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Statement from Lawsuit Reform Alliance of New York Executive Director Tom Stebbins on Mayor de Blasio’s Recognition of Frivolous Lawsuits’ Impact on NYC

January 30, 2015

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Statement from Lawsuit Reform Alliance of New York Executive Director Tom Stebbins on Mayor de Blasio’s Recognition of Frivolous Lawsuits’ Impact on NYC

“We applaud Mayor de Blasio’s recognition that frivolous lawsuits are major drain on the city coffers. As comptroller Stringer recently reported, New York City spends more on lawsuits than on parks, libraries and aging combined, to say nothing of frivolous lawsuits’ impact to the private sector.

We can fix this. We need to reform the rule of “joint and several” liability (where a party 1% at fault can be held 100% liable) to a more equitable “fair share” system, where liability is proportional to fault.

We also call on the mayor to support reform of the archaic and ineffective “Scaffold Law,” which holds contractors and property owners (including the City) fully liable in lawsuits for gravity-related construction injuries regardless of any contributing fault of a worker. Disaster relief organizations like Habitat for Humanity have identified the Scaffold Law as a major impediment to rebuilding efforts in the wake of Superstorm Sandy. Affordable housing advocates have also called for reform of the Scaffold Law. The School Construction Authority has noted that they paid an additional $215m in insurance costs due to the Scaffold Law in 2014 alone, enough to build several new schools. Meanwhile, our kids go to school in trailers.

We need stop spending taxpayer dollars on frivolous lawsuits, and start spending them on the things that really matter to New Yorkers.”

-Tom Stebbins, Executive Director, Lawsuit Reform Alliance of New York

Contact: Phoebe Stonbely | PStonbely@lrany.org | 518.512.5265

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The Lawsuit Reform Alliance of New York (LRANY) is a nonpartisan not-for-profit association of businesses, professionals, healthcare providers, membership organizations, taxpayers, and concerned citizens committed to changing New York’s legal system to help create jobs and energize our economy.

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LRANY Video Series: Ridiculous Lawsuit of the Month October 2014 – Red Bull Wings Lawsuit Settled

This week, Phoebe Stonbely will discuss the recent settlement from Red Bull following a lawsuit claiming false advertising for the energy drinks slogan that “Red Bull gives you wings”.

This ridiculous lawsuit was settled by Red Bull to avoid the cost and distraction of litigation – for $13.5 MILLION DOLLARS

Now experts now predict that the high dollar settlement from Red Bull could start a tidal wave of more false advertising lawsuits looking for a similar big pay-day.

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Fox News: Frivolous Lawsuits in New York City

Fox Friv Lawsuits NYC - TomLast night Fox 5 News aired a segment entitled “Frivolous Lawsuits in New York City” featuring LRANY Executive Director, Tom Stebbins.  The story discussed the problem that New York City faces with frivolous lawsuits and how these cases are clogging our court and draining the pockets of hard working taxpayers.

Highlighting cases such as the ‘220 Pound Teacher Sues Over Assault by 1st Grader‘ and ‘Porky Prisoner Suing for $1 Million, Claims Unfit Apparel is Need for Shrink‘,  the news story shows how these cases are adding to the hundreds of millions the city spend on lawsuits annually.  See video below.

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Fox Friv Lawsuits NYC

Paying Off Careless People

By: Michael Seinberg

The economic and social cost of lawsuits are well-known and much discussed, especially here in New York State, where taxpayers are on the hook for over a billion dollars annually for settlements and judgments. This issue was brought into very sharp focus recently during a contentious city council meeting in Troy, NY.

The problem arose when the council voted 6-2 to settle a lawsuit for $15,000 that a resident had filed against the city. The plaintiff, one Ronald Nicholas, drove a golf cart down a fairway slope on the city’s Frear Park Golf Course in a botched effort to retrieve his ball. In his haste, he managed to flip the cart several times ejecting his passenger, who was unharmed, and injuring himself. According to published reports, Nicholas was trapped inside the cart and tore his left rotator cuff, requiring surgery. His claim was that there were no signs suggesting it was a bad idea to drive a golf cart down a steep hill on a fairway and thus, he wasn’t at fault.

As least one city council member disagreed and voted against the settlement, which was recommended by the city’s corporation council. “He was either drunk and stupid or just stupid and I’m not going to give a man $15,000 for that,” Councilman Kevin McGrath said. One of McGrath’s cohorts on the council, Bob Doherty didn’t agree, suggesting that commenting on Nicholas’ intelligence wasn’t appropriate.

Cases like this play out with alarming frequency in town halls and county legislatures across the state – claims that are technically meritorious (as defined by the law), yet utterly ridiculous. Liability may not be certain, but the settlement amount is carefully calculated to be just a tiny bit less than the city would pay to fight the case. The rational, risk-averse, town manager or city council cuts a check, and the plaintiff and his lawyer split the spoils. “Justice” is served, but are residents better off?

Is this the best way to resolve cases?  Recently, the New York Times reported that New York City is taking a different tack and fighting more of these suits. Along with other large cities, they are now instructing their attorneys to aggressively fight nuisance suits in order to send a message to the plaintiff’s bar. This approach, while costly initially, worked well for Chicago, which saw a dramatic decrease in litigation.

On the extreme opposite end of the spectrum, Yuba City, CA recently paid a “serial plaintiff” $15,000 to stop filing frivolous lawsuits. Will this approach pay off for the taxpayers? Somehow, that seems unlikely.

As taxpayers, we’re all footing the bill for these lawsuits. Troy will undoubtedly be putting warning signs on the golf course to avoid future cart-related issues. Of course, don’t be surprised when someone sues when they run into the warning signs.

The Daily Star – Fox Judgment Is Bad for New Yorkers

This past weekend, The Daily Star ran an opinion piece written by LRANY Executive Director, Thomas Stebbins, which was in response to the recent news that an Otsego County jury awarded a woman $126 million in a lawsuit against the local Fox Hospital.  Stebbins highlights the impact that such a large judgment has on the hospital, the community and the state.

An excerpt:

“The recent news of a historic, nine-figure judgment against Fox Hospital (“Fox Hospital hit with $126M verdict,” Oct. 3) should serve as a reminder for why health care costs in New York remain among the highest in the nation.

An Otsego County jury awarded the plaintiff $126m to pay for a lifetime of care and lost wages. The jury found Fox Hospital liable for the woman’s heart condition and decided Fox should compensate her for her injuries. However, her medical care and lost wages are just a fraction of the total $126 million award. The remainder is for non-economic or “pain and suffering” damages.”

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Asbestos Proven to Cause Judicial Insanity

By: Michael Seinberg

We all know that exposure to asbestos can cause all sorts of nasty health problems, but a new ruling by a New York Supreme Court justice now shows that even talking about the substance can have serious mental repercussions.

It seems one Ronald Dummitt and his very talented lawyer sued Crane Co. and managed to win a record-setting jury award due to his contracting mesothelioma. He claims this occurred due to his service in the Navy from 1960 to 1977 (the disease reared its ugly head in 2009). During his service, Mr. Dummitt claims he was exposed to asbestos and blames Crane, which supplied valves to the Navy, which Mr. Dummit claims to have worked on. But here’s the funny part: Crane argues it is not liable as it did not manufacture, supply or place into the stream of commerce any of the asbestos containing products to which Mr. Dummitt was exposed.

Yes, you read that right, Crane made valves made of metal. They never made or supplied anything that was made of asbestos. Now, to be fair, some of their valves were installed using asbestos containing gaskets, but they were supplied to the Navy by another company. That being said, Mr. Dummitt’s attorney argued that Crane had a responsibility to warn people of the dangers of asbestos. By not doing so, Crane showed reckless disregard for the safety of the end user and was thus 99 percent liable for Mr. Dummitt’s sickness and ultimate death. The fact that he worked with asbestos for 17 years that came from any number of sources did not seem to sway the jury.

The jury bought this liability-without-causality argument, and awarded $32 million to the plaintiff and his lawyer ($16 million for prior pain and suffering and $16 million for future pain and suffering). When Crane appealed the verdict and asked that it be set aside, the judge denied the motion but did reduce the award to $8 million.

To put that $32 million figure into perspective, it was the largest product liability verdict in NY in 2011 and the 4th largest verdict in the state that year. The reduced amount of $8 million represents one of the largest sustained verdicts in NY asbestos litigation.

The asbestos feeding frenzy by the plaintiff’s bar has led to the demise of about 80 companies so far. While nobody argues asbestos is nasty stuff, the sheer insanity of the ruling, the size of the awards and the overarching greed of the attorneys in these cases has gotten way out of hand. We need transparency in asbestos litigation, clearer guidelines on product liability and a huge injection of sanity and common sense before the plaintiff’s bar decides to start suing anyone who even prints the word asbestos. Oops…..

Gas Can Manufacturer To Rise From the Ashes?

By: Michael Seinberg

Last summer saw the official demise of Blitz USA, until then, the largest maker of gas cans in the US. The company claims that they were forced to declare bankruptcy as a result of lawsuits by people injured after misusing Blitz products in a variety of shockingly dangerous ways.

Plaintiffs’ lawyers claim that installing an arrestor device would have lowered the risk of fires and explosions. The idea is that the arrestor, a piece of metal mesh located in the spout, would prevent the liquid gas and vapors still in the can from catching on fire if the user was reckless enough to ignore all warnings (and common sense) and pour gas directly on an open flame.

Blitz executives had discussed adding such a device but eventually decided against it– ironically, due to concerns that it might give end users a false sense of security and cause even more accidents and more lawsuits. The company even repeatedly asked the Consumer Product Safety Commission to regulate their products – yet the commission declined. The lawyers, of course, claim that Blitz chose not to include an arrestor simply to maximize profits and save money, proving they were evil and greedy (unlike trial lawyers who only work for the good of the client with no thought whatsoever to their 33 percent cut).

The bottom line here is that when making any product, there will always be someone foolish enough to abuse or misuse it and then try and blame their stupidity on the maker of the product. Further, there will always be a trial attorney ready to snap on the feed-bag and take it to court. The razing of Blitz was an all too familiar situation; recall the demise of over 80 American companies due to asbestos litigation over the past decades. But there is hope.

A Canadian plastics manufacturer called Sceptor has paid $9.5 million for the Blitz factory in Miami, OK.  The manufacturer plans to reopen the factory and hire back at least some of the 117 people who were put out of work when the 46-year-old company was shuttered.  Sceptor does not use arrestors in the cans it makes and sells in Canada, but may do so in the US, as they quickly became familiar with the litigious nature of this country after settling a lawsuit here last year.

Let’s hope the trial lawyers don’t roast this phoenix before it has a chance to spread its wings.

Popcorn Addiction Leads to $7.2 Million Award for Human Lab Rat

By: Michael Seinberg

Remember a while back when scientists fed some lab rats the equivalent of hundreds of pounds of saccharin and then slapped warning labels all over the stuff when they developed cancer? Well, a guy in Denver managed to do much the same thing and enriched himself and his highly creative lawyer in the process to the tune of $7.2 million.

Wayne Watson of Denver,CO spent about 10 years consuming 2 bags of microwave popcorn every day. And nobody thought to check him into a rehab or at least call Weight Watchers? Anyway, over the course of that time, he developed a condition known as “popcorn lung”, which he claims reduced his lung capacity. The rare malady is named for workers in factories that make microwave popcorn and are exposed to a chemical called diacetyl – which, despite its scary sounding name, occurs as a natural byproduct of fermentation and is present in beer, wine, buttermilk and even real butter. The chemical is what is used to create the buttery taste in popcorn, since, God forbid, you wouldn’t want to clog your arteries with actual butter.

The verdict that Watson won was against the Kroger Co, which ran the supermarket that sold the popcorn, Glister-Mary Lee Corp., maker of the offending snack food, and the Dillon Companies, Inc. “They thought that no consumer would ever be exposed to enough of it to make a difference. Well they rolled the dice and they lose,” Watson said in a TV interview. Maybe they thought no consumer was dumb enough to eat that much popcorn for that long. Well, anyway, our enterprising lab rat even managed to settle claims against FONA International, Inc., which helped develop the flavoring. One wonders if he’ll go after the makers of his microwave oven next.

In the wake of this suit, some makers of microwave popcorn have stopped using diacetyl. Coincidently the chemical was also recently linked to Alzheimer’s, a fact that caused trial lawyers to begin salivating faster than Pavlov’s dogs. The bottom line is that if you consume too much of virtually any substance for long enough, there will almost always be adverse consequences. The old saying, “Moderation in all things,” obviously never made it to Watson’s ears. It certainly never made an impression on his lawyer either. Once again, a sympathetic jury has rewarded bad behavior and we all get to pay the price. At least in this case, Watson had a jury of his peers.

NYC Pays $735 Million in Settlements; Lawyers Cheer

By: Michael Seinberg

For those of you keeping score, Manhattan trial lawyers have hit it out of the park and into orbit. According to the City of New York, the city government will spend $735 million this year to settle lawsuits and pay out awards for suits that claim negligence, police abuse, property damage, improper arrests, collisions with fire trucks, potholes that cause accidents, and slip and falls.

“It’s a huge problem for the city and trial lawyers will say it’s only justice, but it’s also a matter of some people considering a case before a New York jury the same as winning the lottery,” said E.J. McMahon, a research fellow for the Manhattan Institute’s Empire Center for New York State Policy.

To put this massive outlay into perspective, $735 million is the largest aggregate settlement figure in the city’s history – a 32% increase from the previous year, and almost SIX TIMES what Los Angeles pays per capita to handle similar issues.

One of the major reasons that New York pays out so much more per capita than major cities in California, Illinois, and Texas is that all three states impose limits on intangible “non-economic” damages, such as pain and suffering, which helps deter jackpot justice cases.  Most recently, Pennsylvania enacted “fair share” liability reform, ensuring that defendants like city governments are not forced to pay huge settlements when they are found only minimally responsible for an injury. Unfortunately for taxpayers, New York has not enacted any meaningful liability reform in almost three decades – largely due to lobbying efforts by wealthy trial lawyer interest groups.

While $735 million is a frightening sum, what is perhaps even scarier is the breakdown on just where that money goes.  About $119 million covered police misconduct and civil rights violations, $130 million went to malpractice claims from the city’s 11 public hospitals and on it all goes. Because NYC runs its own school district, the city is liable for all school-related lawsuits as well.

New York City, home to some 8 million people, is self-insured perceived as having endlessly deep pockets. But the reality is that lawsuits hit taxpayer where it hurts – in their wallets. New York City estimates its lawsuit costs will continue to rise to $815 million by 2016, dwarfing the annual budgets of entire city agencies. Now, more than ever, New York lawmakers must take action and enact rational limits on liability.

A Homerun….For The Lawyers

By: Michael Seinberg

In 2006, Steven Domalewski was a normal 12-year-old pitching in a little league game in New Jersey. Seconds later, his life changed forever. His pitch was hit by a batter and the line drive came back and struck him in the chest. He was sent flying backwards and the impact caused his heart to stop.  It took 15-20 minutes for rescue workers to revive him. Tragically, because his brain was deprived of oxygen during that time, he suffered major brain damage. Now 19 years old, he is mostly blind and in a wheelchair with only minor speech abilities.

After the accident, the Domalewskis sued the league, Sports Authority, and the maker of the Louisville Slugger aluminum bat, Hillerich & Bradsby Co. The case was recently settled for $14.5 million after working through the system for a good six years but the real crime here is nature of the settlement. Of the $14.5 million, $698,035 will go to pay the family’s attorney’s fees and another $4,037,991 will go to the lawyers as part of a previously agreed upon 25 percent contingency fee.

The crux of the lawsuit was the idea that aluminum bats posed a hazard to young players because they could hit a ball harder and faster than a regular wooden bat. Given this, Little League actually required manufacturers to make sure aluminum bats could not hit any harder than a good wooden bat. They did this back in the 1990s, decades before this accident took place.

The Domalewskis sued for emotional pain and suffering plus other damages under product liability and consumer fraud laws. There’s no doubt that their son’s injury was tragic, but holding the bat company liable – as well as the league and the bat distributor – raises eyebrows, as it appears to be motivated more by financial gain than the fair administration of justice.

“With this settlement, Steven Domalewski will receive the lifetime care he will require as a result of this tragic accident, a type of accident that is extremely rare in youth baseball,” said Stephen D. Keener, president and chief executive officer of Little League Baseball, Inc.

One wonders how Mr. Keener feels knowing 25% of that money won’t have anything to do with Steven’s long term care. The truth is, the attorneys in this case took full advantage of a tragedy and profited handsomely. If they truly cared for their client, they would have accepted their almost $700,000 in fees and moved on. Instead, they’re taking a huge cut of a sum that should, by rights, be going to help a young man live comfortably and safely for the rest of his life.

The lawyers may have hit a financial home run, but they struck out morally.