legal reform

Class action hunters take aim at Australia

December 10, 2024
By Yaël Ossowski
In Australia, Legal Reform, Recent Media
0 comments

By Yaël Ossowski

In line with common law tradition, the class action system was set up in Australia to address wrongs and deliver justice for ordinary people.

But because of a lack of action from politicians and policymakers, it has instead funnelled rivers of gold to faceless foreign investors with a stake in gaming the system.

It’s become akin to a casino with lower stakes and high payouts. The high rollers from overseas, flush with capital to bet big and win big, get VIP treatment in Aussie courts, while ordinary Mums and Dads without that cash or influence get pennies.

As the Daily Telegraph revealed recently, there’s never been a more lucrative time to be a foreign litigation funder investing in Australian class actions.

Since July 2022, $308 million has been doled out to litigation funders involving themselves class action settlements in Australian courts, with a whopping 82 per cent ($255 million) going to funders from abroad.

Worse still, over the same period $152 million went to litigation funders with accounts registered in the Cayman Islands – a jurisdiction not none for divulging corporate or financial identities.

When pressed, many of these funders will say that without their investments, class action claimants would receive no payouts nor have a case at all, and ordinary people would never have a chance against large companies.

But a recent lawsuit brought by thousands of Victorian cabbies against the ride sharing platform Uber shows it just doesn’t work this way.

That lawsuit filed in Victorian Supreme Court aimed to compensate taxi and hire car drivers for loss of income and licence values following the arrival of Uber in Australia. In the US and Canada, similar actions have been tried, but haven’t found an audience.

In May, the Court was asked to approve an historic $272 million settlement, the fifth largest in Australian history. While those who may dislike the sharing economy may celebrate, the actual details reveal why consumers ultimately lose.

Of the $272 million, $36.5 million will make its way to law firm Maurice Blackburn, while $81.5 million would go to Harbour Litigation Funding, a business with significant assets held in the Cayman Islands. $154 million – or just 57 per cent of the settlement – would go to 8,701 taxi drivers, netting them just over $17,000 apiece or fourteen weeks of the average wage of a Melbourne cabbie.

Fourteen weeks’ pay for decades of lost income, and $81.5 million for a one-off investment. And that’s not even taking into account the consumers who will face higher prices and less competition when they try to book a car from the CBD.

With pay-days like these, it’s easy to see why so many litigation funders – backed by investors across the world – have their sights set on Australia.

The latest example is UK-headquartered class action firm Pogust Goodhead, backed by a billion-dollar investment from an American hedge fund, Gramercy. It’s the biggest loan of its type to a law firm in history.

Pogust Goodhead has plans to launch dozens of class actions in Australia out of its newly ordained Sydney office. The firm’s Global Managing Partner, Thomas Goodhead, has even talked about teaming up with green activist groups including the Australian Conservation Foundation and the taxpayer-funded Environmental Defenders Office to pursue firms that power the Australian economy.

Firms like Pogust Goodhead are relentless in their pursuit of payouts.

Pogust Goodhead is ploughing ahead with its $70 billion action in the English High Court against BHP – where it would receive as much as a 30 per cent cut. This follows a $45 billion compensation agreement between BHP and Brazil, where over 500,000 affected people receive payments from early next year. By their own admission, Pogust Goodhead’s English case may not be resolved until 2028.

It’s hard to see how the growth of this industry is good news for everyday Australian consumers who rely on affordable energy and good jobs.

Plainly, the class action system, especially the lax laws governing litigation funders, aren’t working.

How do you fix it? As ever, sunlight is the best disinfectant.

In the United States, Republicans and Democrats have come together to introduce the Litigation Transparency Act, which forces disclosure of financing provided by third parties. They’ve also worked on legislation to stop sovereign wealth funds from investing in American lawsuits. This is a reasonable approach that allows innovative litigation funding to continue, based on the condition that citizens know who has skin in the game.

So, it’s a good thing LNP Senator Paul Scarr raised these issues in Federal Parliament last week – quizzing officials from the Attorney General’s Department about what they’re doing to stop foreign actors interfering in Australia’s courts.

More recently, the European Law Institute – a leading legal think tank – has called on policymakers around the world to do more to “enhance transparency” around litigation funding, including passing laws to require funders to reveal the identity of their investors and disclose potential and actual conflicts of interest.

To tilt the scales of justice back in favour of ordinary people, Australia should heed this call.

Yaël Ossowski is deputy director at the global consumer advocacy group Consumer Choice Center.

This article was published in the Daily Telegraph.

Consumers deserve ‘auto choice’ to bring down insurance costs

Washington, D.C. – The Consumer Choice Center today launched its policy primer offering simple reforms to provide for more competitive, reasonable, and accurate insurance rates to increase choice and lower costs for consumers.

The primer, Fixing What’s Broken: Practical Consumer-Friendly Insurance Reforms to Save Money, focuses on two pressing issues for American consumers. First, it analyzes how insurance providers can adapt to the emerging scientific reality of tobacco harm reduction and consumer trends toward less harmful nicotine alternatives to smoking. Second, this primer explains different models for structuring consumer auto insurance and suggests how costly legal battles can be minimized, in turn lowering costs and premiums.

Yaël Ossowski, Deputy Director at the Consumer Choice Center, commented on the auto insurance policy recommendations, saying, “The legal nightmare that comes with every fender bender or more serious auto injury is known to every American, as they’re reminded by the slew of injury lawyer billboards on the interstate. Rather than subjecting every auto incident to a lawyer-led process that inevitably raises premiums, states and insurance firms should give consumers the right to choose whether they would prefer a tort or no-fault insurance model as is practiced in other countries and states.”

Attempts at legislation to offer “auto choice” to consumers have been introduced in all levels of state and federal government over the years, but have consistently been opposed by well-funded injury lawyers who see a threat to their business.

“For too long, we’ve allowed car insurance costs to balloon because of the adversarial nature of our highly litigious justice system, rather than understanding that most other countries do not force drivers into court after each accident. Giving auto insurance consumers the ability to choose between a no-fault and a tort system would allow flexibility, remove the adversarial declaration of liability that inflates lawsuits, and allows companies to compete for our business with the best policies and plans available. Best of all, good drivers with clean records would benefit from substantially lower premiums and simple plans,” added Ossowski.

Giving consumers the choice between a plan that requires legal negotiations between insurance companies to find blame and assign penalties, and a no-fault model that prioritizes quick and easy payouts without liability is a no-brainer that would bring immediate savings to consumers’ monthly premiums.

“Guided by state insurance commissioners, firms should offer alternatives to liability plans and allow consumers to choose the plan that works best for them as a perfect middle ground between enabling choice and reducing legal costs and headaches,” concluded Ossowski.

The policy primer can be read in full HERE.

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The Consumer Choice Center is an independent, nonpartisan consumer advocacy group championing the benefits of freedom of choice, innovation, and abundance in everyday life for consumers in over 100 countries. We closely monitor regulatory trends in Washington, Brussels, Ottawa, Brasilia, London, and Geneva. Find out more at www.consumerchoicecenter.org

Read this press release online.

Consumers dudded by secret class action suits

We are no strangers to settling our problems in court. Indeed, it is a core function of citizens in free societies.

Staffed by esteemed judges and sometimes juries, people who believe they’ve been wronged can take their claims before a neutral tribunal to plead their case in hopes of a positive outcome and settlement, whether on behalf of a class of litigants or just themselves.

In Australia, these principles are at the heart of a “fair go”.

Increasingly, however, in countries like Australia and the United States, the explosion of both class actions and litigation financing has culminated in a dodgy funding arrangement for actions against companies and individuals that may involve unscrupulous foreign actors.

Influenced by innovative American investors, this new practice of third- party litigation funding involves out- siders not directly involved in lawsuits providing funding in exchange for a cut of the “winnings”, whether they are hedge funds, venture capitalists, or bankers.

Plaintiffs looking to mount a case will turn to these litigation funders to pay for attorneys in lengthy and ex- pensive cases, giving up portions of settlements in exchange for funding.

While one can easily praise the novel aspect of this funding, we should also be aware that existing law does not require the disclosure of these arrangements to courts and judges.

When foreign powers are using lawsuits to try to break up patents and intellectual property, as we’ve increasingly seen abroad, what’s to say this won’t happen in Australia?

A Chinese firm, Purplevine IP, has financed multiple patent lawsuits against Samsung and its US subsidiaries, hoping to unravel some of the proprietary technology found in Bluetooth earbuds.

There’s also evidence of Russian oligarchs – with close ties to Vladimir Putin – parking millions in litigation funds to evade Ukraine-related sanctions.

It is true that Australia’s $200m litigation funding industry is dwarfed by the nearly $13.5bn industry in the United States. But at the same time, Australia is now the class action law- suit capital of the world on a per capita basis, and at least a dozen of the country’s top 20 companies are currently mired in class action lawsuits.

Last week, The Daily Telegraph analysed two recent class action settlements: a $47m settlement against ANZ, and a $29m settlement against Westpac.

While those numbers look good on the surface, if every eligible victim was compensated, they would receive just $317 and $321, respectively, while lawyers and investors walk away with millions.

What these cases point to are a system of legal cases that are systematically proving to be very beneficial for certain legal firms and select litigation funders, while not providing true transparency about who is funding cases and how much are they winning in settlements.

Before the Albanese government changed the rules in 2022, litigation funders were subject to strict regulatory oversight, including a requirement to hold an Australian Financial Services Licence (AFSL). Critically, too, ASIC monitored their activities. By scrapping the rules, the problem has only got worse.

Rest and Hesta – two of Australia’s biggest superannuation funds, with a

combined three million members – hold tens of millions of dollars’ worth of stock in Omni Bridgeway, Australia’s biggest litigation funder. At the same time, Omni Bridgeway is funding class actions against at least six Australian companies Rest and Hesta are invested in.

In other words, Australian workers are funding an all-out assault on their own retirement savings.

There’s more pain on the way, with the arrival of foreign class action firms to Australia including British firm Pogust Goodhead, armed with a billion- dollar loan from an American hedge fund, with plans to launch 10 lawsuits against Australian companies over the next year.

In the US, politicians have rallied around the common-sense idea that litigation funders should be disclosed to courts in important cases. California Congressman Darrell Issa has joined forces with Democrats and Re- publicans to introduce the Litigation Transparency Act that would force disclosure of financing provided by third parties in civil lawsuits.

It’s high time Australian politicians do the same. At present, Australia has no laws requiring litigation funders to disclose the ultimate source of their funding.

This is not only about consumers in Australia, but it’s about the future legitimacy of the entire judicial system across the country, and attempts by foreign powers to exploit it.

Yaël Ossowski is deputy director of the global consumer advocacy group Consumer Choice Center.

This article was published in the Daily Telegraph in Australia (pdf copy here).

Third-Party Litigation Finance: Chinese Interference with the US Judicial System?

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.

That’s why this industry needs a second look, and needs some guardrails to ensure consumers don’t end up facing higher prices because every company on the market is tied up in frivolous lawsuits. 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.

Good Riddance, Chevron Doctrine

Washington, D.C. – The Consumer Choice Center (CCC) celebrates today’s Supreme Court decision overturning the 1984 ‘Chevron‘ doctrine, an outdated ruling that exploded the power of the federal government to use the administrative state to craft rules in the absence of clear legislation from Congress.

Chevron enabled unelected federal bureaucrats to interpret and implement regulations on business, public health, consumers, and much more, drastically increasing the cost of compliance and leading to higher prices for consumers.

Yaël Ossowski, Deputy Director of the Consumer Choice Center, commented on the ruling, stating, “This is a monumental win for consumers and rule of law. The Chevron doctrine had allowed federal agencies to overstep their bounds, creating an unbalanced regulatory environment that often worked against the interests of consumers. The Supreme Court’s decision restores a much-needed check on regulatory power.“

The ruling arose from cases brought by Atlantic herring fishermen in New Jersey and Rhode Island, who challenged a 2020 National Marine Fisheries Service rule requiring them to pay for government-mandated “observers”. Lower courts had upheld this requirement based on the Chevron precedent. The fishermen appealed, and today in the highest court in the land, they won.

“Whether it’s the haphazard rule making from the Securities and Exchange Commission (SEC) on cryptocurrencies or ESG disclosure requirements, expansive EPA rules on emissions that practically no vehicles can match, or the overzealous FDA’s regulatory denials on nicotine alternative products, overturn of Chevron puts power back into the hands of the people through Congress, rather than the administrative state. No longer will agency “experts” have broad authority not explicitly granted by law. This is a great day for the rule of law and a more humble, restrained, and focused Executive Branch, which will benefits consumers who want the freedom to choose,” added Ossowski.

The Consumer Choice Center firmly believes that this decision will lead to a more transparent and accountable regulatory process, which benefits consumers by preventing the kind of overreach that reduces choices, raises prices, and squashes innovation.

About the Consumer Choice Center:

The Consumer Choice Center is a non-profit organization dedicated to defending the rights of consumers around the world. Our mission is to promote freedom of choice, healthy competition, and evidence-based policies that benefit consumers. We work to ensure that consumers have access to a variety of quality products and services and can make informed decisions about their lifestyle and consumption.

Find out more at www.consumerchoicecenter.org

This Sneaky Bipartisan Bankruptcy Reform Will Sting Tech Consumers

September 26, 2023
By Yaël Ossowski
In Legal Reform, Recent Media, Tech Regulation, Technology
0 comments

If there’s one theme emerging this year in Washington, D.C., it’s the full-on bipartisan rampage against American tech firms.

In a courthouse just blocks away from the Capitol, Google is defending its search engine against the Justice Department, while down the street the Federal Trade Commission is finalizing its case to break up Amazon. The DOJ is also reportedly probing Elon Musk’s company expenses at Tesla, laying the groundwork for an eventual case against the tech mogul.

Congress’ anger toward technology companies is red-hot and taking shape in the unlikeliest of forms — federal bankruptcy law reform.

Republican Takes on the Bankruptcy Reform

Last week in the Senate Judiciary Committee, a hearing was held on reforms to Chapter 11 bankruptcies, aimed at ending “corporate manipulation” of its statutes.

The discussion highlighted recent examples of companies undergoing multidistrict class-action lawsuits and their strategy of spinning off separate holding companies to more quickly and efficiently adjudicate claims in bankruptcy courts, rather than endure years-long jury trials.

It’s known as a “Texas Two-Step.”

It’s a model that plaintiff attorneys and Democrats generally deplore, a fact repeatedly made clear during the hearing, but one that has proven to render judgments quickly and with a better assessment of whether claims against large companies are legitimate. Most interestingly, comments by Republican senators indicate their party’s intent on using Chapter 11 to target what they perceive as the “harms” of Big Tech.

“In social media, there is no model like this,” stated Sen. Lindsey Graham. “We may not agree on how to resolve this issue, but if you’re harmed by social media, you have nothing. Zero. Zip. There’s where I hope the committee can come together and create rights of actions.”

Sen. Josh Hawley, who recently authored a book titled The Tyranny of Big Tech and has positioned himself as a chief antagonist of Silicon Valley, went one step further.

“If you wanna know why private rights of action are so darn important, and why we need to use them against the big tech companies, this is the reason why,” he said.

Tech Consumers Will Be Harmed

When Republicans invoke a “private right of action,” they’re talking about allowing consumers to individually sue any company for privacy violations or other “harms” yet defined.

While Hawley and Graham allude to a broad social media “harm,” independent researchers have yet to make any definitive case on what that means. Certainly not enough to mount a legal case.

Tech consumers who depend on these products and services could also soon bear the brunt of the regulatory and legal costs we see all too often in health care, banking, and food production, that of upwardly creeping prices and less innovation.

Everything would change for tech users, advertisers, and adjacent industries. Whether these services are free won’t matter once the free-for-all litigation can begin and lawyer-funded TV ads and billboards coax the next class of plaintiffs for attempts at billion-dollar settlements.

With the threat of more lawsuits — legitimate or not — comes higher costs for compliance and adjudication. When the target is a consumer-facing company with thousands of products and millions of buyers, these added costs are passed down to consumers.

At the same time, these cases overfill the docket alongside many real tort claimants who deserve justice, such as survivors of environmental catastrophes and victims of defective products.

Will Republicans Contract Lawsuit Fever?

Massive class-action lawsuits are the favored tool of legal firms because many companies would rather settle than subject themselves to lengthy litigation, which promises large payouts to the firms that organize the class and file the case.

Think of the corporate cases against Starbucks, a multi million-dollar suit over its fruit drinks not having “enough fruit,” or Burger King, with a class-action lawsuit over “false advertising,” alleging that hamburgers in TV ads are larger than when they’re served in the fast-food restaurants.

The U.S. is nominally the most highly litigious country in the world, so these examples should come as no surprise.

If Republicans also contract lawsuit fever, we’ll see a world with an explosion of mass tort class-action lawsuits filed against American technology companies, many of which would be without merit.

This would tie up resources for hundreds of innovative firms that consumers know and love and would place even more inflationary pressures on prices. Not to mention that it would pervert the true purpose of our judicial system — to deliver justice.

American citizens and consumers rely on a fair and virtuous legal system to protect our rights and ways of life. If anything, we should continue to demand that this be upheld.

Yaël Ossowski is a Canadian-American journalist and deputy director of the Consumer Choice Center.

Published in American Spectator (archive link).

GOP bill would deter frivolous COVID lawsuits

As customers slowly trickle back into stores and workers punch back in at reopened businesses, one thought dominates all our minds: caution.

Protective plastic shields and screens, face masks and gloves are a new reality, and it is a small price to pay for coming out of state-mandated lockdowns. But months into the all-encompassing coronavirus pandemic, there is another cost many entrepreneurs and administrators fear: future legal bills.

While voluntary precautions will be plentiful in every situation where a customer, student or worker is getting back out in the world, the nature of the virus means it is almost certain that someone, somewhere, will catch the virus. That means huge potential legal ramifications if a person wants to hold an institution or business liable.

A demonstrable lawsuit epidemic already exists. Between March and May of this year, more than 2,400 COVID-related lawsuits have been filed in federal and state courts. These cases are likely to blow up the legal system as we know it, elevating accusations of blame, clogging every level of our courts and keeping judges and lawyers busy for some time.

That is why the idea of a liability shield for schools, businesses and organizations has taken up steam. In a recent letter to congressional leaders, 21 governors, all Republicans, called on both houses of Congress to include liability protections in the next round of coronavirus relief.

“To accelerate reopening our economies as quickly and as safely as possible, we must allow citizens to get back to their livelihoods and make a living for their families without the threat of frivolous lawsuits,” the governors wrote.

While a liability shield will not give cover to institutions that are negligent or reckless, and reasonably so, it would ensure that blatantly frivolous or unfounded lawsuits are not allowed to go forward. For the average entrepreneur or school administrator, this would help alleviate some of the worries that are keeping many institutions and businesses closed or severely restricted.

No one wants customers or workers catching the virus in these environments, but creating 100 percent COVID-free zones would be next to impossible, a fact many scientists are ready to acknowledge. That’s why state governors, lawmakers and business leaders want to ensure that our states can open back up, yet be cognizant of the risk.

There is still plenty of uncertainty related to transmission of the virus, as the Centers for Disease Control and Prevention has pointed out, and that is why a liability shield — at least for those who follow health and safety recommendations — makes sense. Businesses and schools that willfully endanger citizens through negligence, though, should rightfully be held liable. This is the idea currently being debated in the nation’s capital, as Senate Republicans have stated they want a liability shield to avoid a lawsuit contagion.

Unfortunately, the idea is likely to be mired in a toxic partisan death spiral. Senate Minority Leader Chuck Schumer of New York decries such a plan as “legal immunity for big corporations” and national reporting on the topic has suggested as much.

But these protections would most benefit small businesses and schools that follow health recommendations and still find themselves the subject of lawsuits. It’s no secret that many attorneys see a potential payday in the wake of the pandemic. Already hundreds of law firms are pitching “coronavirus lawyers.”

And much as in consumer fraud cases before the pandemic, a favorite tool of coronavirus tort lawyers will be large class-action lawsuits that seek huge payouts. These are the cases that usually end up lining the pockets of legal firms instead of legitimately harmed plaintiffs, as a recent Jones Day law firm report finds. And that does not even speak to whether these cases have merit or not.

Whether it’s the local community college or bakery, we must all recognize that assigning blame for virus contraction will be a frequent topic of concern. But those accusations must be founded, and be the result of outright harmful and negligent behavior, not just because students are back in class or customers are once again buying cakes. A liability shield for the responsible citizens of our country is not only a good idea but necessary.

Yaël Ossowski is deputy director of the Consumer Choice Center. This article was published in the Waco Tribune-Herald.

Responsible businesses need COVID-19 liability shields

As customers slowly trickle back into stores and workers punch back in at reopened businesses, there’s one thought on all our minds: caution.

Protective plastic shields and screens, face masks and gloves are a new reality, and it is a small price to pay for coming out of state-mandated lockdowns.

But months into the all-encompassing coronavirus pandemic, there is another cost many entrepreneurs and administrators fear: future legal bills.

In this April 15, 2020, file photo, two people walk past a closed sign at a retail store in Chicago.Nam Y. Huh, AP

There is already a demonstrable lawsuit epidemic. Between March and May of this year, more than 2,400 COVID-related lawsuits have been filed in federal and state courts. These cases are likely to blow up our legal system as we know it, elevating accusations of blame and clogging every level of our courts that will keep judges and lawyers busy for some time.

That is why the idea of a liability shield for schools, businesses and organizations has taken up steam.

In a recent letter to congressional leaders, 21 governors, all Republicans, called on both houses of Congress to include liability protections in the next round of coronavirus relief.

While a liability shield will not give cover to institutions that are negligent or reckless, and reasonably so, it would ensure that blatantly frivolous or unfounded lawsuits are not allowed to go forward.

For the average entrepreneur or school administrator, that would help alleviate some of the worries that are keeping many of these institutions closed or severely restricted.

No one wants customers or workers catching the virus in these environments, but creating 100% COVID-free zones would be next to impossible, a fact many scientists are ready to acknowledge. That’s why state governors, lawmakers and business leaders want to ensure that our states can open back up, but be cognizant of the risk.

There is still plenty of uncertainty related to the transmission of the virus, as the Centers for Disease Control and Prevention has pointed out, and that is why a liability shield — at least for those who follow health and safety recommendations — makes sense. Businesses and schools that willfully endanger citizens through negligence though, should rightfully be held liable.

This is the idea currently being debated in the nation’s capital, as Senate Republicans have stated they want a liability shield to avoid a lawsuit contagion.

But these protections would most benefit small businesses and schools that follow health recommendations and still find themselves the subject of lawsuits.

It is no secret that many attorneys see a potential payday in the wake of the pandemic. There are already many law firms pitching “coronavirus lawyers” and many have reassigned entire teams and departments to focus on providing legal advice and counsel for COVID-19 cases.

And much like in consumer fraud cases before the pandemic, a favorite tool of coronavirus tort lawyers will be large class-action lawsuits that seek huge payouts. These are the cases that usually end up lining the pockets of legal firms instead of legitimately harmed plaintiffs, as a recent Jones Day report finds. And that does not even speak to whether or not these cases have merit or not.

In debating the next level of pandemic relief for Americans, including a liability shield would be a great measure of confidence for responsible and cautious businesses and institutions in our country.

Whether it is the local community college or bakery, we must all recognize that assigning blame for virus contraction will be a frequent topic of concern. But those accusations must be founded, and be the result of outright harmful and negligent behavior, not just because students are back in class or customers are once again buying cakes.

A liability shield for the responsible citizens of our country is not only a good idea but necessary.

Originally published in the Detroit Times here.

The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

Burned Tort Lawyers Plead Guilty to $200 Million Extortion Racket

Late last year, we covered the criminal case against Virginia-based attorney Timothy Litzenburg and his partners.

He was accused of approaching an international agrochemical company, presumably Bayer, the parent company of Monsanto, and threatening to weaponize the media and courts against them unless they gave his law firm $200 million.

The aim was to use recent verdicts to claim glyphosate, a key ingredient in Monsanto’s Roundup, is a dangerous carcinogen, even though hundreds of studies by reputable bodies, including the FDA, have said there is no evidence for that claim.

In court, it was revealed that Litzenburg’s firm threatened Monsanto by pitching them a massive “consulting agreement” that would make future cases against them from the firm invalid because of the conflict of interest. The hope was that the company would back down and the lawyers would make off with a huge payday.

Last Friday, Timothy Litzenburg, of Charlottesville, and his partner, Daniel Kincheloe each pleaded guilty to extortion after a short trial. They will face sentencing in September.

Litzenburg and Kincheloe also admitted that after making their demand for $200 million from the company, they registered a Virginia corporation for the purpose of receiving money from the company, and that they agreed to split the funds among themselves and their associates, and to not distribute any of the money the company paid them as purported “consulting fees” to their existing clients. Litzenburg and Kincheloe admitted that after making their demand for $200 million, Litzenburg threatened that they and others would commence litigation that would become “an ongoing and exponentially growing problem for [Company 1], particularly when the media inevitably takes notice[,]” and that such litigation would cost Company 1 and its publicly-traded parent company “billions, setting aside the associated drop in stock price and reputation damage.”
WHSV

This case is important because it peels back some layers on our nation’s vastly complicated tort or injury legal system, a pernicious cyclone of veiled threats, millions of dollars, unethical standards, and huge settlements to lawyers that often leave truly injured plaintiffs in the dust.

The incentives that exist in the American legal system make it possible for virtually any legal firm to trump up a case against companies or individuals. Often times, companies will choose to settle these cases for large amounts rather than have the case gain publicity, even if there was no actual harm or injury.

In a sense, the bigger a company is, the more likely they are to have a target on their back, no matter the claim that is brought up in court.

Though there are plenty of legitimate tort cases in which people have been harmed, there are just as many that are just outright frivolous and have no legal merit. Just think of the various cases against Google Maps because people took a wrong route and were struck by a car, or against Burger King because it’s meatless burgers aren’t really “vegan”.

Because the number of cases that can be heard by judges and juries is limited in a given year, the existence of these types of cases means that other cases, with real greviences won’t get heard.

And even if cases with real harms are eventually brought to court, it’s highly likely the plaintiffs will only receive a fraction of their deserved restitution.

It’s a system that overwhelmingly benefits injury lawyers at the expense of those they are supposed to represent.

Earlier this year, an analysis of large class-action lawsuits compiled by the law firm Jones Day found that that class members received an average of just 23 percent of eventual payouts — sometimes in the billions of dollars — and close to two-thirds went straight to lawyers instead.

These large settlements end up costing companies and the consumers that suffer from higher prices, not to mention the hundreds of potential plaintiffs who are not able to have their civil cases quickly heard.

Can you sue the ski hut where you contracted coronavirus?

European nations may be opening up their economies throughout the month of May, but that grand opening is likely to be dogged by the wave of COVID-19-related lawsuits.

We learned over the weekend that over 5,000 international tourists to the ski town of Ischgl, Austria are in the process of filing a lawsuit against the town and public officials. There are also being considered against ski resort owners in the area.

The lawsuit is being prepared by the Austrian Consumer Protection Association, which claims health authorities and the bar owners were “negligent” in not shutting down ski huts and restaurants earlier. They launched a website asking potential plaintiffs to share their information in order to join a future class-action lawsuit.

Often described as the “Ibiza of the Alps,” Ischgl made international headlines as an epicenter of the coronavirus crisis. At one particular venue, Kitzloch, a German bartender reportedly tested positive for coronavirus on March 7th. The bar closed its doors two days later. The town went into lockdown on March 13th. Tyrolean Governor Günther Platter then issued a province-wide quarantine on March 18th.

By the end of March, nearly 1,000 cases across Europe could be traced back to the resort town, and as many of 1,500 to the region itself.

The complaint states that the delay from the first known case until the ski town was ordered into lockdown was “negligible” and that authorities should have “known of a threat of mass infection”. Some have even blamed “greed” and “toxic business” as the reason local officials and business owners waited before shuttering doors. But as covered above, ski lodges and restaurants shut before provincial and national lockdowns ordered them to.

The first death in Austria from the coronavirus wasn’t until March 12, after which the town of Ischgl went into complete lockdown. The national lockdown went into effect four days later.

Is this enough to make a case against ski huts and villages where tourists contracted coronavirus?

As my colleague Linda Kavuka has pointed out, the current pandemic is a living and breathing example of Force Majeure, an Act of God that indemnifies certain parties in lawsuits and breaches of contract because it is simply “beyond the control” of any person or organization.

That said, there are legitimate questions to be asked: should ski towns have shuttered their doors and closed down bars and restaurants earlier? Likely. But we simply didn’t have the same information then as we do now.

And considering the very disturbing revelations about obfuscation of information by both the Chinese Communist Party and the World Health Organization at the outset of this crisis, it’s hard to place blame solely at the feet of local mayors and ski hut owners in the Alps.

(That’s why the U.S. states of Mississippi and Missouri have filed lawsuits against China.)

Of course, the fact that any skier or holiday goer would contract the coronavirus at a place where they were supposed to be enjoying themselves is a tragedy. Many people unknowingly spread the virus, were hospitalized themselves and died as a result. No one can excuse that loss of life and the grief that ensues.

But what we must hold uphold, in this situation and many more to come, is the facts and cases we allow to enter our legal system and our courts.

Classifying or assigning claims of negligence in the pandemic could likely mean thousands of unwitting public officials, business owners, and individuals will be held liable for what they didn’t know at the time. That would be a dangerous precedent.

We’ve often covered the incredibly litigious culture in the United States’ tort law system and articulated to reasons to reform it. Now, it seems, we’ll have to spread that same message throughout the European continent.

Why are juries awarding millions of dollars based on shoddy baby powder science?

There’s something amiss in our nation’s courts.

Just last week, a New Jersey jury awarded $750 million to four people who claimed baby powder products made by Johnson & Johnson had contributed to their cancer diagnoses.

In the end, that amount will actually be reduced to $186 million, a feature of New Jersey law that caps award amounts to five times the damages declared by previous rulings.

What’s amiss in this ruling is just how much the jury verdicts stray from actual scientific opinion.

Plaintiffs and their attorneys claim the company has knowingly sold asbestos-tainted talc in its baby powder for years, even though scientific studies have yet to prove a definite link between modern-day talc and any cancers.

The same has been echoed by the American Cancer Society, and the same conclusion was reached by a wide-ranging 2014 study published in the Journal of National Cancer Research Institute.

Last month, the largest-ever study on baby powder and talc was published in the Journal of the American Medical Association. It followed 250,000 women who used the product and found “there was not a statistically significant association” between using baby powder and any link to ovarian or other cancers.

Why, then, would the juries have sided against the science?

In the last verdict in a similar case, a St. Louis jury sided with Johnson & Johnson, finding no proof in the cases furthered by plaintiffs.

Others, though, have delivered record awards. But why?

It’s a combination of ambitious tort lawyers and misleading journalism.

Tort Lawyers and the Long Legal Pursuit

In the trial mentioned above, and in other cases I profiled in my article in the Miami Herald, attorneys specializing in injury cases have elevated what would otherwise be an open-shut case based on science to become a cause célèbre based on penalizing a large company with a familiar brand.

Indeed, the lawyers who argued this case against Johnson & Johnson made the company’s global revenue and its CEO’s compensation the baseline for compensation. It was the first trial in which J&J Chief Executive Alex Gorsky testified before a court.

In his final words to the jury, Panatier made it clear that the focus of their verdict should be on Johnson & Johnson’s conduct. “So when you think about the punitive damages, what number punishes and deters them, you’ve got to think in Johnson & Johnson terms,” he said, noting that Johnson & Johnson was a “$60 billion company.” “And you can make them pay attention. And that is an immense responsibility and it is an immense, immense task that you’ll have to try amongst the 10 of you to determine what that number should be.”
New Jersey Law Journal

What was missing from their core argument was any definitive proof that the plaintiffs were exposed to asbestos from the talc in the baby powder – or that this is how they contracted mesothelioma, a specific lung cancer.

An analysis provided by FDA and mineral experts last week could only conclude that the mineral products in question are likely too small to be adequately tested, and thus new testing would be required.

But again, that conclusion does not negate the various and recent studies that have found no connection between the baby powder and cancer.

Despite that, it hasn’t stopped leagues of injury lawyers from lining up to take their shot at winning a multi-million dollar verdict. More than 16,000 class-action plaintiffs have been assembled to sue the company in other jurisdictions.

The interest of injury lawyers, who receive sometimes up to 40% or more of the winnings, is quite clear.

Media Malpractice?

When it comes to reporting on the facts of these trials, the science is often downplayed in favor of convincing legal arguments and sensationalist headlines.

For news outlets such as Reuters and the New York Times, the decades of scientific studies are often overlooked – or at the very worst, neglected.

An oft-cited example is on the company’s cautious recall of thousands of baby powder products in October. But further tests concluded none of the batches of the company’s baby powder contained asbestos, a fact admitted by Reuters.

Most internal J&J asbestos test reports Reuters reviewed do not find asbestos. However, while J&J’s testing methods improved over time, they have always had limitations that allow trace contaminants to go undetected – and only a tiny fraction of the company’s talc is tested.
Reuters

As such, it’s difficult to prove what so many lawsuits and investigative allege. Not enough for scientific analysis, but maybe enough for a courtroom and a few headlines. Herein lies the issue.

In the reports of the baby powder cases, these products and cancer are too casually linked. At least according to the studies we have provided to us.

For real understanding about what’s in the products we use and consume, it’s best to adhere to the studies and academic literature. Of course, no one wants to use anything that could prove harmful to them, and consumers should always be wary.

But, in that case, shouldn’t we look to science for those answers rather than 12 men and women sitting in a jury box? Shouldn’t that be the standard we employ for all of the important health issues of our time?

That, along with many other reasons, is why we need true legal reform in this country. We cannot afford to allow real science to be voted away in jury boxes and courtrooms.

Tort lawyer tries to extort $200 million, gets burned

We’ve written before that there is a significant problem with bogus lawsuits and unscrupulous tort lawyers in our country. That’s why we launched time4legalreform.org, to track many of these cases.

Often, large tort legal firms will put advertising to rack up plaintiffs for class-action lawsuits against companies who’ve been accused of some wrongdoing, either rightly or wrongly.

Sometimes, there is collusion between plaintiffs’ attorneys and scientific authorities who conjure up “expert” testimony to use in court. We covered that in our video on IARC, the International Agency for Research on Cancer.

This week, a startling arrest has once again proven that we need legal reform in this country.

In an action filed on Monday, a Virginia-based attorney is accused of trying to extort a global chemical company out of $200 million, claiming he’ll tarnish their reputation, cause a “40% stock loss” and start a monumental “public relations nightmare”.

It is alleged that attorney Timothy Litzenburg “approached a global company in October and threatened to make public statements claiming that it had significant civil liability for manufacturing a supposedly dangerous chemical used in Monsanto’s Roundup weedkiller,” according to Law360.

He was arrested by authorities for attempted extortion and interstate threats, presumably against Bayer (Monsanto’s parent company), who he is pursuing in many court actions. His firm represented the plaintiff who won a $289 million verdict against Monsanto in August 2018, a verdict that was later reduced to $78 million.

This case is similar to that of Michael Avenatti, the one-time Trump foe who was arrested and charged for attempting to extort Nike out of over $20 million. He has since been charged with fraud as well, accused of embezzling even more millions from his clients.

Glyphosate, the chemical compound in Roundup, has repeatedly been proven in hundreds of studies to not be carcinogenic, including the FDA. But that hasn’t stopped lawyers from weaponizing to the court system to overturn science.

Litzenburg is, of course, innocent until proven guilty, but if the allegations are true, it’s just another case that proves our legal system is being used and abused. That’s why we need #legalreform now.

We can’t afford to continue to allow bogus lawsuits and unscrupulous lawyers to completely change public policy and public opinions on science.