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."
Saturday, April 25, 2009
Thursday, April 23, 2009
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.
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.
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.
Wednesday, April 22, 2009
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.
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.
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