, in both published opinions and public professional fora, condemned ad hominem attacks on trial judges as offensive and improper.  Such “scorched-earth” tactics, when coupled–as they almost invariably are–with lurid and misleadingly incomplete descriptions of the record–are counterproductive.  They impair, rather than assist, the appellate process” (quotations and italics in the original).

In the rarified air of the Oregon Court of Appeals, that’s equivalent to a serious smack down.  Courts are like elephants in that they don’t forget.  Oregon remains a small legal community, and as a result, most of us who practice law here are mindful of how we conduct ourselves. In Oregon legal circles, earning a reputation for being unprofessional or dishonest sticks with a lawyer for a long time.

The other thing of note is that the Court of Appeals correctly protected the integrity of the trial judge. One of the things that’s really important for our system is judicial integrity. We can’t have a fair legal system if judges aren’t accorded respect by lawyers appearing in court. We can disagree with judges. We can dislike their reasoning and take issue with their conclusions, but if we’re to be part of the justice system, each of us owes a duty to maintain the integrity of the system.

David Sugerman

Guess they’re through licking their wounds over their electoral losses earlier this month. The Chamber of Commerce is back with its tired screeds about the “costs” of lawsuits.  According to the Chamber, the “lawsuit industry is booming.” I’m sure that has nothing to do with the Chamber’s role in federal deregulation. As well, I’m sure that the various market and consumer frauds that led to the financial collapse would have nothing to do with why there might be more litigation.

The Chamber can’t have it both ways.  If it wants dergulation, then it must accept that lawsuits will happen when deregulated actors cross various lines. On the other hand, if it truly wants less lawsuits, then the Chamber should welcome regulation as the alternative approach. But arguing against both regulation and lawsuits can mean only one thing: The Chamber insists that American business should answer to no one. I think our current financial crisis explains exactly why “neither” is a bad choice.

David Sugerman

Good piece on how it’s usually wise for plaintiffs in injury cases to settle their claims, even when the settlement feels like too little money. The short version is that pre-trial settlement of the claim is generally the wise choice.

According to the forthcoming study, plaintiffs–the people bringing the lawsuit–mistakenly go to trial 60 percent of the time.  The measure of a mistake is whether they receive more at trial than was offered or less. If it’s less, the authors treat that as a mistake.

Interestingly, while defendant’s make the wrong choice less frequently, the study reportedly finds that when they are wrong, they tend to be wrong by a much greater amount.

I’ll be interested to see the study once it’s out because it may have understated something that’s important. If the study only compares the amount of the settlement offer to the amount of the trial verdict, the study may understate the harm to the plaintiff who chooses incorrectly.

Here’s why.

It usually costs substantially more to go to trial. In contingent fee cases, it is not unusual for a lawyer’s fee to increase if the case goes to trial.  That increase is designed to reflect the sharp increase in the amount of work the lawyer must do.The hourly lawyer’s fees also increase sharply as trial approaches, as the lawyer and his or her staff will spend a lot of time on the clock preparing for trial and going to trial.  When I am in trial, it is not unusual for my work days to run 14-18 hours, and when a trial goes several weeks or longer, it’s easy to see why things get expensive.

It’s not just about lawyers fees. In addition, the expenses associated with trying a case can be postponed until late in the game, but they steeply increase on the brink of trial. Expert witnesses spend many hours getting ready to testify. That’s an expense. So are the costs of exhibits and presentations.The bottom line is that going to trial costs a heck of a lot more.

As a practical matter, it measn that a settlement today of $25,000 might result in an equivalewnt bottom-line net recovery that is roughly equal to a trial result in the same case of $40,000.  So in this example, if an injured person turned down an offer of $25,000 and went to trial and won a verdict of $30,000, it would prove to be an unwise choice because the net amount in the person’s pocket would actually be less.

It’s a sobering article. But it confirms my professional experience. It’s part of why those of us who try cases regularly tell clients about the risks of going to trial.  We always want our clients to make informed choices.

David Sugerman

On the political side, it’s a bit interesting to see President Bush cave and sign the housing rescue bill that he threatened to veto.  The president had little choice.  From what the experts say, if Freddie Mac and Fannie Mae go down, we would be looking at a profound financial crisis.

And of course, this means a taxpayer bailout.  I’ve got precious little math talent, so you should take my rough calculations with a grain of salt. But according to my pencil, when you add this bailout in the cost of the Iraq war and subtract revenue from tax cuts, we’ll be paying for this for…looks like about 407 years.  (Like I say, rough reckoning; you may get different numbers if you check my math.)

The sad truth is that this collision was brought to bear by very simple human forces. The truth is that people tend to be greedy.  And when you have a complex market, that tendency toward greed can go off in different directions. It will motivate lenders to loan money they should never loan. It will push borrowers to sign deals that are too good to be true. It will drive investors to buy junk securities that are nothing more than piles of bad debt. Everyone who gets a cut has an incentive to push and grab.

That’s where regulation comes in.  While market regulation isn’t perfect, it is the best way of controlling unchecked greed that gets you down into the multi-trillion hole that we will now bequeath to our children and grandchildren. I wonder if the president understands this now? Or is this profoundly expensive rescue going to be nothing more than the cost of doing future business?

I’m curious how the free market purists are reacting to this deal. I imagine that most concede that this rescue was inevitable. Regardless of whether they think the rescue was inevitable, I hope that a few have come to understand that unregulated markets don’t work in a complex world.

This issue of unregulated commerce is actually important to the work that I do.  Here’s how.

When a manufacturer sells an unsafe product that causes a profound injury, I have to come try to put the pieces back together.  That’s a claim and/or lawsuit process.

The purpose of that process is to assign responsibility for unlawful conduct and pay the injured person for his or her harms and losses.  Of course, we would all be better off if the injury didn’t happen. Reasonable regulation of product safety is the best way to prevent injury. And for those who really dislike trial lawyers, there is an added incentive: when regulations promote safety and injuries decrease, people like me have less work. That’s an outcome I’m ready to embrace.

I would really like to hear from free market advocates about whether this rescue was essential and whether this costly stain doesn’t undermine the argument that unregulated markets are essential.

David Sugerman

The recent FDA announcement of the tomato salmonella outbreak leads me to wonder about how we got here. Announcements like this give the media great material to play with the fear process. I call it the “don’t eat that,” or scare-of-the-moment journalism. The danger is real, of course, as salmonella can pose a serious health hazard for children, elderly, and people with compromised immune systems.

The real problem is a lax food safety system. This is not something that’s simply limited to tomatoes.  The reality is that deregulation–the heralded salvation and light of the American economy–has a very nasty underside.

Food safety is one of those classic government functions. If we want a safe food system, we have to pay for it and know that sometimes regulations are a pain in the neck. Oh, and it costs money, as in higher taxes.  Of course, that pain in the neck is part of how we protect our toddlers and aging parents who can be felled by a manufacturer’s failure to maintain food safety standards.

The alternatives give us two things. One is this scare-of-the-moment journalism. Annoying. But here’s the bigger one. The other consequence of deregulation is that people like me–trial lawyers–have more and more work.  My job starts when injured people call about calamities that have befallen them.  I am like “All the Kings’ horses and all the Kings men” as I go about trying to re-assemble lives and families broken by unsafe practices.

Our food supply system needs to be regulated properly, and we need to dedicate the resources to it so that regular inspections and enforcement processes prevent these outbreaks.

David Sugerman

It sounds like a set up in search of a punch line: What’s the difference between an Oregon lawyer and a Texas lawyer? If you’re an Oregon consumer, you can have a laugh, and if you live in Texas, well, shed another tear.

Oregon requires that each Oregon lawyer carry liability insurance, as a way to protect consumers in case the Oregon lawyer mishandles the client’s matter.  The Professional Liability Fund provides the first level of insurance to all Oregon lawyers. And that’s part of the secret to its success. There’s a lot of purchasing power when you have a large group buying insurance. As a result, the annual premiums are affordable.

Texas takes a different approach. A commission set up by the Texas Supreme Court recently rejected a rule that would require all Texas lawyers to inform clients about whether they have liability insurance.  The proposed rule was fairly straightforward. It simply required all Texas lawyers to disclose whether they had malpractice insurance. The commission rejected the rule. I guess it’s there own special version of, “Don’t ask; don’t tell.”

According to the news report, the commission rejected the rule because…gasp!…it could lead to mandatory insurance.  Oregon lawyers and consumers have got to be ridiculing Texas over this one. Lord knows that mandatory liability insurance could lead to actual protection of the public interest.

This one is a no brainer.  As an ex-Texan, I can say with the certainty of one who was born and raised there, no one ever accused the mighty Lonestar State of being long on brains. (And of course, I feel compelled to explain that it was a long time ago, I had no say in the matter, and…and…and….)

Having insurance is actually one of those comforts for both me and my clients. I’ve handled multiple lawyer malpractice cases over the years, and I’ve learned that lawyers sometimes make mistakes that can do great damage to our clients.

So why would anyone go without?  The Texas commission really missed the boat on this one.  Mandatory insurance has protects the public in Oregon.  And even if Texas won’t insist on insurance, the Texas commission chose to sow more seeds of distrust by blowing past the chance to provide Texas consumers with a small bit of protection. Bad call.

David Sugerman

Interesting write up today in The Oregonian about the civil trial in a case brought by former investors against formerly high flying financier, party activist, Republican gubernatorial candidate, Craig Berkman. This is another one of those cases where I just want to grab a big tub of popcorn, plop down in an easy chair and enjoy the show.

At the front end, Mr. Berkman apparently admits that he secretly took $3.8 million in investors’ money. Apparently, his lawyer plans to claim that the investors losses of $20 million came from market conditions, not the secret taking of cash.

I’m taken with several parts to this.  Most notably is the repeat of the realization from the Adidas verdict that no one rants about businesses suing businesses for large sums of money.  Same is true about investors, I guess. And I don’t really have a beef with that, but I have to wonder why a double standard applies when a profoundly injured person dares to sue for damages.

The Big O article closes with a specific description of Jordan Schnitzer’s experience. All of Portland knows the Schnitzer family–they are successful, high profile civic leaders who have given large sums of money to many Portland institutions. I assume that Mr. Schnitzer’s net worth is such that his million dollar loss has relatively little impact on his overall wealth. I don’t mean to sound petty–it’s more that you need a sense of perspective about these things. But of course, it’s an interesting part of the story.  And regardless of his wealth and status, Mr. Schnitzer has every right to press his proper claims forward.

The other interesting piece is that Bullivant Houser’s Steve English leads the team representing the investors. He’s an accomplished trial lawyer from a law firm that focuses mostly on business and defense of claims.  It’s a large law firm by Portland standards.

While I suppose it’s easy to write it all off as a big-firm lawyer representing some pissed off rich people against a wrongdoing rich guy, the lesson underneath is that we all need a civil justice system. We all need access to the courts. We all need to be able to hold wrondoers accountable. That should be true whether the case involves multi-millionaires fighting over who owes what to whom or whether the case involves a working person who suffered profound injury caused by a dangerous product.

David Sugerman