One of the most followed corporate trials of the decade is drawing nearer to a close. Johnson & Johnson’s Red River Talc subsidiary in Texas filed a third time for bankruptcy in the Southern District of Texas while a majority of affected plaintiffs have indicated they wish to settle. With more than 75 percent of plaintiffs on board, this case should be allowed to conclude instead of being held up by lawyers grasping for more cash.

In mid-August, a vote was held in another of the major baby powder cases where 83 percent of plaintiffs voiced their support for a whopping $6.5 billion settlement to be paid out over 25 years by LTL Management, J&J’s Texas-based subsidiary. About 61,000 lawsuits would be settled for 99.75 percent of the plaintiffs, leaving only a small amount of mesothelioma suits to be settled.

Now, it will be up to the judge to decide whether the settlement is appropriate and fair.

Though attorneys representing some of the victims in the case have supported the plan, others have decided to stick out the trial in the hopes of extracting a larger settlement. However, Johnson & Johnson’s recent commitments to increase the total amount of the settlement up to $9 billion may shore up more support for their proposal and boost the prospect of a final settlement among victims and their families.

Considering the tens of thousands of Americans involved in this case who claim injuries and cancer diagnoses, including many who’ve battled in the courts for years, the prospect of a resolution should bring relief and comfort. However, it is unclear whether that message will be pressed in court.

One lawyer in the case has warmed to the deal for his clients, but others are likely to seek an even larger payday that could come if they strike for a bigger deal and more delay. No surprise. It’s estimated that attorneys in this case could receive up to a third of the final settlement.

For years, Americans have seen hundreds of commercials related to baby powder cases used by attorneys to grow their roster of plaintiffs in the lawsuit.

This practice of mass tort advertising and recruitment is standard fare in today’s legal system and has been mainly responsible for delivering some of the largest settlements to date. However, many groups have warned that unchecked advertising could be creating more problems than solutions for vulnerable Americans.

The American Medical Association and the American Association of Retired Persons have made clear that “fear-mongering” legal ads are making elders reluctant to seek additional care. “Nothing could be more invidious than the exploitation of the aged. These pressures that plague older persons place their health in jeopardy and further deplete their reduced incomes,” said AARP’s founder, Ethel Percy Andrus.

Legal firms defend the practice as an effective method of reaching potential victims who may not otherwise know that a case exists, for which there is a kernel of truth.

After many years of delay and legal maneuvering, observers of the Johnson & Johnson case should have learned a few lessons about balancing plaintiff recruitment efforts and restoring faith in an otherwise bloated court system.

The voting mechanism by plaintiffs has proven to be an effective method to achieve a comprehensive settlement that will aid victims. We can only hope that the presiding judge will allow this settlement vote to be realized and seen through to its end.

Originally published here

As the 2024 election grinds on, you’ll hear a lot more about the online betting markets which have become all the rage amongst politicos and statisticians. These days, you can bet on election outcomes and even the weather. But should you be able to gamble on courtroom verdicts? That is essentially what’s happening within a new trend of litigation finance by third parties, where outsiders not directly involved in lawsuits are providing funding in exchange for a cut of the “winnings.” This could fundamentally change the nature of justice in the United States. 

As shown in a 2022 report by the US Government Accountability Office, the third-party litigation finance industry has quickly grown to an estimated $13.5 billion business in a few short years. Litigation finance is becoming an attractive way to attract and accumulate capital for firms. 

One notable case involves a medical tech startup leveraging litigation finance to sue a Fortune 500 company they claim stole trade secrets. Another features a food distributor beefing up its lawsuit against meat packers for price-fixing with the help of a Saudi-backed venture fund. 

Certain cases are fertile ground for any hedge fund, venture capitalist, or banker who can stomach some risk in exchange for the chance of a big payday, amounting to gambling on lawsuits.

And while the money continues to pour in, there’s a growing recognitionthat litigants who benefit from outside financing should be forced to disclose that to the bench. Not least because it could have severe implications on cases, but also because of the downstream effect on workers and consumers who rely on firms for goods and services they love.

America already is a highly litigious country, perhaps it was inevitable that courts would become proxy battlegrounds for high-stakes finance and informal betting. This trend is picking up steam because trials in the United States are expensive. Retaining high-quality lawyers to pursue civil litigation can easily rack up hundreds of thousands of dollars in fees, and way more if cases go to trial. 

For plaintiffs who want their day in court but can’t afford a roster of celebrity lawyers, it may be necessary to tap outside funding. Class action lawsuits help disperse these costs among multiple clients, but trials with a limited scope and impact may rely on litigation funders to get their cases over the finish line.

This matters greatly because the justice system is still perceived as a neutral ground for resolving disputes in business and among individuals. If parties can secure a judgment in an American courtroom, this can help settle broader debates and stave off any future claims and bad behavior, likely saving millions of dollars that would be spent in legal battles. 

Unchecked billions flowing into our courts should be a real concern for the integrity of our judicial system. As put by Stephanie Leslie of the California Deposition Reporters Association, “These third parties even enter into contracts and arrangements with court reporting agencies, something happening regularly here in California. It certainly appears improper and as introducing bias into a position that requires the neutrality of an official record keeper.  Any business arrangement involving the shorthand reporters should have to be disclosed to all parties involved in that matter.” 

At present, this is no legal requirement that litigants disclose to the court whether a third-party stands to gain from a financial settlement. Judges may require this, but it is based solely on their discretion.

That many specialized companies offer money to potential litigants to bank on a positive outcome is undoubtedly a product of the ingenuity of American capitalism. 

But what happens when hostile actors begin to do the same to tip the scales of justice?

As researchers and court watchers are now discovering, several foreign-owned firms tied to shady regimes abroad are also aware of this power, and using it to antagonize innovative American companies and bring patents into question. House Oversight Committee Chairman James Comer (R-KY) acknowledged this in a recent letter to Supreme Court Chief Justice John Roberts.

One such example is PurpleVine IP, a China-based firm financingmultiple patent lawsuits against Samsung and its US subsidiaries, hoping to unravel some of the proprietary technology found in Bluetooth earbuds.

If that intellectual property is successfully challenged, it could open the floodgates for products once deemed counterfeit to enter the United States and undercut domestic firms.

Many American innovators fear that the same fate could befall those working in the biotech and defense industries, especially as third-party funding has become a mainstay in the Chinese legal system, serving as a new national security concern between the two global superpowers.

To this end, Rep. Darrell Issa (R-Calif.) has joined some of his colleagues to introduce the Litigation Transparency Act to force disclosure of financing provided by third parties in civil lawsuits. Though there have been similar attempts that focused on funding from abroad, this bill simply requires all third-party funding to be disclosed in court. This is a good first step for transparency.

The commodification of lawsuit funding is a somewhat ingenious concept that may indeed help smaller companies win their day in court, but it also opens the door to even more bad-faith participation in the justice system.

Americans deserve a legal system that is not only accountable and fair, but transparent. Those gambling on the outcomes of our judicial system should be able to take the risk, but we deserve to know who they are.

Originally published here

In a protracted eight-year-long legal battle, lawsuits against pharmaceutical and beauty giant Johnson & Johnson seem to be finally coming to a resolution. These cases have been some of the largest and most expensive in recent history and are providing memorable lessons for companies, consumers, and legal firms as to how massive claims can be best adjudicated to render justice.

LTL Management, J&J’s Texas-based subsidiary, is being pursued for J&J’s baby powder product and whether certain bottles contained trace elements of talc tainted with asbestos over the years. Most commonly associated with glass wool used for attic insulation, asbestos is also found near talc mine deposits, and the company has been fighting close to 61,000 claims that those trace elements caused various illnesses in consumers.

The subsidiary based in Texas was created as a holding vehicle for the various claims against the company, a practice favored in state bankruptcy law.

The merits of the scientific findings in the case itself have been hotly debated for some time and will continue to be. What’s at stake in our justice system, however, is the ultimate role of those consumers who felt wronged and how their voices will be heard as these cases meet their end.

The tens of thousands of disparate cases have ranged in the level of harm consumers say they endured as a result of using the product, and have been split up into several class action lawsuits and multi-district litigation cases heard by different judges, juries, and courts.

This is standard fare for large tort law cases but is exacerbated as additional injury law firms seek class participants for these big suits through direct recruiting or spending millions on advertising.

It is no secret that an entire industry of plaintiff attorneys active in tort law depend on high-profile cases such as these to seek massive rewards as a cut. Whether or not claims are legitimate, publicly traded companies with reputations and stock prices to maintain would often rather cut a deal than risk a lengthy trial process that will balloon their legal budget and drag their brands through the mud of media coverage.

When final awards or settlements are made, attorney fees usually come out as high as a third of the entire payout, or more. The lawyers that halted Elon Musk’s controversial payment plan, for example, are seeking nearly $7 billion in fees from Tesla as a result of their case, which would be one of the largest legal payouts in American history. Musk recently announced the company would move its headquarters to Texas after how Tesla has been treated in other jurisdictions.

In the case of Johnson & Johnson, the company has offered multiple options to claimants looking to settle out of court rather than continue costly legal battles that could result in fewer rewards for those harmed. The latest settlement would be a combined $6.5 billion paid out over 25 years to those who were diagnosed with ovarian cancer.

For consumers who believe they’ve faced real harm and are involved in these cases, whether or not they can prove it, they deserve a chance to end the expensive ordeal and reach a settlement, as they should in any case.

But considering that some of the country’s largest tort law firms have an ongoing interest in drawing out these legal fights, either because of the ongoing legal fees or the promise of a healthier payout, it is not clear whether those settlements announced will be favorably presented to their clients.

Consumers who were affected deserve to be heard and to have their cases justly administered. If they are offered a deal, they should not have their rights limited simply because a larger payday could hypothetically be on the horizon.

When the people filing the lawsuit are kept from making a settlement by their lawyers, as reports frequently indicate, we should ask hard questions about the incentives of the lawyers and legal firms that bring these types of cases.

We cannot know the machinations of what injury law firms are telling their clients about current settlements or future prospects, but we would hope these are ethical, truthful, and represent their clients’ interests.

What’s at stake in the broader context is the future of our judicial system and the faith of everyday people that they can get a fair shake in court, without losing out on what they’ve been promised.

Consumers harmed by-products should have the ability to not only be heard in court but to participate in a fair, transparent process where they can seek redress.

Allowing the multi-year litigation process to continue without giving clients and consumers affected the option to settle now not only risks leaving thousands without proper justice, it also undermines the rule of law which is meant to protect Americans when we need it most.

We hope this remains true, and that no bad precedents are set for future claimants.

Originally published here

If you ask most Americans when it’s time to call a lawyer, the answer is no mystery: after a law has been broken, you’re forced to do so.

Just as we don’t ask doctors to prescribe medicine before we’re sick, most people don’t pay for lawyers and then go commit crimes. Trial lawyers, however, might be the exception. Where there is no injury, one must be invented.

Legal marketing is a multi-billion-dollar industry to generate claims for mass tort settlements. The business model at play is deceitful, wasteful and highly lucrative. In conjunction with deep-pocketed Wall Street and Madison Avenue backers, trial lawyers galvanize hundreds, if not thousands, of meritless claims through slick advertisements. Claims are directed at specific companies or industries and then bundled into mass tort litigation, leveraging the defendant for all they’re worth.

This rigmarole is very costly for consumers, as companies are forced to beef up legal departments and pass their higher costs to customers.

The peculiar world of law advertising for tort cases is so ubiquitous that most of us likely don’t even recognize it anymore. Car accident? Lawn care products? You may be entitled to compensation!

A recent report estimated that trial lawyers spent more than $971.6 million on 15 million local TV ads targeted toward potential plaintiffs in 2021.

A 1977 Supreme Court case ruling declared restrictions on legal service advertisements a violation of free speech, leading to a surge in mass tort litigation. Whatever we think of this opinion, spending on trial lawyer ads on television hit $1.2 billion by November of that year.

Of course, one might argue that in America, businesses are free to market as they wish, and most would agree. But we’d be negligent if we didn’t recognize the pernicious nature of these class-action lawsuit recruiting ads.

The American Medical Association and the American Association of Retired Persons warn that trial lawyers’ fearmongering is causing patients, especially the elderly, to halt medical care. Perception is a reality for many people, so when actors in a TV ad sternly suggest an illness may be the result of faulty medication, they listen. Evidence is not required.

Much of this marketing is built on dubious claims and questionable science and leaks into courtrooms yearly. Courtrooms are clogged with so many baseless cases that it undermines claimants’ credibility with more legitimate claims.

The tort claim tsunami is designed to stress our already burdened court system, and defendants often settle rather than endure what can be years-long legal battles. In doing so, they avoid costly battles that will sink their company’s stock price and reputation, even if they’ve done nothing wrong.

On top of all this, it’s well-known that tort legal firms often are the biggest beneficiaries of larger settlements. It gives them ample motive for exaggerating claims while getting as many people into class action lawsuits as possible. And that’s no matter how silly the case.

The Federal Trade Commission was established to police deceptive and unfair business practices and has been unusually visible under Chair Lina Khan, whose tenure has been defined by suing almost every major American tech company based on questionable legal theories. Instead, the FTC should focus on a slam-dunk case examining the junk science that marketing firms push to the media as “evidence” in their litigation.

If federal action is not forthcoming, a defense should be mounted by capable state regulators.

A few states — including Tennessee, Kansas, Texas and West Virginia — have taken the necessary steps toward better tort enforcement. With the mass tort litigation machine playbook fully exposed, there is no reason legislators everywhere should not follow their good example.

We live in a digital age where it is increasingly difficult to parse through the deluge of information coming our way. But it is not impossible, no matter how much the tort lawyers wish it were so.

Originally published here

The Supreme Court recently delivered a decision on the constitutionality of one of the federal government’s most peculiar and least understood agencies, the Consumer Financial Protection Bureau.

Unlike the Fifth Circuit Court, which earlier ruled that the agency’s unique funding model violates the Constitution, Justice Clarence Thomas argued in the majority opinion the government’s funding of the CFPB “satisfies the Appropriations Clause”.

The CFPB is a federal agency unlike any other. For one, it has no direct funding. Its funds come from the Federal Reserve, our opaque central bank. 

In perpetuity, the CFPB can claim up to 12 percent of the Fed’s “surplus,” which are profits it makes through various liquidity and asset schemes that come from buying and selling government bonds. They also charge interest on loans to financial institutions with zero congressional oversight. 

While the funding structure has passed legal scrutiny for the time being, questions remain on the agency’s actions and whether the CFPB may be harming, rather than helping, consumers.

The CFPB is the brainchild of now-Sen. Elizabeth Warren and was created with the intention of policing “unfair and deceptive practices” in the financial sector. It is a more consumer-facing version of the Federal Trade Commission but more specialized in consumer financial services. 

Since then, it has become an agency of scorn for financial product providers and their customers, restraining credit availability and making it more difficult for consumers to get access to capital such as business loans. 

For one, the CFPB does not have a traditional rulemaking process that invites and accepts comments from citizens. It disseminates rules without democratic input, as any other agency is required by law to follow. This would not be a dealbreaker for agencies overseeing highly specialized industries with limited scope, but it’s different if we’re talking about rules that impact every bank and financial customer in the country.

Second, many of the CFPB’s rulings have been targeted at credit programs offered by specific financial firms, revealing selective enforcement based more on political factors than actual deceptive practices. Former employees have gone on the record detailing how they were directed to concentrate on individual companies rather than specific behavior. 

Whether this be payday loans, credit card rewards, or even auto financing, Americans have turned to these programs for credit and to improve their standard of living. The vast majority appear satisfied with their offerings. 

And all of this, despite the agency’s own lax security that has already put consumers at risk.

Last year, it was revealed that a CFPB staffer forwarded the confidential financial information of nearly a quarter million Americans to their personal email, an unprecedented breach from within a federal agency.

One of the more controversial rules from the agency was the fulfillment of a campaign promise by President Biden to cap credit card fees at just $8 per month. In the wake of the Fifth Circuit ruling calling into question the agency’s funding, that rule has been halted by a federal judge in Texas. 

Capping fees may satisfy political concerns, but for Americans who rely on credit to pay their bills or make ends meet in tough times, making credit less available only hurts those most in need of tools to get by. That includes minority and poorer households and businesses, who feel the direct impact when credit is artificially constrained.

The power and reach of the CFPB will face another hurdle when the Supreme Court revisits not just the agency’s rulemaking, but federal agencies as a whole with the case of Relentless, Inc. v. the U.S. Department of Commerce.

In the much heralded Fisheries case, the Court will rule on the fate of the Chevron Doctrine, the ability for agencies to promulgate rules beyond the remit of Congress. This would have a sweeping impact on the ability of the CFPB to issue its rules and regulations without authority from the legislative branch of the federal government.

Consumers deserve both protection and the freedom of choice when it comes to goods and services, especially when dealing with the financial sector.

The unique financial products offered in the United States give us an advantage in boosting our standard of living. Access to credit is seen as a chief measure of financial inclusion and success.

But when rules are burdensome, and reduce the availability of credit, this is worth another look. And competing branches of government should work overtime to keep the CFPB in check.

At best, the Consumer Financial Protection Bureau is an agency without watchers. At its worst, it’s an unaccountable bureaucracy halting innovation and entrepreneurship. Reforms will have to come at some point for consumers to both prosper and be protected. 

Originally published here