Skip to main content

Bad Cases Make Bad Law

The August issue of The Federal Lawyer ran a piece by Spencer Garrett Scharff on streamlining mass tort litigation, a happy event that will only be accomplished, Scharff seems to think, when LEXECON is overturned.

Personally, I suspect it would be better to distinguished LEXECON away and render it prudentially harmless than to overturn it outright. If the decision made bad law it was because it was a "bad case," an unrepresentative fact pattern.

For non-initiates, Lexecon was a defamation case that arose out of a mass tort, the infamous Savings-and-Loan industry collapse of the 1980s. The plaintiff, Lexecon, was a defendants' consultant firm, which came into many cases on the opposite side of the famous plaintiffs' attorneys Milberg Weiss.

A typical Milberg Weiss case in those days -- the heyday of Bill Lerach, pictured above -- might start with these facts: the CEO of XYZ Industries made certain statements on January 15th. Those statements were false, and presented an excessively optimistic view of the value of XYZ stock. The stock price rose thereafter. On June 15th, the truth contradictory to the CEO statements became widely known. From June through October, the stock lost the value it had gained early in the year.  Thus, Milberg Weiss would bring a lawsuit on behalf of the class of people who had bought stock when it was at its peak, relying (implicitly) on the word of the CEO. The measure of damages would be the loss they had suffered when the truth became known.

Lexecon would enter such cases on the other side, the side of the CEO, the company, and various co-defendants. It was a consultancy, not a law firm, but it would typically work with the defense attorneys to make a factual case that there were other reasons for the stock movements involved, that the CEOs puffing had nothing to do with them, Thus, no actual injury and no recovery.

Unsurprisingly, bad blood developed between Lexecon and Milberg Weiss. The blood was especially bad in the matter of those S&Ls, where Lexecon worked with lawyers representing Lincoln Savings Bank, the infamous bank run by Charles Keating, befriended by the "Keating Five." At any rate: Milberg Weiss principals apparently crossed some lines in their attacks on  Lexecon and a principal thereof, leading to the (ultimately successful) defamation suit by the former.

But first there was the procedural issue to be resolved: was the defamation suit to be bundled into the multi-district litigation about the S&L industry collapse? The intuitively appealing position is that it should not have been: it was a very different sort of case. That position prevailed, but only at the expense of a precedent that now, as noted above, limits the amount of streamlining that can be done for mass torts in general.

My own conclusion: see the headline again.  


Popular posts from this blog

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.

We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majestic wate…

Great Chain of Being

One of the points that Lovejoy makes in the book of that title I mentioned last week is the importance, in the Neo-Platonist conceptions and in the later development of the "chain of being" metaphor, of what he calls the principle of plenitude. This is the underlying notion that everything that can exist must exist, that creation would not be possible at all were it to leave gaps.

The value of this idea for a certain type of theodicy is clear enough.

This caused theological difficulties when these ideas were absorbed into Christianity.  I'll quote a bit of what Lovejoy has to say about those difficulties:

"For that conception, when taken over into Christianity, had to be accommodated to very different principles, drawn from other sources, which forbade its literal interpretation; to carry it through to what seemed to be its necessary implications was to be sure of falling into one theological pitfall or another."

The big pitfalls were: determinism on the on…

Philippa Gregory

My recent reading includes large helpings of Philippa Gregory's latest, THREE SISTERS, THREE QUEENS (2016), another of her fictionalized takes on love and betrayal among the royals of Renaissance Europe.

In this book, the focus is on the early Tudor dynasty, and especially on Margaret Tudor, the eldest daughter of Henry VII, founder thereof, and the older sister of the future Henry VIII. Margaret became Queen of Scotland with an arranged marriage to James IV. She reigned and ruled under the title of Dowager Queen after James' death at the Battle of Flodden in 1513.

So who, you ask, were the other two sisters of the novel's title? One is Margaret's blood sister, Mary Tudor, who was known as one of the great beauties of the age. Mary was the inspiration for the name her brother Henry gave to his older daughter. More important for Gregory's story, she wed the King of France (Louis XII) in 1514, and Anne Boleyn served as her maid of honor at that ceremony.

The third &…