Ireland as a Judicial Hell Hole (Somewhat Tongue in Cheek)

Pointoflaw's Walter Olson notes here items related to an Irish article describing Lloyds of London's Chariman as griping out about the amount of tort litigation in Ireland of late. As to global tort litigation, the key quote is this:


"Tort costs are expanding around the world at twice the rate of the global economy. Added to this is the fact that US legal jurisdiction is trying to creep outwards."

Updated - James Hardie - Links to the Opinion/Judgment, the Charges by the AU SEC and a Tally on the Outcomes

The Australian SEC - known as ASIC - has posted on its website the charges it filed, and a document summarizing which charges were sustained and which were dismissed. All of the charges relate in one way or the other to James Hardie's contingent risks regarding asbestos claims.

Update: The opinion/judgment is available here.

James Hardie Directors Lose Charges of Securities Violations in Connection with Statements Regarding Funding of its Asbestos Trust

Not a good week for James Hardie. This week the news is that it will not fund an expected shortfall of cash in its asbestos trust, and its officers and the company lost on charges of misleading investors regarding the adequacy of its funding of its asbestos trust.

The World Today - Thursday, 23 April , 2009 12:10:00 states the following:

Reporter: Sue Lannin
PETER CAVE: In a landmark ruling a court has found that former James Hardie executives broke the Corporations Act when they claimed that a trust set up to compensate victims of asbestos-related diseases had adequate funding. The New South Wales Supreme Court has ruled that 10 company officials including the former chief executive engaged in both misleading and deceptive conduct. But not all of the civil charges brought by the corporate regulator, the Australian Securities and Investments Commission, were proven. And in a separate twist the company says it faces a shortfall in its compensation because of the global financial crisis. Finance reporter Sue Lannin was in the court. She joins me now. Sue exactly what did the judge find?

SUE LANNIN: Well Peter the judge found that former executives and directors of James Hardie did breach sections of the company law basically by making false and misleading statements. Now that's in relation to the setting up of a fund in 2001 to compensate victims of asbestos-related diseases. In statements to the stock market and in press releases, the judge, in a press release, the judge said that the claim that that fund had adequate funding was false and misleading.Now some of those defendants include the former chief executive Peter Macdonald, former company secretary Peter Shafron and former chairwoman Meredith Hellicar. The main issue is that they've made false statements to the market or they did not disclose information to the market that there wasn't enough money in the trust fund. And also the judge found that Peter Macdonald the former chief executive made false statements to investors as part of a roadshow in Europe in 2002. As some background, James Hardie moved its corporate headquarters to the Netherlands in 2001. It set up a compensation fund. Another compensation fund had to be set up in a landmark agreement in 2004.Now some of those charges were proven, as we said, but some haven't. In relation to the roadshow, the judge found that Macdonald did make some false statements but some of the statements were not found to be false, or ASIC failed to prove its case.

PETER CAVE: Was there any reaction when the various parties emerged from the court?

SUE LANNIN: Well this has been a partial win for ASIC. I mean it's failed in previous prosecutions of high-profile cases. But even though it was a mixed victory the parties for asbestos victims who were there say it is a win. Karen Banton, the widow of asbestos campaigner Bernie Banton, said she felt vindicated. And Tanya Segelov, a lawyer for asbestos victims said it was a victory.

TANYA SEGELOV: I think it is significant. This is the first time any person connected with James Hardie has been held to have engaged in unlawful conduct. And while ASIC didn't succeed on all its claims, we have a finding that former directors, former executives, the former company and the current company were engaged in misleading and deceptive conduct and were in breach of the Corporations Act.

PETER CAVE: Tanya Segelov there. When will the penalties be handed down?

SUE LANNIN: Well that's still a date to be set by the judge but it will be later this year and certainly lawyers for the defendants will be arguing their case. Now there's also a, the judge said that, made a judgement that the board in 2001 did approve a press release that contained false and misleading statements in regards to the adequacy of the compensation fund so the judge is still to rule on that.He also, as I said, has to rule on what the penalties will be. Now the former company officials and directors face fines of up to $200,000 and they could also be disqualified from running a company. But several of those former directors are still running companies, including Meredith Hellicar, the former chairwoman. She's currently a director of AMP.

PETER CAVE: Thank you Sue Lannin, just back from the court.

Lawsuits Against The Ultimate Sovereign ?? - The Holy See a/k/a The Vatican

More and more sovereign entities will face tort litigation in the foreseeable future because they are involved in businesses through direct or indirect owenership. A wrinkle on that general issue is whether and when the Holy See, a/k/a The Vatican , can be sued. The issues are complex because it is a nation state. Recent case law in the area is summarized in an interesting article by Russell Jackson of Skadden Arps. He also hosts a blog at www.consumerclassactionsmasstorts.com. The case law he discusses includes Doe v. Holy See, 557 F.3d 1066 (9th Cir. 2009), and O'Brien v. Holy See, 556 F.3d 361 (6th Cir. 2009). The article is here.

Payday Lender Lawsuits - Claims Against Indian Nation "Sovereigns" and Offshore Entities

More and more tort litigation will involve suits against entities that operate outside the United States and through the Internet. Accordingly, I noted with interest an April 6, 2009 National Law Journal article by Pamela MacLean regarding payday lenders proving difficult to pursue in unfair and deceptive trade practice cases filed by state attorneys' general. Why are they hard to pursue? According to the article, many of them have moved to internet presences and have moved off shore. Some also are said to be claiming immunity from suits as purportedly controlled by Indian tribes. The article provides an interesting review of case law in the area and a basic description of some of the efforts of state attorneys general to prosecute the payday lenders. No doubt similar issues will arise in the future as there are additional suits against sovereigns, and as tort litigation becomes more global.



On the subject of payday lenders, note further that federal legislation was introduced to facilitate law suits byattorney's general, as described here on Pointoflaw.

Forum Non Conveniens in Global Mass Accident Situations - Italian Plane Crash Example

'Mass accident" cases produce tough issues on applicable law and teh forum for litigation. The 11th Circuit recently issued a per curiam ruling affirming a district court order invoking forum non conveniens principles to cause 69 of 70 air crash lawsuits to be tried in Italy instead of the United States with respect to a plane crash in Milan, Italy. The district court order directed Cessna to submit to jurisdiction in Italy. The case is King v. Cessna Aircraft Co., No. 08-11033. The opinion is here.

Multinationals and the Enforceability of Class Action Waivers in Contracts

As class action statutes proliferate around the world, a key issue for corporations is whether they can block class actions through contract terms. The April 6, 2009 National Law Journal includes a good summary article by plaintiff's lawyer Linda Mullenix regarding the enforceability of class action waivers. She reviews specifically the recent decisions in Homa v. American Express, 2009 WL 440912 (3rd Cir. Feb. 24, 2009), and In re American Express Merchants' Litigation, 554 F.3d 300 (2nd Cir 2009). The Merchants' decision is especially interesting because of the court confronting and rejecting an attempt to apply the law of one state (Utah) remote to the transactions. Utah law apparently was chosen by Amex because of a state statute upholding the validity of class action waivers. The court declined to let Utah law control.

James Hardie Judgment Due Today Regarding Criminal Prosecution and Asbestos Expense Disclosures - AU Time

Press reports indicate that a judgment is due out later today regarding the Australian "SEC"s criminal prosecution of directors of James Hardie regarding disclosures with respect to its asbestos-laibilities and the private trust it created to seek to resolve personal injury claims.

UK Pleural Plaques - Developments in Scotland and London

The battle over pleural plaques claiming is continuing to evolve in the UK

With respect to the Scottish legislation allowing renewed pleural plaques claiming, an April 21, 2009 Business Insurance article by Sarah Veysey reports that four insurers have now filed the promised lawsuit challenging the pleural plaques legislation in Scotland. The article states: "the four insurers challenging the law represent more than half of the U.K. employers’ liability market. They are Aviva P.L.C.; AXA Insurance, the U.K. arm of AXA S.A., RSA Insurance Group P.L.C.; and Zurich Financial Services Group." Much the same information is found on the website for the Association of British Insurers.


Meanwhile, the Brtish government still has not announced its position on pleural plaques. An April 8 article said that London is supposed to provide its answer on plaques "after Easter." The article states in pertinent part:

"Prime Minister (Gordon Brown) has issued a statement that a decision on pleural plaques will be made when Parliament resumes after the Easter recess.

During Prime Minister’s Questions Brown was asked (by Jarrow MP Stephen Hepburn) what he planned to do to end the compensation injustice for pleural plaques sufferers. Brown replied: “Asbestosis is a terrible disease, and all those who suffer from it deserve the best of help from the public authorities. It is right that we look again at this as a result of legal actions that have been taken about the obligations of insurance companies. “The Justice Secretary will make a statement on this when we return after Easter.”

I previously submitted to the government in London a detailed opposition the the pleural plaques claiming. You can see it here.

Grace Libby Trial

U.S. v. W.R. Grace trial started February 19 in Missoula MT. The WSJ Law Blog notes that the case seems to be flying under the radar without a lot of news coverage.

The WSJ Law Blog also provides a link to a great resource about the trial - the Grace Case blog, a joint project of the law school and the school of journalism of the University of Montana. The Grace Case blog has been covering the trial - from both a legal and a journalistic perspective - since the trial started.

Update on International Corporate Aiding and Abetting Liability Risks and the Alien Tort Statute

When is a multinational at risk for "aiding and abetting" human rights violations?

The answer is evolving. One case on the issue is Khulumani v. Barclay National Bank Ltd., 504 F.3d 254 (2d Cir. 2007). Recent developments are described in an interesting law.com article online as of today and written by Professor Georgene Vairo of Loyola Law School in Los Angeles; the article is available here

Much of the article focuses on an April 8, 2009 opinion by Judge Scheindlin that analyzes the issues in depth on a motion to dismiss in a case known as In re South African Apartheid Litigation. The opinion dismissed some claims but sustained others. The opinion by Judge Scheindlin is here, and seems well worth reading. Of note, the opinion allows American Pipe tolling of statutes of limitation in favor of the plaintiffs. That's a powerful incentive to the filing of class actions. It's also a weapon against governments - I may have been the first to apply it against the U.S. government, which we did successfully when representing businesses seeking to recoup taxes paid under an unconstitutional "Harbor Maintenance" tax. See Stone Container Corp. v. U.S., 229 F.3d 1345 (Fed. Cir. 2000).

The following excerpt from Professor Vairo's article provides a summary of some but not all of the "aiding and abetting" and conspiracy issues evaluated by Judge Scheindlin:

"On the other hand, she refused to dismiss claims that Ford Motor Co., General Motors Corp., International Business Machines Corp. and other companies aided and abetted torture and other atrocities committed by the regime, such as arbitrary denationalization by a state actor and cruel, inhumane and degrading treatment because such torts are well established in the community of nations.

Scheindlin's opinion is important because she takes a careful look at the standards for imposing liability, noting that the 2d Circuit had not left her with precise standards on a number of issues. Having established that aiding and abetting may violate the ATS does not answer the question of the type of mens rea required by nonstate actors. She rejected the defendants' argument that specific intent be required, holding instead that international law "requires that an aider and abettor know that its actions will substantially assist the perpetrator in the commission of a crime or tort in violation of the law of nations."She noted that the 2d Circuit had not addressed the question of whether conspiratorial liability was a tort cognizable under the ATS, but found that there was no consensus among nations and therefore refused to recognize conspiracy as a tort. According to Scheindlin, the defendants' political-question and international-comity arguments were largely eviscerated by her rulings on each of the classes of claims raised in the case. She noted the U.S. State Department's opposition to the litigation, as well as that of the current government of South Africa. She dismissed the State Department's arguments because they were vague, on the one hand, and irrelevant to the remaining claims. The political-question doctrine argument would have merit had the case impacted U.S. foreign policy, but she failed to see how litigating the remaining claims would have any impact on it at all."