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2021-2022 Dishonorable Mentions

“Dishonorable Mentions” generally comprise singularly unsound court decisions, abusive practices, legislation or other actions that erode the fairness of a state’s civil justice system, but aren’t otherwise discussed in other sections of the Judicial Hellholes report.

AMERICAN LAW INSTITUTE REVIVES ACTIVIST RESTATEMENT OF “CONSUMER CONTRACT” LAW

In the 2020-21 Judicial Hellholes® report, the ATRF examined the American Law Institute’s mission shift over the past decade from “scholarly institution that was safely above the fray” to that of an advocacy group proposing novel expansions in liability law. Perhaps the clearest example of the ALI’s activist mentality is the proposed Restatement of the Law, Consumer Contracts. This work product attempts to create out of whole cloth new legal rules for courts to adopt that govern contracts between businesses and consumers.

This proposed Restatement is highly controversial because it departs from the traditional objective of an ALI Restatement to “restate” the most sound legal rules based on existing law developed by judges (usually over the course of centuries). Instead, the consumer contracts Restatement endeavors to dictate what the law “should be” based on the policy preferences of its law professor authors. As a result, this proposed Restatement recommends new ways for consumers to invalidate agreements they enter with businesses that lack a firm grounding in existing law. If adopted by courts, the Restatement’s novel proposed rules would disadvantage businesses and increase overall product and service costs for consumers.

The ALI debated this proposed Restatement at its Annual Meeting in May 2019. The project generated substantial criticism across a broad range of stakeholders, with many calling for the project to be abandoned or at least not allowed to proceed as a Restatement. Such fundamental disagreements resulted in no further action taken on the project for years, leaving many to wonder if this work product would be shelved indefinitely. In October 2021, however, the ALI resurrected this proposed Restatement with few material changes after more than two years of inaction.

The ALI’s decision to revive this controversial Restatement, and disregard basic concerns that have been raised for many years, shows that the organization has chosen to leverage its standing and influence more aggressively in the legal community to pursue legal advocacy. Rather than developing Restatements that assist judges by clarifying the law, the ALI is maneuvering to reinvent law. In doing so, projects such as the proposed Restatement of the Law, Consumer Contracts may end up misleading judges as to the actual state of the law, calling into question the purpose of Restatements.

FLORIDA APPELLATE COURT SUBJECTS PHARMACY TO PUNITIVE DAMAGES FOR EMPLOYEE’S QUESTIONING OPIOID PRESCRIPTIONS

As the opioid epidemic rages, there is no shortage of pointing fingers in litigation as to who is responsible. In Florida, a recent court decision sends the confusing message that being careful when providing opioids can put you on the hook not only for liability, but even punitive damages.

The case arose when an experienced pharmacist began questioning the heavy volume of prescriptions coming from a doctor in the building who ran a busy pain management clinic. During this time, she was receiving so many opioid prescriptions that the pharmacy sometimes ran out of stock. This occurred during the height of the opioid crisis in an environment of new laws and regulations requiring pharmacists to closely scrutinize prescriptions.

As a result of her questioning the doctor’s prescriptions, the doctor sued the pharmacist and her employer, Walgreens, for defamation. A trial in Miami-Dade County, a former Judicial Hellhole, resulted in a $1.3 million award to the doctor in March 2020 – one of Florida’s Top 25 largest verdicts of 2020.

The trial court dismissed the plaintiff’s request for punitive damages, however, because the court found no evidence that the pharmacist had a malicious motive to destroy the doctor’s reputation.

The Florida Court of Appeals, Third District, reversed this ruling in July 2021, finding the punitive damage claim must to go to trial. It reached this outcome even though the pharmacist acted out of concern for the over-prescribing of opioids during a national crisis, not any ill will toward the doctor. Walgreens also argued, to no avail, that it was unaware of any defamatory statements, did not condone her conduct, and was not grossly negligent in training or supervising the pharmacist (as Florida law requires for imposing punitive damages on an employer).

Subjecting a pharmacy and pharmacist to punitive damage liability for being careful during the opioid crisis is contrary to public health. All interested parties, including regulators, government officials and doc- tors, are working together to put an end to the opioid crisis that is gripping many parts of the nation. The Florida appellate court’s ruling may deter pharmacists from speaking out and doing their due diligence out of fear of facing harsh civil penalties.

LACK OF TRANSPARENCY SURROUNDING KENTUCKY AG’S PENSION PLAN LITIGATION

In 2020, the Commonwealth of Kentucky intervened in litigation brought against KKR & Co. over the company’s management of state pension plans, alleging breach of fiduciary duties and aiding and abetting in the breach of fiduciary duties based on hedge fund activities dating back to 2000. Now, the attorney general’s office has hired private trial lawyers to lead the lawsuit on its behalf.

The Attorney General’s office contracted with the Oldfather Law Firm, a well-known Louisville plaintiffs’ lawyer firm, determining that the contingency fee is “both cost-effective and in the public interest.” The terms of the contract could lead to the private trial lawyers being paid a considerable portion of any money recovered by the state in the lawsuit.

The contract with the firm was not bid through the state’s traditional processes thanks to a questionable provision in the state budget bill, which allows Kentucky Attorney General Daniel Cameron to hire and pay any counsel he chooses “on any contractual basis the Attorney General deems advisable.” This provision was vetoed by Kentucky Governor Andy Beshear, who called it an “unprecedented authorization” that provides no guardrails on how much outside counsel might be paid, leaving no accountability for taxpayer dollars, but his veto was overridden by the legislature.

Under the contract, Oldfather attorneys and their subcontractors will be reimbursed with a set percentage of gross recovery received by Kentucky. The lawyers will receive 20% of the first $250 million recovered, 15% of any amount between $250 million and $1 billion, and 10% of any recovery beyond $1 billion.

In addition to the lack of transparency described above, Attorney General Cameron has yet to make public a report analyzing the performance of the financial institutions. This report cost Kentucky taxpayers over $1 million, and despite promises to do so, state officials have refused to make it available to anyone including the defendant financial institutions.

If this report helps to make the case advanced by the amended complaint filed by the Attorney General, it is surprising, to say the least, that the Attorney General had to hire outside counsel on a contingency fee basis in addition to the lawyers on his own staff. If the report weakens or otherwise “harms” the AG’s case, he should acknowledge that and further amend or dismiss his case.

Attorney General Cameron should embrace good government principles and work to create transparency in this and other government litigation. Kentucky taxpayers should be assured that his office is working in their best interests and not those of entrepreneurial trial lawyers

A TALE OF TWO COURTS: OHIO COURT DRASTICALLY EXPANDS PUBLIC NUISANCE LAW

In a year when the ATRF praises the Oklahoma Supreme Court for soundly rejecting an expansive view of public nuisance law, a recent verdict in an Ohio federal court serves as a stark contrast of what happens when an activist judge oversees litigation.

In November 2021, a jury in the U.S. District Court of the Northern District of Ohio found three pharmacies – CVS, Walgreens and Walmart, liable for creating a public nuisance by filling valid opioid prescriptions. The case was brought by two counties in Ohio as part of the national multi-district litigation (MDL) being overseen by Judge Dan Polster. The court adopted the very same expansive view of public nuisance law that the Oklahoma Supreme Court found to be dangerous and an inappropriate application of the law. Historically, public nuisance law involved instances in which a property owner’s activities unreasonably interfered in a right that is common to the public, usually affecting land use. Unlike Judge Polster, the Oklahoma Supreme Court recognized that the opioid crisis is one to be solved by the legislative and executive branches of government and not the courts.

The decision drastically distorts public nuisance and product liability law. The companies were found liable for selling a legal and highly regulated product over which they had no control of the manufacture or labeling – and is heavily regulated. While technically a jury decided the case, it was Judge Polster’s overall approach to the litigation that allowed such a dramatic expansion of the law to occur. As the Wall Street Journal points out, Judge Polster will use this verdict to hold the companies “hostage to a settlement.”

The MDL process he oversees is intended to speed the process for courts to handle complex lawsuits that involve similar conduct; however, it should not be to the disadvantage of one party or another. The fact that Judge Polster began the process with a statement suggesting that he and the judiciary would “solve” the opioid crisis, and he also stated on the record that “no one has done enough,” in this regard – plainly suggest that he would drive the process to achieve a desired outcome.

Judge Polster’s management of the case is part of a broader and concerning trend in MDL litigation. As two law professors noted in a recent article, “MDL’s gravitational pull over thousands of cases demolishes all of the normal expectations of individual process and federalism.”

Right from the outset, Polster pushed the parties for a settlement, and in doing so, he plainly demonstrated where he thought fault should be allocated. In open court he went so far as to state that defendants are “responsible for having created the opioid crisis” and “must now take some responsibility for fixing it.”

Judge Polster took additional steps that led defendants to conclude that he was attempting to “direct” the plaintiffs’ trial strategy when he quickly scheduled a new “bellwether” trial after a decision of the U.S. Court of Appeals for the 6th Circuit. The defendants stated in a subsequent motion, “No party asked to have any case restructured… Rather, without warning and without considering the views of the litigants, the district court judge assumed control of the plaintiffs’ cases.”

This followed a strongly worded Writ of Mandamus the 6th Circuit issued in April of 2020, finding Polster disregarded the Federal Rules of Civil Procedure in his management of the litigation. Writing for the court, Judge Raymond Kethledge stated, “MDLs are not some kind of judicial border country, where the rules are few and the law rarely makes an appearance.”

The 6th Circuit further rebuked Polster, calling his decision to allow plaintiffs in the litigation to amend complaints 19 months post-deadline “plainly incorrect as a matter of law,” which “manifests a persistent disregard of the federal rules.”

In the end, Judge Polster got what he wanted in this trial. He most likely will continue to push the par- ties toward settling, in hopes that it happens before the 6th Circuit Court of Appeals can again weigh in on an appeal.

UTAH SUPREME COURT EMBRACES ‘TAKE HOME EXPOSURE’ THEORY

The Utah Supreme Court ruled that employers owe a duty of care not only to their employees, but also to their employees’ family members, allowing a “take-home” asbestos exposure claim to proceed. This ruling goes against the longstanding tort principle that a party owes no duty to third parties with whom they have no relationship.

In Boynton v. Kennecott Utah Copper, LLC, the plaintiff sued his former employers, alleging that his exposure to asbestos while working on job sites owned by the three companies led to his wife’s death from mesothelioma in 2016. The plaintiff claimed that his wife was exposed to asbestos fibers that stuck to his clothes when she did his laundry.

After the trial court dismissed the claims against two of the defendants, finding that they had no duty to third parties, the Utah Supreme Court reversed.

While tort liability typically requires a direct relationship or action between an injured person and a defendant, the court did not require the plaintiff to establish such a relationship between the employers and the plaintiff’s wife. The court instead held that the operators were subject to liability because there was a foreseeable risk that an employee’s work with asbestos would expose his co-habitants.

In taking this approach, Utah joined the minority of jurisdictions that have ruled on the issue and allowed such claims. Other courts have rejected take-home exposure claims, either because of the limit- less pool of plaintiffs that would result in dropping the need to show a relationship between the plaintiff and defendant or because it was not foreseeable at the time that an employee’s exposure to asbestos would harm people who are not present in the workplace. The direction of this decision could result in expanded liability based on the loose concept of foreseeability beyond the asbestos context.