BeasleyAllen.com - Jere Beasley Report

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					THE                                                                                          MARCH 2008




B e a s l e y , A l l e n , C r o w , M e t h v i n , P o r t i s & M i l e s , P. C . , A t t o r n e y s a t L a w

       A NATIONAL LAW FIRM LOCATED IN MONTGOMERY, ALABAMA
                          Helping those who need it most since 1979.




                                 www.BeasleyAllen.com
I.                                         prices reported by the companies.            job and were well received by the
                                              State Medicaid Programs compute           jurors. After a thorough investigation,
CAPITOL
                                           reimbursement for drugs based on             Attorney General Troy King authorized
OBSERVATIONS                               reported AWPs and WACs. Both are             the filing of the lawsuit. I, along with
                                           reported by the drug companies, and          Dee Miles, Clint Carter, Clay Barnett,
                                           as the guidelines stated, state Medicaid     and Paul Lynn from our firm and Caine
STATE OF ALABAMA WINS THE FIRST
MEDICAID FRAUD CASE                        agencies are entitled to depend on the       O’Rear, Roger Bates, Clay Rankin,Windy
                                           AWPs and WACs as being complete              Bitzer, and Tracy Davis from the Mobile
   After a lengthy trial a Montgomery      and truthful. The OIG stated that the        firm of Hand,Arendall, represented the
County jury returned a $215 million        drug companies, such as AstraZeneca,         State in the case. Our staff personnel
verdict against AstraZeneca in the State   are responsible for “ensuring the            also did a great job in helping to get
of Alabama’s Medicaid fraud case.The       integrity of data they (the companies)       this case ready for trial.Working on the
State sued the drug manufacturer in        generate that is used for government         case were Greta Beasley, Michelle
2005 alleging fraud in the pricing of      reimbursement purposes.” The OIG             Lysdale, Sarah Martinez, and Levi
drugs under the State’s Medicaid           guidelines specifically address the          Nichols.Ashley Pugh handled our docu-
program. The jury found that               importance of the “integrity of data”
AstraZeneca had falsely reported the       used by the Medicaid agencies to                     I N TH I S I S S U E
prices of drugs during the period of       “establish payment amounts.” The
time 1991-2004. The reimbursement          OIG stated further in the guidelines          I.     Capitol Observations . . . . . . . . . . . . 2
formula promulgated by the State Med-      that the Medicaid agencies set reim-
                                                                                         II.    Recent Settlements By Firm . . . . . . 5
icaid Program used as part of that         bursement with the “expectation that
formula what are known as Wholesale        the data provided are complete and            III.   Legislative Happenings . . . . . . . . . . 6
Acquisition Cost (WAC) and Average         accurate” and that the “knowing sub-
                                                                                         IV.    Court Watch . . . . . . . . . . . . . . . . . . 8
Wholesale Cost (AWP). For the formula      mission of false, fraudulent or mislead-
to work properly, the prices reported      ing information is actionable.”               V.     The National Scene . . . . . . . . . . . . 13
by the drug manufacturer must be true         We actually proved our case of fraud
                                                                                         VI.    The Corporate World . . . . . . . . . . 15
and accurate prices. During the entire     at trial by calling as adverse witnesses a
period of time AstraZeneca never           number of present and former Astra-           VII. Product Liability Update . . . . . . . . 17
reported its true prices.The jury found    Zeneca employees.A clear and convinc-
                                                                                         VIII. Mass Torts Update. . . . . . . . . . . . . 19
that AstraZeneca was guilty of inten-      ing case of fraud was made out for the
tional misrepresentation and conceal-      jurors to consider. We also were able         IX.    Business Litigation . . . . . . . . . . . . 24
ment under Alabama law.                    through pretrial discovery to obtain
                                                                                         X.     Insurance and Finance Update . . . 24
   As you may know, over the years         internal documents from the company
there has been a great deal of fraud       that were extremely helpful to our case       XI.    Predatory Lending. . . . . . . . . . . . . 26
and abuse in the federal healthcare        and damaging to AstraZeneca. One of
                                                                                         XII. Premises Liability Update . . . . . . . 29
programs. In 2003 the Department of        the witnesses called at trial—who had
Health and Human Services (HHS)            been a key AstraZeneca pricing                XIII. Workplace Hazards. . . . . . . . . . . . 30
gave written notice to all drug compa-     officer—testified that the company had
                                                                                         XIV. Transportation . . . . . . . . . . . . . . . 33
nies participating in the Medicaid         engaged in unethical conduct over a
Program setting out guidelines. The        period of time that was illegal. This         XV.    Arbitration Update . . . . . . . . . . . . 35
notice laid out in clear and unambigu-     employee tried unsuccessfully to get
                                                                                         XVI. Nursing Home Update. . . . . . . . . . 36
ous language that which was required       the bosses at AstraZeneca to put a stop
of all drug companies, including           to the conduct that he described as           XVII. Healthcare Issues . . . . . . . . . . . . . 37
AstraZeneca.The purpose of the com-        “sleazy.” When his efforts failed, this
pliance guidelines was to prevent and      man eventually left the company.              XVIII. Environmental Concerns . . . . . . . . 38
reduce fraud and abuse in all federal         The jury awarded $40 million in            XIX. The Consumer Corner. . . . . . . . . . 40
healthcare programs, including Medic-      compensatory damages and an addi-
aid.The guidelines resulted from find-     tional $175 million in punitive               XX.    Recalls Update . . . . . . . . . . . . . . . 41
ings in investigations conducted by the    damages. Experts for the State were Dr.       XXI. Firm Activities . . . . . . . . . . . . . . . . 44
Office of Inspector Office of Investiga-   Gerard Anderson, a former employee of
tions Genera’s (OIG) and the Justice       HHS who is now a professor at John            XXII. Special Recognitions . . . . . . . . . . . 45
Department. The investigations had         Hopkins University, and Ed Sauls, an          XXIII. Some Closing Observations . . . . . . 46
found that the companies were inten-       expert in accounting and damages.
tionally manipulating the AWP in           Each of these witnesses did a very good       XXIV. Some Parting Words . . . . . . . . . . . 47



2                                          www.BeasleyAllen.com
ment presentation during the trial.           during 2004, 2005 and 2006 and that          has announced that he will run for
They all worked very hard and did an          increased to one-half of his time in         Congress in Alabama. Bobby kicked off
outstanding job.. Carol Herman Steckel,       2007.That ratio carried over into 2008.      his campaign in Ozark where he grew
the Commissioner of the Alabama Med-          Based on him billing a total of 2100         up.The Second Congressional District
icaid Agency, was the representative for      hours each year and then applying the        seat is a wide open race with no
the State at trial. She testified and did a   percentages, Dr. Gaier’s total bill would    incumbent.The district covers much of
very good job.This was a tremendous           exceed $12 million. He told the jury         southeast Alabama and stretches all the
win for the state.                            that he had personally been paid             way from Dothan to Prattville. Bobby,
                                              $600,000 during 2007. In addition to         who was one of 14 children raised on
                                              Dr. Gaier, 10 others in his firm also        a cotton farm near Ozark, was the first
THE NEXT ROUND                                billed AstraZeneca at huge hourly            in his family to go to college. He
                                              charges.At trial, Dr. Gaier said he could-   became a lawyer and elected to work
  We will try another case for the state
                                              n’t tell us how much the total amounts       in Montgomery. Bobby was elected
on April 7th. Defendants in that case are
                                              were that his firm actually billed           Mayor of Montgomery in 1999 and was
GlascoSmithKline and Novartis. The
                                              AstraZeneca. That was pretty hard to         re-elected in 2003 and 2007. In my
defendants have a writ pending in the
                                              believe considering that he is a $595        opinion, Bobby has been an outstand-
Supreme Court in an attempt to sever
                                              per hour economist.                          ing mayor and is very well liked by
the cases. Hopefully, we will be able to
                                                                                           folks in the River Region.
try the two defendants together as
                                                                                              This will be a hotly contested race
scheduled. But if the Supreme Court           SENATOR OBAMA IS MY CHOICE                   with a large number of good candi-
says try one—we will try one.
                                                                                           dates on the GOP side.Already running
                                                I am backing Senator Barack Obama
                                                                                           as Republicans are State Senator Harri
                                              for President. Now that John Edwards is
THE $12 MILLION DOLLAR MAN                                                                 Anne Smith, State Representative Jay
                                              out of the race, I am going to actively
                                                                                           Love, State Representative David
                                              support the Illinois Senator. I am firmly
  I have seen lots of expert witnesses                                                     Grimes, Dothan oral surgeon Craig
                                              convinced he is the person needed to
in my time and I must confess that I                                                       Scmidtke, Montgomery broadcasting
                                              bring about the changes that are so
have never found one who didn’t                                                            executive David Woods, and Dothan
                                              badly needed in Washington. I also
charge substantial fees for their serv-                                                    businessman John Martin.
                                              believe strongly that Senator Obama
ices. My experience led me to believe                                                         This will be a most interesting race
                                              will be an outstanding president. It’s
that the automobile manufacturers                                                          with a number of very good candi-
                                              quite evident that the winds of change
attracted the most expensive experts                                                       dates. In fact, this may be the best
                                              are blowing at a record clip all across
and paid them tremendous sums of                                                           group of candidates in one race that I
                                              the land, and that this man is a breath
money. However, I just met an econo-                                                       have seen in years. Bobby will defi-
                                              of fresh air on the political scene. I am
mist from Washington, D.C. whose fees                                                      nitely be the Democratic nominee and
                                              looking forward to his taking over the
charged in a pharmaceutical lawsuit                                                        will face a strong GOP candidate in the
                                              leadership in our Nation’s capital.
may have gone to the top of the pay                                                        fall. However, at this juncture it’s impos-
                                              Clearly, the Obama candidacy has
scale. Dr. Eric Gaier testified in the                                                     sible to figure out who is the strongest
                                              brought new hope to millions of
AstraZeneca case and during cross                                                          of the GOP candidates. In any event, it’s
                                              people in our country who have been
examination had to admit how much                                                          my opinion the Democrats have a very
                                              left out when it comes to decision-
his firm, Bates & White, had charged                                                       good chance of taking this seat!
                                              making in Washington. I talked at
AstraZeneca through 2007. Dr. Gaier
                                              length with the Senator before making
had been hired by a coalition of
                                              up my mind to get actively involved in       JOSH SEGALL RUNNING FOR CONGRESS IN
lawyers representing a number of drug
                                              his campaign and was quite impressed.        THIRD DISTRICT
companies in late 2003.
                                              I am convinced Senator Obama will
  The      Washington-based      expert
                                              work for the programs put forward by            Josh Segall, a Montgomery lawyer, has
worked for a number of the drug com-
                                              my friend John Edwards, and that was a       announced he is running for Congress
panies during 2004, 2005, 2006, 2007
                                              significant factor in my decision to join    in Alabama’s 3rd Congressional District.
and 2008 to date. He was one of the 10
                                              the Obama team.                              Josh will be a candidate for the Democ-
experts assigned in 2007 to the
                                                                                           ratic nomination in the June 3rd primary
Alabama case by the coalition. Dr. Gaier
                                                                                           for the U.S. House seat currently held
testified at trial that he personally         MONTGOMERY MAYOR BOBBY BRIGHT WILL           by Republican Rep. Mike Rogers. Josh,
billed for his time at $595 per hour. He      RUN FOR CONGRESS                             if elected, will work to create jobs to
spent one-third of his total hours of
                                                                                           replace those lost in the closing of
time working on the Medicaid cases              Montgomery Mayor Bobby Bright



                                              www.BeasleyAllen.com                                                                  3
textile plants in the area.The Third Con-    ago my oldest granddaughter, Sara            ADEM FINES EXXONMOBIL $90,000 FOR
gressional District includes much of         Beasley, interviewed Mrs. Carr for a         GAS RELEASE
east Alabama and stretches from Mont-        school assignment. Needless to say, the
gomery to Cherokee County in the             videotaped interview was a real hit             The Alabama Department of Environ-
northeastern part of the state. Josh is      back in Auburn. Nobody could believe         mental Management (ADEM) has fined
the son of my very good friend Bobby         that Sara had actually met and talked        ExxonMobil $90,000 for a cloud of poi-
Segall and if he is anything like his dad,   with a famous person like Mrs. Carr.         sonous gas that washed over Dauphin
he would be a very good member of            Sara, who is now a junior at Auburn          Island and sickened a number of resi-
Congress if elected. Mike Rogers, the        High School, says that meeting has had       dents. The penalty, which was said to
incumbent, will have the burden of           a lasting effect on her. She will never      bring about new safety measures on
having to explain a number of his votes      forget meeting with a great American         three of the company’s Mobile Bay
and also will have to try and distance       who holds a very special place in our        natural gas platforms, was levied in a
himself from his close ties to the Bush      country’s history. To say that Mrs.          consent order issued last month. Exxon-
Administration. I have a hunch this race     Johnnie Carr will be missed is an            Mobil officials told the Mobile Press-Reg-
may be much closer than some of the          understatement!                              ister that the company is working with
political experts are predicting.                                                         local emergency officials to improve
                                                                                          procedures.The giant oil company has
                                             SPECIAL INTEREST LOBBYISTS HAVE A            blamed the release of hydrogen sulfide
MRS. JOHNNIE CARR DIES AT AGE 97             VESTED INTEREST IN WHO WINS IN               on a problem with a flare used to burn
                                             NOVEMBER                                     the gas so that it’s no longer a threat.
   Mrs. Johnnie Carr, who joined child-                                                   Debris in a gas supply line apparently
hood friend Rosa Parks in the historic          The vast number of lobbyists sup-
                                                                                          caused the flare to go out and resulted
Montgomery bus boycott and became a          porting John McCain is staggering.This
                                                                                          in unburned hydrogen sulfide being
prominent civil rights activist over the     tells me that the special interests who
                                                                                          released for several minutes.
past half century, died last month at the    control Washington don’t want to lose
                                                                                             Hydrogen sulfide, which has a rotten
age of 97. Mrs. Carr succeeded the Rev.      their grip on both the executive and
                                                                                          egg odor, is a component of the
Martin Luther King Jr. as President of       legislative branches of our national gov-
                                                                                          natural gas mined from beneath
the Montgomery Improvement Associa-          ernment.The powerful oil, pharmaceu-
                                                                                          Mobile Bay. Dozens of people reported
tion (MIA) in 1967, a post she still held    tical, and insurance industries have had
                                                                                          nausea and other problems on the
at her death. It was the newly formed        their gang of lobbyists hard at work for
                                                                                          island’s east end. Classrooms had to be
MIA that led the boycott of city buses in    the Arizona Senator. In addition to the
                                                                                          evacuated at the Dauphin Island Sea
the Alabama capital in 1955 after Mrs.       lobbyists who are “bundlers” for
                                                                                          Lab. Carolyn Wood, who is with the
Parks, a black seamstress, was arrested      McCain, there are a number of law
                                                                                          Sea Lab, was glad ADEM issued a fine,
for refusing to give up her seat to          firms working hard on behalf of their
                                                                                          but she was disappointed that only
whites on a crowded bus. Mrs. Carr was       clients from these industries and they
                                                                                          the ExxonMobil platforms would be
a great lady and has been an inspiration     are raising big bucks for McCain.
                                                                                          upgraded. She told the Press-Register
to folks across the country. She and I          If regular folks are to have any say in
                                                                                          there are several other companies
became very close friends over the           what happens in our nation’s capitol
                                                                                          with production wells near the island.
years and I developed a tremendous           over the next four years, they had best
                                                                                          I agree with Mrs. Wood that all the
respect and admiration for her. Morris       back the Democratic nominee for pres-
                                                                                          industry safeguards should be
Dees, co-founder of the Southern             ident who I am firmly convinced will
                                                                                          upgraded. I also have to wonder why
Poverty Law Center, put it very well         be Senator Barack Obama. Interestingly,
                                                                                          the penalty was so small for a rather
when he discussed this lady’s place in       the Illinois Senator has refused to take
                                                                                          serious and potentially dangerous hap-
history:                                     any campaign money from lobbyists.
                                                                                          pening. But, when you consider it was
                                             He is being financed by regular folks
                                                                                          ExxonMobil, an extremely powerful
    Johnnie Carr is one of the three         who are giving small amounts to his
                                                                                          and politically influential corporation,
    major icons of the Civil Rights          campaign. Unfortunately, the GOP can-
                                                                                          I guess that answers my question.
    Movement: Dr. King, Rosa Parks           didate won’t be able to say that.
                                                                                          Source: Mobile Press-Register
    and Johnnie Carr. I think ulti-          Senator McCain has to depend on the
    mately, when the final history           special interests and the 527 commit-
    books are written, she’ll be one of      tees to furnish the money needed to          MERCK WILL PAY $671 MILLION TO SETTLE
    the few people remembered for            get his message out.                         MEDICAID OVERCHARGE CASES
    that terrific movement.
                                                                                            Merck has agreed to pay a combined
    On a personal note, about three years                                                 total of $671 million to settle claims



4                                            www.BeasleyAllen.com
that it overcharged Medicaid programs       vehicle’s roof strength caused our          by the accident vehicle. Our roof crush
for two big-selling drugs, Vioxx and        client to suffer serious head injuries      expert then took a production Taurus
Zocor, and to resolve allegations of        after his vehicle struck a cow on a dark    and internally strengthened the exist-
improper marketing to doctors. Merck        road in a rural Alabama county. Of          ing roof support structures. He then
paid improper inducements to doctors        course, striking livestock and deer on      impacted the reinforced vehicle with
to prescribe the cholesterol drug Zocor     rural Alabama roads is not uncommon.        the cow dummy at the same speed and
and the painkiller Vioxx.The wrongdo-       Fortunately, many vehicles that colide      force that caused the damage to the
ing in this case—which amounts to           with large animals absorb the impact        accident vehicle.The results of his tests
fraud—is the same sort of thing             rather than failing like this Ford roof     were astonishing.The cow dummy lit-
AstaZeneca was doing in the case that       did on this occasion.                       erally bounced off the reinforced
our firm tried last month in Mont-             What we discovered during our            vehicle.The roof crush in the accident
gomery. Merck was hiding the steep          investigation of this vehicle was tragic.   vehicle was in excess of 16 inches.The
discounts it gave to hospitals by report-   First, we were disappointed to learn        roof crush in the reinforced Taurus was
ing higher prices to the government.        that Ford has not conducted a rollover      approximately one inch. Our client
   From 1997 to 2001, Merck also gave       test on any vehicle, including the          would have walked away from the
money and perks to doctors and other        Taurus, since 1974. In contrast, compa-     accident had he been in the Taurus
health care professionals to entice         nies like Volvo, Mercedes, and Saab rou-    with a properly designed roof.
them to prescribe Merck drugs.This is       tinely conduct rollover testing, drop         We were able to establish that
illegal under the federal laws. In a case   testing, and even large animal impact       strengthening the roof would have
in Philadelphia, Merck agreed to pay        testing in an effort to determine how       cost Ford approximately $22 per
$399 million plus interest for improper     the roof structures in their vehicles       vehicle. Our roof crush expert pointed
calculation of Medicaid rebates and its     perform with respect to occupant            out this was much cheaper in cost and
marketing practices. In a Louisiana         injury potential.                           in weight than a luxury item such as a
case, it agreed to pay $250 million plus       Then, we learned that our client’s       sun roof. We learned that the Ford
interest for its rebate practices. The      case was not unique. Ford has previ-        Taurus did not meet Ford’s internal
Louisiana case involved pricing for the     ously been sued because other inno-         requirements for roof strength.We dis-
heartburn drug Pepcid when it was           cent victims were seriously injured or      covered that after the accident vehicle
sold only with a prescription. The          killed when a Ford roof collapsed after     was manufactured, Ford further
Philadelphia case, which involved a         striking an animal. On one occasion, an     reduced its internal roof crush require-
related Nevada action, involved pricing     eleven-year-old girl died while traveling   ments.This too was surprising until we
programs for the cholesterol drugs          as a passenger in a 1992 Ford Taurus.       discovered an internal Ford memoran-
Zocor and Mevacor and the painkiller        While the child was being taken to          dum. In that memo, the Chairman of
Vioxx, which was pulled from the            school, her mother was unable to avoid      the Board and Chief Executive Officer
market in September 2004. All states        a horse. Upon impact, Ford’s weak roof      at Ford urged Ford engineers “to
with the exception of Arizona will          collapsed, killing the young girl.          reduce costs related to items designed
receive funds from the settlement and          Because Ford had not conducted           to achieve or exceed compliance with
that includes Alabama.                      one single roof crush test on the           regulatory requirements to as low a
Source: Associated Press                    Taurus, other than slowly pressing          level as possible.” In essence, he was
                                            downward on a roof with a plate in          urging Ford engineers to design down
                                            order to meet the minimum federal           to the lowest possible safety level
II.                                         requirement, we authorized our roof         which would still allow Ford to legally
                                            crush expert to conduct testing. It         sell vehicles. This is another classic
RECENT
                                            should be noted that the minimum            example of a company placing profits
SETTLEMENTS                                 federal requirement does not in any         over safety. The case was settled just
BY FIRM                                     way represent what occurs in real           before jury selection for a confidential
                                            world crashes. In an effort to recreate     amount. Graham Esdale and Cole Portis
                                            the forces involved in our accident, our    from our firm and Robert Thompson
SETTLEMENT WITH FORD MOTOR CO. IN A         roof crush expert constructed a cow         from Tuskegee handled the case and
ROOF CRUSH LAWSUIT
                                            dummy weighing 1800 pounds and              did a very good job.
  Our firm recently settled a lawsuit       impacted several different Ford Taurus
against Ford Motor Co. that involved        roofs at various speeds until the
the roof on the 1991 Taurus which was       damage profile in the accident vehicle
insufficiently designed.The lack of the     was recreated.This enabled us to deter-
                                            mine the amount of force experienced


                                            www.BeasleyAllen.com                                                               5
VERDICT IN DEATH CASE IN GREENWOOD,         workers were not unloading these                failure to chock the load of pipes
MISSISSIPPI                                 pipes when the pipe fell on Raines.             caused the pipe to roll off of the trailer
                                            They were actually assisting the truck          and caused Mr. Raines’ death. The
  Plaintiffs Brian Raines and Eric          driver by unhooking the chains and              Defendants did not dispute Dr. Bene-
Raines filed a wrongful death case in       removing the straps and chains from             dict’s testimony.
2002 against Defendants Cecil Higger-       the top layer of pipes before they                 An economist, James Koerber, was
son and Kittle Heavy Hauling, Inc. in       could unload and take the pipes off of          accepted by the court as an expert
Leflore County, Mississippi. Defendants     the trailer. Mr. Raines had gathered the        witness and testified at trial concern-
negligently failed to properly secure a     chains and given them to the truck              ing the economic loss suffered by the
load of pipes and failed to use chocks      driver. Both Mr. Raines and the truck           estate of Michael Raines and his two
on the pipes, causing the death of the      driver were on the driver’s side of the         sons. Mr. Koerber testified as to the loss
plaintiffs’ father, Michael Raines. Mr.     truck.After the last chain from the top         of future earning capacity of Mr.
Raines, who was 51 years old at the         layer of pipe was unhooked from the             Raines. His testimony was also undis-
time of his death, worked for Inland        trailer, a pipe fell off the trailer, hit Mr.   puted by Defendants.
Dredging Company. He was a licensed         Raines, causing his death.                         After selecting a jury in Leflore
captain and had worked as a tender             Kittle’s own policies and procedures         County, Mississippi, on March 4, 2008,
boat operator since the 1970s.              required that their drivers use chocks          the case was tried for several days.The
However, he was working in a difficult      on a load of pipes such as this load.The        jury returned a verdict in favor of Plain-
capacity at the time of his death. Inland   Kittle drivers were required to use             tiffs for $850,000. Since Mississippi is a
Dredging Company had a verbal con-          chocks which they understood. Kittle            comparative negligence state, the jury
tract with Kittle Heavy Hauling to load     had instructed their drivers to use             apportioned some fault to Kittle Heavy
and transport large dredging pipes          them. The vice president of the                 Hauling and some fault to Inland. The
from Sardis to Greenwood.These pipes        company testified at trial that chocks          case was tried for the plaintiffs by Julia
were approximately 36” inches in diam-      were available to their drivers for use at      Beasley and Navan Ward, Jr. of our firm
eter, 48 feet long and weighed 1,500-       the Sardis site.The Inland workers testi-       and Charles J. Swayze, Jr. and Charles J.
1,800 pounds. Kittle Heavy Hauling, a       fied at trial that none of the loads of         Swayze, III, of Whittington, Brock &
trucking company, operated out of           pipe hauled by Kittle for Inland had            Swayze, P.A, from Greenwood, Missis-
Henagar, Alabama. Cecil Higgerson, an       chocks on them.                                 sippi.They did a very good job and got
employee of Kittle Heavy Hauling, was          Dr. Charles Benedict, who is a profes-       a good result under Mississippi law for
the driver hauling the load of pipes.       sional licensed engineer, was accepted          their clients.
  On October 31, 2001, the driver had       by the Court as an expert witness. He
made 2 previous trips to Greenwood          testified on behalf of Plaintiffs at trial
hauling pipes without any problems.
On the last load, a Kittle employee
                                            that a load of pipes like this load must        III.
                                            have chocks nailed to the 4x4 to prop-
used the Kittle crane to place 16                                                           LEGISLATIVE
                                            erly secure the pipes and to prevent
dredging pipes on to the trailer owned      the load of pipes from shifting or              HAPPENINGS
by Kittle in Sardis. The pipes were         rolling. Dr. Benedict is familiar with the
stacked 4 per layer with 4 layers of        customs in the trucking industry and
pipe.Also, 4x4 timbers were placed on                                                       REGULAR SESSION STARTS WITH A FLURRY
                                            has been familiar with those customs            OF ACTIVITY
some pipes, but the load of pipes had       from the 1960s to the present. The
no chocks. As you probably know, a          custom in the trucking industry is that           During the first weeks of the Regular
chock is a wooden triangular wedge          a load of pipes like this one should be         Session, there has been a pretty good
that is nailed to the 4x4 timber.           chocked. At trial, Dr. Benedict’s testi-        bit of activity in both the House and
Without a chock, the pipes can shift        mony was undisputed. In fact, Kittle’s          Senate.As usual, the House has been the
and can roll off the trailer. Chains and    lawyers hired a trucking “expert,” but          more active, but the Senate hasn’t been
straps were in place on this load, but      could not call him to testify at trial.         too bad thus far. It appears a bill
according to expert witness testimony,      Based on the industry standards and             banning PAC-to-PAC transfers will even-
those chains and straps won’t prevent       his education, training and experience,         tually make it through this time. The
the pipes from shifting and don’t           Dr. Benedict testified that Defendants          Senate passed the House bill with
prevent pipes from rolling off the          breached the standard of care by                changes, but the changes were rejected
trailer at the loading site or upon         failing to properly secure the load of          by the House.The bill was sent to con-
arrival at the Greenwood site when          pipes and by not using chocks. Dr.              ference, which means a conference
preparing to unload. It was undisputed      Benedict also testified to the ultimate         committee will be required to work out
that Mr. Raines and the other Inland        issue in this case—that Defendants’             a good bill.While media reports haven’t


6                                           www.BeasleyAllen.com
been too kind to the Senate so far, I am     they will wait until April for the Educa-    MINIMUM LIMITS BILL PASSES
hopeful the Senators will put aside          tion and General Fund budgets in the
political differences and have a good        Senate.The two Senate chairmen said             The House of Representatives has
session.                                     they hope to have a better picture by        passed a bill that will bring Alabama in
                                             then whether big cuts will be neces-         line with about half the South by
                                             sary for some programs. The budgets          raising the minimum amount of auto-
THE BISHOP-BARRON RESOLUTION                 must be finished before the legislative      mobile liability insurance that
                                             session ends in mid-May. Hopefully, the      motorists must buy. The House voted
   I must confess that a number of folks                                                  82-0 for legislation by Rep. Marc
                                             economic woes caused by the Bush
were looking forward to round two of                                                      Keahey, D-Grove Hill, that would
                                             Administration’s irresponsible fiscal
the Bishop-Barron battle as a carry-                                                      require motorists to carry $25,000 in
                                             policies and the uncontrolled spending
over from last year’s debacle. However,                                                   coverage for a single injury or death,
                                             that resulted won’t cause our state to
it appears cooler heads prevailed and a                                                   $50,000 for multiple injuries or deaths,
                                             suffer to any great extent. However, the
showdown between the two elderly                                                          and $25,000 for property damage.The
                                             economic downturn could result in the
senators was averted. Senator Bishop                                                      current minimum limits under
                                             cutting of good and badly needed pro-
made a public apology for his actions                                                     Alabama’s mandatory insurance law
                                             grams.These would include both edu-
and I understand the Jasper lawmaker                                                      are $20,000, $40,000 and $10,000,
                                             cation programs and those programs
also made a personal apology to                                                           respectively. Rep. Keahey’s bill now
                                             funded out of the general fund budget.
Senator Barron. Hopefully, there won’t                                                    goes to the Senate, where an identical
                                             Source: Associated Press
be any more of the sort of thing that                                                     measure by Sen. Roger Bedford was
has been described as a public dis-                                                       previously passed by a vote of 33-0. For
grace and which brought universal            ATTORNEY GENERAL PROPOSES TOUGHER            the higher requirements to become
ridicule to the state.There is too much      LAW AGAINST DRINKING AND DRIVING             law, Keahey’s bill must pass in the
important work that needs to be done                                                      Senate or Bedford’s bill must win
for the Senate for its members to               Alabama Attorney General Troy King
                                                                                          approval in the House.
spend any more time fighting on the          has proposed legislation to toughen the
                                                                                             The proposed new minimums would
Senate floor. My intention is to never       law against people who drink alcoholic
                                                                                          bring Alabama in line with the insur-
mention it again in any future issues of     beverages and then drive. The bill
                                                                                          ance requirements in Arkansas,
this Report. I hope that time will           would increase the sentences for viola-
                                                                                          Georgia, Mississippi, South Carolina and
soften the bad image created last year       tors and would make some DUI offend-
                                                                                          Texas.Tennessee,Virginia and Kentucky
as a result of an irresponsible act.         ers install interlocking devices in their
                                                                                          have the same limits for injuries and
                                             cars so the vehicle would not start until
                                                                                          deaths but smaller amounts for prop-
                                             the driver passed an on-the-spot breath-
                                                                                          erty damage. Florida and Louisiana have
ALABAMA LEGISLATURE WON’T WORK ON            alyzer test.The Attorney General’s pro-
BUDGETS UNTIL AFTER EASTER                                                                lower amounts across the board, and
                                             posal would remove a loophole from
                                                                                          North Carolina’s minimums are higher
                                             the state’s current DUI law.The Alabama
   The Chairmen of the Legislature’s                                                      for injuries and deaths than those pro-
                                             Court of Criminal Appeals ruled in Sep-
budget committees have postponed                                                          posed for Alabama, according to the
                                             tember that the four convictions that
work on the two state budgets until                                                       Insurance Information Institute.
                                             raise a drunken driving sentence from a
later this month or early April. Nor-                                                        While passage of this legislation
                                             misdemeanor to a felony must be
mally, work starts much earlier, but                                                      would be a good thing, it is grossly inad-
                                             within a five-year period. The ruling
because of the uncertainly relating to                                                    equate.A serious motor vehicle accident
                                             struck down a long felony sentence for
fiscal forecasts the delay seems to be a                                                  resulting in severe disabling injuries
                                             a motorist who had seven DUI convic-
good idea. Much depends on how tax                                                        would obviously involve medical bills
                                             tions within 15 years, but only three
collections will fare during the eco-                                                     alone that would greatly exceed the
                                             within a five-year period.The new law
nomic slowdown. So far during this                                                        amount of available insurance. The
                                             would make it clear that drunken
fiscal year, the state’s sales tax collec-                                                answer is for persons who have liability
                                             driving is a felony after four convictions
tions are flat and the individual income                                                  insurance to purchase uninsured
                                             with no exceptions. For third-time
tax collections are growing less than                                                     motorist coverage in the largest amount
                                             offenders, the bill would allow the
1%. House budget committee Chairman                                                       possible from their insurance carrier.
                                             judge to require the offender to install
John Knight says his committee should                                                     The premiums for higher uninsured
                                             the ignition interlock device. Drivers
take up the General Fund budget after                                                     motorist coverage is fairly inexpensive.
                                             must blow into the device and the car
the Legislature’s Easter break.                                                           Uninsured motorist coverage is optional
                                             won’t start if the driver is intoxicated.
   Senate Budget Committee Chairmen                                                       in Alabama. It kicks in when the driver
                                             Source: Associated Press
Hank Sanders and Roger Bedford said                                                       at fault in an accident has no insurance



                                             www.BeasleyAllen.com                                                                 7
or too little insurance to cover all the    involves random drug tests 10 to 12         company that made the toxins that
damage.A study released last year by the    times monthly to make sure partici-         killed him should have been held
nonprofit Insurance Research Council        pants stay off drugs. By this time next     responsible.Although the result in the
showed that 25% of Alabama drivers          year, the Chief Justice Cobb predicted      recent case won’t affect the Cline
lacked insurance between 1999 and           she would be able to report a decline       family, at least according to a report in
2004.That tied Alabama with California      in Alabama’s prison population              the Birmingham News the court
for the second-highest percentage of        without compromising public safety.         “fixed” the “Cline problem.” Regardless
uninsured drivers. Mississippi was first.   Everybody concerned should agree            of how some of the justices really
While passage of the minimum limits         that the court system in Alabama must       feel—had it not been for Jack Cline—
bill sounds good, increasing the unin-      be adequately funded. To make that          the recent decision by the divided
sured motorist coverage is the real         happen, the legislators should meet         court would never have happened. For-
answer when it comes to protecting          the systems’ needs with an increase in      tunately, a majority of the justices on
insured drivers.                            the governor’s proposal.                    the Supreme Court finally stood up
Source: Associated Press                    Source: Associated Press                    against the power and influence of the
                                                                                        big business lobby in Alabama. As you
                                                                                        will recall, Jack Cline died of myeloge-
                                            STATE OF ALABAMA APPEALS A PORTION
IV.                                         OF THE EXXON CASE
                                                                                        nous leukemia in January after a long
                                                                                        and unsuccessful battle to have the
COURT WATCH
                                               ExxonMobil has paid a total of           facts of his case heard by a jury. He
                                            $121,511,231 to the State of Alabama        fought for justice up until he died, and
CHIEF JUSTICE WARNS OF LAYOFFS IN           ,which represents most of what the          in my opinion this man was a true
COURTS                                      powerful oil giant owed the state after     American hero.
                                            the Alabama Supreme Court took away            In the recent case, five members of
  Chief Justice Sue Bell Cobb says the                                                  the court—Chief Justice Sue Bell Cobb
                                            all of the punitive damages. Now the
state court system will have to lay off                                                 and Justices Champ Lyons Jr., Tom
                                            State is appealing the trial judge’s
employees until the system gets a                                                       Woodall, Tom Parker and Glenn
                                            ruling on a portion of the compensa-
budget increase. The courts in                                                          Murdock—voted to overturn decades
                                            tory damages to the Supreme Court in
Alabama’s 67 counties are getting a                                                     of precedent that made it virtually
                                            an effort to recover the additional
state appropriation of $155.8 million                                                   impossible for Alabamians sickened by
                                            $21.3 million we contend Exxon still
this year to pay judges, court clerks,                                                  toxins to have their cases heard by a
                                            owes the State. We believe that on
juvenile probation officers and other                                                   court and jury.This decision overturns
                                            appeal this ruling will be in the State’s
employees. All but $3 million of the                                                    one of the worst rules of law ever to
                                            favor. The additional amount due is
appropriation is going for salaries and                                                 have existed in our state. Now a wrong-
                                            actually from a 12% penalty that is
benefits, according to the Chief                                                        ful death lawsuit that a trial judge had
                                            required to be paid on unpaid royalties.
Justice, who heads Alabama’s court                                                      barred on grounds that the plaintiff
                                            Exxon had taken the position that this
system. For the new fiscal year begin-                                                  waited too long to file suit will go
                                            was a penalty and not interest, that is,
ning October 1st, the chief justice had                                                 forward.
                                            that was the companies position prior
sought an increase to $174 million,                                                        The 5-4 decision will allow Alabami-
                                            to the last hearing.Their position had
but Governor Bob Riley has recom-                                                       ans exposed to toxic chemicals after
                                            changed by the time the hearing was
mended $156.9 million, which is just                                                    January 25, 2006, to sue the manufac-
                                            held.What had been termed a penalty
about level funding.                                                                    turers if they become ill in the future,
                                            by ExxonMobil all of a sudden became
  Chief Justice Cobb was the first chief                                                but it will not apply to thousands of
                                            interest.
justice invited to give a “State of the                                                 people who were last exposed before
Judiciary” speech to a joint session of                                                 that date. Birmingham lawyer Bob
the Legislature since Chief Justice         ALABAMA SUPREME COURT FINALLY DOES          Palmer, who represents the plaintiff in
Sonny Hornsby in 1989. The Chief            THE RIGHT THING                             the case, a widow of a Tuscaloosa man
Justice reported that judges are trying                                                 who died from a rare form of leukemia,
to help ease the growing number of             The Alabama Supreme Court finally        observed after the court ruled:
state prisoners by developing drug          corrected a grievous wrong that had
courts and using community correc-          been done by the high court. As a             Denial of justice to anyone is not
tions. Both programs keep nonviolent        result, persons like the late Jack Cline      justice. ... It’s a victory, but it’s not
offenders out of prison by letting them     will now be able to have their day in         a complete victory.
remain in their communities with            court.As you know, Jack Cline was liter-
                                                                                          Bob is correct, the job isn’t finished.
intensive monitoring. Drug court also       ally poisoned on the job and the
                                                                                        The Alabama Legislature should


8                                           www.BeasleyAllen.com
promptly pass the legislation required         that was not illegal. The latest Oregon      and punitive damages of $5 million for
to complete the job that Jack Cline            Supreme Court decision didn’t take           emotional distress and invasion of
started. Hopefully, the “Jack Cline Bill”      issue with the U.S. Supreme Court on         privacy. The original jury award was
will soon become law. To make sure             another point it raised—that Oregon          $10.9 million.The appeal by Westboro
that happens, our Alabama readers              courts couldn’t allow jurors to use puni-    to overturn the verdict is still pending.
should contact their Senators and              tive damages to punish a defendant for       Westboro members believe U.S. deaths
House members and ask for their help           harm done to anybody who wasn’t part         in Iraq are punishment for the nation’s
in completing the work started by Jack         of the suit. Philip Morris will apparently   tolerance of homosexuality.
Cline and carried on by his family and         appeal the ruling to the U.S. Supreme        Source: Associated Press
his dedicated lawyer after Jack’s death.       Court.
When that happens, it will be a fitting           The Oregon high court made its first
memorial to Jack Cline.                        decision in 2002, refusing to hear an        USS COLE FAMILIES SEEK REHEARING OF
Source: Birmingham News and Associated Press   appeal from Philip Morris. Then the          THEIR LAWSUIT
                                               U.S. Supreme Court rejected the judg-           Family members of the 17 sailors
                                               ment of nearly $80 million, saying that      killed in the 2000 attack on the USS
OREGON HIGH COURT REAFFIRMS $79.5              punitive damages generally should be
MILLION AWARD IN PHILIP MORRIS CASE                                                         Cole in Yemen are trying to use a new
                                               held to no more than nine times actual       federal law to reopen their lawsuit
  The Oregon Supreme Court has                 economic damages. It declined,               seeking more than $100 million in
again affirmed a $79.5 million punitive        however, to make that a firm rule. In        damages from Sudan. In a ruling last
damages judgment against Philip                the Williams case, the family was            year a federal judge found that Sudan
Morris, an award twice struck down by          awarded $521,000 in actual damages.          provided training and logistics allowing
the U.S. Supreme Court, which sug-             The punitive damages are about 150           al-Qaida terrorists to bomb the Navy
gested it was excessive.The award was          times greater. The Oregon Supreme            destroyer. But, although U.S. District
for the family of Jesse Williams, a            Court upheld the punitive damages,           Judge Robert G. Doumar ordered Sudan
former Portland janitor who started            citing “extraordinarily reprehensible”       to pay about $8 million for lost wages
smoking during a 1950s Army hitch              conduct on the part of Philip Morris         and earnings potential, he said he was
and died in 1997 six months after he           officials. Then came the U.S. Supreme        prohibited by law from awarding the
was diagnosed with lung cancer.A jury          Court’s second look at the case. On          families money for pain and suffering.
in Portland made the award in 1999.            that appeal, a narrower ruling resulted         The families are asking Judge
This is the third time the state court         that did not address the size of the         Doumar to reopen the case. It appears
has ruled.                                     award, but only how juries could con-        that the Justice for Victims of State-
  The Oregon court ruled that Philip           sider the conduct of defendants in           Sponsored Terrorism Act, which
Morris and the tobacco industry                determining punitive damages. It will        became law on January 28th and allows
worked during the 1950s on a                   be interesting to see what the highest       terrorism victims to seek punitive
“program of disinformation” to create          court in the land will do on this case’s     damages for pain, suffering, and emo-
doubt about the dangers of smoking.            next trip up on appeal.                      tional distress, favors the plaintiffs’ posi-
                                               Source: Associated Press
The latest ruling followed a decision by                                                    tion.This law provides relief for certain
the U.S. Supreme Court last year to                                                         older terrorism-related cases, such as
send the case back to Oregon. That                                                          the one involving the Cole, as well as
                                               JUDGE REDUCES DAMAGES AWARDED IN
state’s Supreme Court was told to              FUNERAL PROTESTERS CASE                      new cases. But interestingly, it prohibits
reconsider the award based on its deci-                                                     suits involving Iraq, and that’s sort of
sion about instructions for the trial jury       A federal judge in Baltimore has           hard to figure out.
that Philip Morris had proposed and            upheld the October jury verdict in the          The families’ lawyers want to get the
the trial judge rejected. The Oregon           lawsuit brought against a Kansas-based       $8 million from U.S. banks that hold $60
high court said there were other               fundamentalist church group for its          million in Sudanese assets. The banks
defects in the instructions violating          anti-gay protest at the 2006 Maryland        take the position that the U.S. govern-
Oregon law, that justified the trial           funeral of a Marine killed in Iraq. The      ment has frozen the assets. Fifty-nine
judge’s decision.                              judge reduced by more than half the          family members sued, and 24 spouses,
  For example, the Oregon court said           total amount of damages awarded to           children, and parents of unmarried
that the instructions Philip Morris sug-       the plaintiff, the Marine’s father. The      sailors were awarded amounts ranging
gested would have forbidden the jury to        decision means the Topeka-based West-        from $104,000 to $781,000. If Judge
consider the profits the tobacco               boro Baptist Church and three of its         Doumar grants the request to reopen
company made through misconduct                members must pay total compensatory          the case, all of the plainitffs could be eli-



                                               www.BeasleyAllen.com                                                                    9
gible for payment. I hope justice will be     the longtime industry standard of 60           administrator of the medical monitor-
done.                                         degrees, the 231-cubic-inch U.S. gallon        ing plan. As you may recall, ten resi-
Source: Associated Press                      puts out a certain amount of energy.           dents of Spelter sued DuPont in 2004,
                                              But fuel is often sold at much higher          claiming the company deliberately
                                              temperatures, causing the fuel to              misled them about health risks from
AN APPEALS COURT OVERTURNS TRAVELERS          expand and the amount of energy to             the pollution and delayed a site
$500 MILLION ASBESTOS SETTLEMENT              decline for each gallon dispensed. Con-        cleanup for as long as possible to
   A federal appeals court has over-          sumers nationwide annually paid an             maximize profits. The lawsuit was
turned a $500 million settlement              estimated $2.3 billion more than they          tried last year in four phases involv-
reached two years ago by The Travelers.       otherwise would have to because the            ing property damage claims, long-
Cos. Inc. This ruling could result in         year-round average fuel temperature            term health screenings, and corporate
more lawsuits being filed against the         was nearly five degrees higher than the        accountability. Jurors awarded the
company.The ruling by the U.S. Court          nationwide standard.                           punitive damages in October in the
of Appeals for the Second Circuit                The lawsuits have more than 100             trial’s fourth phase. In the other
vacated a March 2006 decision of the          defendants, including major oil compa-         phases, the jury required medical
U.S. District Court for the Southern Dis-     nies, distributors, and fuel retailers.The     monitoring and found DuPont liable
trict of New York.The 2006 settlement,        plaintiffs include everyday consumers,         for negligence in creating the waste
which arose from the settlement of            truckers, and small businesses. While          site. Jurors also found that DuPont
asbestos claims arising out of a suit by      this court order was most significant,         had created a public and private nui-
Denver, Colorado-based Johns-Manville         the judge was simply following the law.        sance and that its pollution tres-
Corp., is subject to final court approval.    Bob Horn, a very good Kansas City              passed onto private property. DuPont
Travelers insured Manville, which filed       lawyer, is a co-lead counsel in this litiga-   plans to appeal.
for bankruptcy in 1982, while it made         tion. We will continue to monitor              Source: Associated Press

and sold asbestos from the 1940s to the       further developments in this case since
1970s.Travelers says it will not adjust       we are actively involved the litigation.
                                              Rhon Jones is the lead lawyer for our          ALABAMA SUPREME COURT ATTEMPTS TO
the level of its asbestos reserves as a                                                      RESTRICT WHERE A PRODUCTS CASE MAY
result of the Second Circuit’s decision.      firm in the cases.
                                                                                             BE FILED
                                              Source: Kansas City Star
It will be interesting to see how this
latest development plays out.                                                                   There have been two recent opin-
Source: Insurance Journal                                                                    ions by the Alabama Supreme Court
                                              JUDGE UPHOLDS $196.2 MILLION AWARD
                                                                                             that have not gained much media
                                              AGAINST DUPONT
                                                                                             attention, but have had a significant
JUDGE ALLOWS CLASS ACTION HOT FUEL              A West Virginia State circuit judge          impact on the rights of the injured and
LAWSUIT TO PROCEED                            has upheld a $196.2 million punitive           disabled in Alabama. Ex parte Suzuki
                                              damages award against DuPont in the            Mobile, Inc. and Ex parte Volvo Trucks
   As the result of a federal judge’s
                                              class action pollution case that we            North America, Inc. are significant
ruling, a class-action lawsuit against U.S.
                                              wrote about recently. In his order,            because the Supreme Court has
oil companies for not adjusting gaso-
                                              Judge Thomas A. Bedell also ordered            attempted to severely restrict where
line prices or volume for temperature
                                              the Wilmington, Delaware-based                 injured parties can file a product liabil-
will go forward. U.S. District Judge
                                              chemical giant last month to set aside         ity case in Alabama. Before these deci-
Kathryn Vratil, hearing lawsuits from
                                              nearly $130 million for a medical              sions, it was generally understood that
across the country consolidated in her
                                              monitoring plan. Judge Bedell said the         the location of where the injury
court in Kansas City, Kansas, rejected a
                                              plan would be operated on a pay-as-            occurred was a proper basis for estab-
motion by the oil companies to dismiss
                                              you-go basis, but DuPont must put the          lishing venue in the county.This under-
the lawsuit. In doing so, the judge said
                                              total amount in an escrow account.             standing was based upon the plain
the defendants had not explained how
                                              The jury in the case required DuPont           language of Alabama’s statute govern-
their arguments, even if accepted,
                                              to provide medical monitoring for 40           ing venue—“in the county in which a
would preclude the plaintiffs’ claims.
                                              years to people who were exposed to            substantial part of the events or omis-
   The lawsuits—from 26 states, Guam,
                                              arsenic, cadmium and lead from a               sions giving rise to the claim
and the District of Columbia—con-
                                              former zinc-smelting plant in the              occurred.” It was assumed by plaintiff
tended that customers can be
                                              small community of Spelter.                    and defense lawyers that parts of the
deceived, shortchanged, or both
                                                Judge Bedell appointed Ed Gentle, a          “events” giving rise to “the claim” were
because motor fuel is sold by volume
                                              Birmingham, Alabama lawyer, as                 the injury and the causation, i.e., the
and not adjusted for temperature. At



10                                            www.BeasleyAllen.com
defect causing the injury. Without          was ejected through the windshield            the venue statute, a county having no
injury and causation, there is no claim,    onto the pavement. He survived at the         connection to the accident, the injured
and the injury and causation occur          scene, but later died as a result of his      victim, or even to the defendant who
where the accident happens. Despite         injuries.                                     designed and manufactured the
this, the Alabama Supreme Court held           Freeman’s daughter filed suit against      product is now a proper venue simply
that it is the “wrongful acts of the cor-   Volvo and the dealership who sold the         because the large corporation has an
porate defendant” that determine            truck in Montgomery County, for a             unrelated dealership or an agent in the
venue under this statute.                   defective seatbelt.The defendants filed       county. Now one can envision that
   In the case, the plaintiff’s son was     a motion to transfer the case to Butler       product cases will begin to pile up in
seriously injured in an accident in         County on the basis of forum non con-         the counties with larger cities in them
Choctaw County while operating an           veniens because the accident occurred         because that is where the corporate
ATV.The plaintiff sued Suzuki, the man-     there and because it would be more            defendants usually have dealerships.
ufacturer of the ATV, and the dealership    convenient to the witnesses. The trial        Yet, the county where the death or
where it was purchased, alleging the        court denied the motion and the defen-        severe injury occurred, where the
ATV was defectively designed.The suit       dants filed a petition of mandamus            claim arose, and where the of the
was filed in Choctaw County where           with the Supreme Court. In analyzing          county have the strongest interest in
the accident occurred.The dealership        the issues, the Supreme Court first           not having defective products injure or
was located in Mobile County, and the       noted that, in order to transfer the case     kill their residents, will no longer be
defendants filed a motion to transfer       to Butler County, that county must be a       considered a proper venue.That seems
venue to Mobile County.The trial court      proper venue.Applying the rationale of        to be a real change from well-settled
denied the motion, and the defendants       the Suzuki case, the Court determined         venue case law in our state.
petitioned for a writ of mandamus           that Butler County was not a proper
asking the Alabama Supreme Court to         venue for the action because none of
transfer the action.                        the wrongful acts of the corporate            A FORMER SUPREME COURT JUSTICE
   The Supreme Court held that, even        defendants in designing, manufactur-          SPEAKS OUT
though the injury occurred in Choctaw       ing, and selling the truck and its defec-        Sandra Day O’Conner, who served
County, venue was actually proper in        tive seatbelt occurred there.The Court        with distinction on the U.S. Supreme
Mobile County, where the dealership         agreed with the Plaintiff and found that      Court, had some interesting observa-
was located.The Court determined that       Montgomery County was the proper              tions recently relating to our court
while the location where the injury         venue because the sale of the defective       system. The justice’s comments were
occurred used to be a dispositive fact,     seatbelt occurred there.                      printed in a recent story in Parade mag-
the July 1999 amendment to the statute         These opinions seem to run counter         azine. I believe you will find her astute
focused the inquiry on the location of      to the underlying premise of Alabama          observations to be not only interesting,
the “events or omissions giving rise to     law that it is in the “interest of justice”   but extremely thought-provoking.
the claim.” The Court reasoned that,        for a suit to be filed in a county “with a
because the Plaintiff’s complaint           strong connection to the action.” The
alleged the wrongful acts occurred in       Supreme Court has stated:                       HOW TO SAVE OUR COURTS
the design, manufacture, assembly, dis-
                                              The key factors concerning the
tribution, and sale of the ATV, none of                                                     In my work as a Supreme Court
                                              interest of justice that clearly
which occurred in Choctaw County, it                                                        justice, I was required by the Con-
                                              apply in this case are the burden
could not be a proper venue.                                                                stitution to fairly and impartially
                                              of piling court services and
   This ruling was further clarified in                                                     apply the law-not the law as I
                                              resources upon the people of a
the Volvo case. On October 12, 2005,                                                        wanted it to be but the law as it
                                              county that is not affected by the
Joseph Freeman, Jr., who was                                                                was. Now, as a private citizen, I
                                              case and, perhaps most basic of
employed by Evergreen Forest Prod-                                                          am anxious about the state of the
                                              all, the interest of the people of a
ucts, was driving a 2004 Volvo tractor                                                      judiciary in America.
                                              county to have a case that arises
trailer. Although he was obeying the
                                              in their county tried close to                I am not concerned about particu-
speed limit and operating his truck in
                                              public view in their county.                  lar judges or cases, nor am I con-
a safe manner, an oncoming pickup
truck crossed over the center line of         Ex parte Smith’s Water & Sewer                cerned about the judiciary shifting
the highway and struck Freeman’s            Authority, 2007 WL 2687396 (Ala. Sept.          right or left.What worries me is the
Volvo truck near the driver side front      14, 2007).                                      manner in which politically moti-
tire. As a result of the collision, and                                                     vated interest groups are attempt-
despite wearing his seatbelt, Freeman         Yet, with the new interpretation of           ing to interfere with justice.


                                            www.BeasleyAllen.com                                                                11
 The rule of law in the U.S.            groups to attack, defend and           What does it gain people? How
 includes statutes and constitu-        counterattack.                         can anyone have faith in the
 tional provisions. It also involves                                           system?”
                                        The money can be spent in polar-
 precedent, which is a previous
                                        izing ways. When Bill Cunning-         Good questions. When so much
 judicial ruling on a matter. A
                                        ham was running for the                money goes into influencing the
 judge typically defers to prece-
                                        Kentucky Supreme Court in 2006,        outcome of a judicial election, it is
 dent. Like good cooking, good
                                        one opposing campaign ad               hard to have faith that we are
 judging requires taking ingredi-
                                        implied that he was responsible        selecting judges who are fair and
 ents and procedures used success-
                                        for letting six rapists out on         impartial.If I could do one thing to
 fully in the past and adjusting
                                        parole. It said:“One had been on       solve this problem, it would be
 them to the case at hand. New
                                        parole for only 12 hours when he       to convince the states that select
 legal recipes-or rules-can have
                                        raped a 14-year-old and made her       judges through partisan elections-
 major ramifications. So if a judge
                                        mother watch.”                         that is, when a Democrat and
 comes up with a new way to
                                                                               Republican run against one
 apply the law, her opinion may         This story was very misleading.
                                                                               another-to switch to merit selection
 be reviewed by state or federal        Cunningham, then a lower-court
                                                                               instead. Under this plan, currently
 appellate courts to ensure that it     judge, did rule to change the sen-
                                                                               used in states such as Colorado
 is a correct interpretation of the     tences of several rapists from life
                                                                               and Nebraska, an independent
 law. If it’s not, it’s overturned.     without parole to life with the
                                                                               commission of knowledgeable citi-
                                        possibility of parole, but these
 Thus, our judicial system has                                                 zens recommends candidates to
                                        men all stayed in jail. And the
 safeguards to ensure consistency                                              the governor, who appoints one
                                        rape referred to in the ad
 and preservation of the law. But it                                           of them as judge. After several
                                        occurred 20 years earlier, before
 is threatened when judges ignore                                              years on the bench, the judge’s
                                        Cunningham was even a judge.
 settled law and make decisions                                                name is submitted to the elec-
 according to personal or public        Sue Bell Cobb remembers speak-         torate, who vote on whether he
 preferences.                           ing to a reporter the day after        should keep his position. This
                                        she won the election for chief         method decreases the importance
 The judiciary currently is experi-
                                        justice of the Alabama Supreme         of money and politics in the
 encing unprecedented pressure
                                        Court in 2006. Chief Justice Cobb      process while still allowing voter
 from interest groups to make
                                        expected to be asked how it felt       input on retaining each judge.
 decisions that are based on poli-
                                        to be the first woman in that job.
 tics. In Washington, D.C., we hear                                            I believe the long-term solution to
                                        Instead, the reporter asked:“How
 a lot about federal judges, and                                               the politicization of the judiciary
                                        does it feel to be the victor of the
 they have a critical role in                                                  process is education. Children,
                                        second most expensive judicial
 upholding the Constitution. But                                               voters, policymakers and lawyers
                                        race in U.S. history? How will
 having been a state judge and a                                               all should be informed about the
                                        you convince the people of
 state legislator, I know that the                                             importance of a fair, impartial
                                        Alabama that the campaign con-
 vast majority of law is state law.                                            judiciary. Judges should write
                                        tributions you sought will not
 Ninety-five percent of litigation                                             their opinions in plain English so
                                        impact how you rule? How can
 takes place in state courts. Many                                             that the public can understand
                                        we convince people their courts
 legal issues are primarily decided                                            what the law is.
                                        are not for sale?”
 there, including divorce, property
                                                                               You also should educate yourself,
 rights, employment law, product        I imagine she answered much like
                                                                               an especially important task if
 liability and medical malpractice.     Illinois Supreme Court Justice
                                                                               you live in one of the 39 states
                                        Lloyd Karmeier did after he won
 Political pressure is a big problem                                           that holds elections for judges.
                                        the most expensive judicial elec-
 in a number of our state courts.                                              Take these steps:
                                        tion in American history in 2004.
 More than 89% of state judges go
                                        That race cost the candidates $9.3       • First, learn about the candi-
 through some form of election
                                        million, a sum greater than what           dates. That you agree with a
 process. Many of these elections
                                        was spent in more than half of the         person’s policy positions is irrel-
 recently have become full-fledged
                                        U.S. Senate races that year.               evant to whether he or she
 political battles, fueled by
                                        Karmeier said of the money:                would make a good judge. Eval-
 growing sums of money spent by
                                        “That’s obscene for a judicial race.       uate them based on their
 candidates and special-interest



12                                     www.BeasleyAllen.com
    ability to be fair, impartial and   V.                                            Simply stated, there is no doubt
    competent. Look for unbiased                                                      that Saddam Hussein now has
                                        THE NATIONAL
    sources-many states offer voter                                                   weapons of mass destruction.
    guides and performance evalu-       SCENE                                         There is no doubt he is amassing
    ations.                                                                           them to use against our friends,
                                                                                      against our allies, and against us.
  • Second, be suspicious if a can-     LOCATING THE TRUTH IN THE BUSH WHITE
    didate makes a promise about        HOUSE IS VERY DIFFICULT                        The American people are looking
    how he or she would rule in a                                                   forward to a time when the President
                                          If you want to hide the truth from
    particular case. Every case is                                                  of our country and his team of advisors
                                        the American people, some say the
    different and should be judged                                                  will simply tell them the truth.We have
                                        best place to put it is in the Bush
    according to how the law                                                        had seven years of the Bush Administra-
                                        White House. It has been widely
    applies to that situation. If a                                                 tion’s deception and it’s clearly time for
                                        reported that President Bush and his
    judge decides a case based on a                                                 change. I believe the current political
                                        top aides publicly made 935 false
    campaign promise, he or she                                                     climate is the direct result of folks
                                        statements about the security risk
    has not upheld the pledge to be                                                 losing confidence in an Administration
                                        posed by Iraq in the two years follow-
    fair and impartial.                                                             that has played fast and loose with the
                                        ing the tragic events of September 11,
                                                                                    truth and has favored the rich and pow-
  • Third, vote. Judicial elections     2001. A study released by two non-
                                                                                    erful while totally ignoring the wants
    tend to garner little attention.    profit journalism groups indicates that
                                                                                    and needs of regular folks.
    This is increasingly problematic,   “the Bush Administration led the
                                                                                    Source: CNN
    because interest groups often       nation to war on the basis of erro-
    can be the main source of infor-    neous information that it methodi-
    mation. The only way to coun-       cally propagated and that culminated        EXXONMOBIL ANNOUNCES RECORD PROFITS
    teract this is to research the      in military action against Iraq on
    candidates, know where your         March 19, 2003.” The study was con-            ExxonMobil Corp. set another record
    information is coming from          ducted by the Center for Public             when it posted the largest annual profit
    and vote.                           Integrity and its affiliated group, the     by a U.S. company—$40.6 billion—and
                                        Fund for Independence in Journalism.        that’s bad news for folks in this
I’m working with Georgetown             While a report of this sort would,          country. It means that regular folks and
University and Arizona State Uni-       under normal circumstances, be big          business owners have made this possi-
versity on two programs on this         news, it’s just another day at the office   ble.The world’s largest publicly traded
subject. One is called Our Courts       with the Bush Administration.               oil company is profiting while people
and will be an online civics expe-        According to the study, President         who are buying their gasoline at the
rience for children. They’ll be able    Bush and seven top officials—includ-        pump are hurting. Exxon also set a U.S.
to step into a judge’s shoes so they    ing among others,Vice-President Dick        record for the biggest quarterly profit,
can better understand what he or        Cheney—made 935 false statements            posting net income of $11.7 billion for
she does. The other program, the        about Iraq during those two years.          the final three months of 2007, besting
Sandra Day O’Connor Project on          The study was based on a searchable         its own mark of $10.71 billion in the
the State of the Judiciary, will        database compiled of primary                fourth quarter of 2005. The previous
create a dialogue between experts       sources, such as official government        record for annual profit was $39.5
and law practitioners on the            transcripts and speeches, and second-       billion, which ExxonMobil reported for
court system and report on the          ary sources—mainly quotes from              2006.This politically powerful corpora-
best ways to safeguard its role.        major media organizations.The study         tion uses its political muscles and influ-
I hope I can make a lasting con-        says the President made 232 false           ence to pretty much get its way. Having
tribution to protecting our courts.     statements about Iraq and former            Dick Cheney in a position of power
We must preserve our system of          leader Saddam Hussein’s possessing          certainly hasn’t hurt the oil compa-
government, a system for which I        weapons of mass destruction, and 28         nies—including ExxonMobil—and that
have the utmost respect as I            false statements about Iraq’s links to      is a gross understatement.
reflect back on my Supreme Court        al Qaeda. The quotes in the study           Source: Associated Press

career.                                 include an August 26, 2002, statement
                                        by Vice-President Cheney to the
Justice Sandra Day O’Conner             national convention of the Veterans of
Parade Magazine                         Foreign Wars.Typically, the Vice-Presi-
February 24, 2008                       dent claimed:


                                        www.BeasleyAllen.com                                                               13
BUSH’S FRAUD CRACKDOWN ON FRAUD              tions ongoing into bribes, false billing,    groups want the court to order the
COMES WITH A LOOPHOLE                        contract fraud, kickbacks, and theft.The     DOJ to move forward with creation of
                                             Army Criminal Investigation Command          the National Motor Vehicle Title Infor-
   It’s really hard to visualize the Bush    has 90 criminal investigations under         mation System. The database would
Administration ever really cracking          way into alleged contract fraud in Iraq,     help consumers avoid purchasing a
down hard on corporate fraud. What           Kuwait, and Afghanistan.                     potentially dangerous used car by
was being touted as a major effort, an          The Associated Press reported that        allowing them to instantly check the
Administration proposal to force com-        an estimated $350 billion is spent on        validity of a car’s title and mileage and
panies to report abuse of taxpayer           government contracts annually. This          learn whether it had been stolen or
money actually has a multibillion-dollar     comes from the White House Office of         was a junk or salvage vehicle.
loophole. Interestingly, the plan won’t      Federal Procurement Policy. With                A salvage vehicle is one that was
apply to work done overseas, including       money going to contractors and sub-          totaled in collision, fire, flood, or other
projects to secure and rebuild Iraq and      contractors, both foreign and based in       event to the extent that its value, plus
Afghanistan. I suspect that loophole         the United States, experts say it’s nearly   the cost of repairing it for legal opera-
makes bosses at companies like Hal-          impossible to pinpoint how much of it        tion, is more than its fair market value
liburton rest a whole lot easier. For        is spent overseas. Studies by the Center     immediately before the event that
decades, contractors have been asked         for Public Integrity estimate that at        caused the damage. People’s lives are at
to report internal fraud or overpay-         least $102 billion has been spent since      risk because they are buying used cars
ment on government-funded projects.          2003 on postwar contracts in Iraq and        that are missing air bags or have other
Compliance has been voluntary, and           Afghanistan.The study says spending to       critical safety defects because of their
over the past 15 years the number of         secure and rebuild the two nations has       hidden histories as junked or salvaged
company-reported fraud cases has             grown by more than 50% each year.            vehicles, according to Public Citizen
declined steadily.                           Meanwhile, the number of companies           President Joan Claybrook. The federal
   Now, the Justice Department wants         reporting internal fraud in their han-       government should deliver on what
to force companies to notify the gov-        dling of government contracts has            Congress directed in 1992.
ernment if they find evidence of con-        declined sharply. In 1987, contractors          Congress passed the law that called
tract abuse of more than $5 million.         voluntarily reported 44 instances of         for the national database in 1992 but
Failure to comply could make a               fraud or abuse to the Justice Depart-        shifted responsibility of establishing it
company ineligible for future govern-        ment. By 2002, the number had                to the DOJ in 1996 because the
ment work.The proposed rules, which          dropped to eight. Last year, contractors     Department of Transportation had
are in the final approval stages, specifi-   reported three instances of fraud. If        failed to make any headway.The move
cally exempt “contracts to be per-           anybody believes voluntary compliance        didn’t make a difference; the DOJ has
formed outside the United States,”           and self-reporting works, they haven’t       now delayed more than 10 years
according to a notice published in           kept up with the news lately.                without making progress on this criti-
January in the Federal Register. Critics     Source: Associated Press                     cal source of information for con-
including the watchdog group Taxpay-                                                      sumers. Every year, people all across
ers Against Fraud said the overseas                                                       the country fall victim to auto fraud
exemption raises suspicions.                 DEPARTMENT OF JUSTICE HAS FAILED TO          when they buy used cars that were
   The United States poured billions of      PRODUCE NATIONAL DATABASE TO HELP            rebuilt after a wreck.
dollars into projects in Iraq and            PREVENT AUTO FRAUD
                                                                                             Under the 1992 law, junk and salvage
Afghanistan to secure and rebuild the                                                     yard operators are required to file
                                               More than 15 years after Congress
two nations.With the money came the                                                       monthly reports to the database opera-
                                             required the federal government to set
fraud.At least $14 million has been lost                                                  tor. Each report is supposed to contain
                                             up a national database to allow car
in bribes alone over the last five years                                                  a list of the vehicle identification
                                             buyers to determine whether a vehicle
in Iraq and Afghanistan, and I believe                                                    numbers of all junk and salvage vehi-
                                             has been stolen or rebuilt after a
that is just the tip of the iceberg. The                                                  cles obtained during the previous
                                             wreck, the system is still not in place,
Justice Department so far has charged                                                     month.The law also requires insurance
                                             three consumers groups have com-
44 people with bribery, conspiracy,                                                       companies to file similar reports. But
                                             plained. Public Citizen, Consumers for
money laundering, and other contract                                                      the DOJ has yet to establish regulations
                                             Auto Reliability and Safety (CARS), and
fraud crimes related to the govern-                                                       that would tell insurance companies
                                             Consumer Action have filed a lawsuit
ment’s wartime spending. Some of                                                          and junk and salvage yards how to
                                             against the Department of Justice
those cases came from the Office of                                                       report their information.
                                             (DOJ) in the U.S. District Court for the
the Special Inspector General for Iraq                                                       The suit filed by the consumer
                                             Northern District of California. The
Reconstruction, which has 52 investiga-                                                   groups asks the court to find the


14                                           www.BeasleyAllen.com
Department of Justice in violation of      American people have been victims of       deals by $500 million in 2000 and 2001
the 1992 law for not having established    an industry that has let marketing         to artificially boost its stock price.The
the database or even the regulations       forces in the companies push medical       defendants were former General Re
setting it up.The court is being asked     doctors out of control positions in the    CEO Ronald Ferguson; former General
to order the DOJ to issue the regula-      corporate structure. Greed has pretty      Re Senior Vice President Christopher P.
tions within 30 days of finding the        well taken over in the corporate board-    Garand; former General Re Chief Finan-
agency in violation.                       rooms of the drug companies and that       cial Officer Elizabeth Monrad; and
Source: Public Citizen                     has resulted in the American people        Robert Graham, a General Re senior
                                           subsidizing the rest of the world on the   vice president and assistant general
                                           prices of prescription drugs.              counsel from about 1986 through
VI.                                           The pharmaceutical industry has         October 2005.Also charged was Christ-
                                           been a target of criticism in the presi-   ian Milton,AIG’s vice president of rein-
THE CORPORATE
                                           dential campaign by Senator Barack         surance from about April 1982 until
WORLD                                      Obama, who will be the Democratic          March 2005.
                                           nominee. He will be a strong protector     Source: Associated Press
                                           of consumers once he is elected. The
BIG PHARMA IS LITERALLY RAPING THE
AMERICAN PEOPLE                            fact that Americans pay more for indi-
                                           vidual drugs than any other country’s      AIG SETTLES WITH STATES OVER BID-
  Even though the pharmaceutical           citizens can’t be justified. On his Web    RIGGING ALLEGATIONS
industry has been a target in the presi-   site, Senator Obama says he “will             American International Group, Inc.
dential campaign, that hasn’t stopped      prevent [drug] companies from              (AIG) has reached settlements with
the industry from continuing to aggres-    abusing their monopoly power               nine states and the District of Columbia
sively raise the prices of prescription    through unjustified price increases.”      relating to their investigations into
drugs. Pharmaceutical companies            The Senator has endorsed giving the        alleged bid-rigging and price-fixing and
increased wholesale prices for the 50      federal government, which currently is     questions about undisclosed contin-
top-selling branded drugs by an average    excluded by law from directly negotiat-    gent commissions paid to brokers.The
of 7.82% in 2007, after increases of       ing with drug makers, the power to         states contended that some of AIG’s
6.73% and 6.22% in the previous two        negotiate prices for the Medicare Part     subsidiaries were involved in a “pay-to-
years, according to Delta Marketing        D drug benefit.The right of the federal    play” tactic used by Marsh & McLennan
Dynamics Inc., a health-care marketing     government to negotiate prices with        and other insurance brokers that pur-
research company. The most recent          the powerful drug companies was            portedly caused businesses to pay
increase is almost double the overall      taken out of the Prescription Drug Act     higher insurance premiums.The settle-
U.S. economy’s 4.1% annual inflation       passed in 2006 by the Bush Administra-     ments, which are subject to court
rate last year. I am afraid that we are    tion and the drug industry lobbyists.      approvals, were reached with the Attor-
seeing just the beginning of drug price    Most folks are shocked when they find      neys General of Florida, Hawaii, Mary-
increases that will continue at record     out what has happened on that front.       land, Michigan, Oregon,Texas, and West
paces.                                     Source: Wall Street Journal
                                                                                      Virginia; the Commonwealths of Massa-
  Some individual drugs had double-                                                   chusetts and Pennsylvania; the District
digit price increases over three years.                                               of Columbia; the Florida Department of
For example, GlaxoSmithKline PLC           FIVE FORMER INSURANCE EXECUTIVES
                                           FOUND GUILTY                               Financial Services; and the Florida
raised the price of antidepressant Well-                                              Office of Insurance Regulation.The set-
butrin XL by 44.5% from 2005 to 2007.         Five former insurance company           tlements call for total payments of
Sanofi-Aventis SA raised the price of      executives were found guilty late last     $12.5 million to be allocated among
sleep drug Ambien 70.1%. Shire PLC         month of a scheme to manipulate the        the 10 jurisdictions.
increased the price of its attention-      financial statements of the world’s           During the term of the settlement
deficit disorder medication, Adderall      largest insurance company.The verdict      agreements,AIG said it will continue to
XR, by 33.5%, while the price of choles-   came following a month-long federal        maintain certain producer compensa-
terol-fighting Lipitor—the world’s top-    court trial. The defendants were four      tion disclosure and ongoing compli-
selling drug, which brought in roughly     former executives of General Re Corp.      ance initiatives.AIG will also continue
$13 billion last year for Pfizer Inc.—     and a former executive of insurance        to cooperate with the industry-wide
rose 16%.                                  industry leader American International     investigations.The agreement with the
  The pharmaceutical industry is politi-   Group Inc., who were accused of inflat-    Texas Attorney General also settles alle-
cally powerful and has pretty much         ing AIG’s reserves through reinsurance     gations of anticompetitive conduct
had its way in our nation’s capitol.The


                                           www.BeasleyAllen.com                                                             15
relating to AIG’s relationship with        care financing company defrauded          SETTLEMENT ON AIRLINE PRICE FIXING
Allied World Assurance Co., and            investors of $1.9 billion and took part
includes an additional settlement          in a “massive cover-up” to hide their        British Airways and Virgin Atlantic
payment of $500,000 related to that        dealings. This is one of the largest      will jointly pay about $203 million to
issue.                                     white-collar crimes since Enron and       settle a lawsuit brought by passengers
   According to the complaint,AIG and      WorldCom. The government says             who said the airlines illegally fixed the
several of its insurance subsidiaries      National Century executives misdi-        price of fuel surcharges on long-haul
allegedly conspired with Marsh and         rected payments and then made up          trips.The agreement settles a two-year-
other brokers by submitting fake bids      numbers and loaded false data on to       old case in United States District Court
to create the illusion of a competitive    computer systems to cover their tracks,   for the Northern District of California
bidding process in the excess casualty     while moving money between sub-           contending that customers overpaid
commercial insurance market. Investi-      sidiaries to make them appear healthy.    for fuel surcharges, which were meant
gators said they determined that           The company’s mission was to help         to help airlines cope with rising fuel
despite the appearance of a fair bidding   health care companies pay their bills     costs. Under the pact,American ticket
process, the broker had already            by filling the gaps between the time      purchasers will receive $59 million and
decided which insurer would receive a      doctors rendered a service and the        British purchasers will get £73.5
particular policyholder’s business. As     time they were paid. A trial in federal   million ($144.4 million) in refunds,
part of the scheme, AIG paid the           trial in Columbus, Ohio started last      according to lawyers representing the
brokers “contingent commissions” that      month and is expected to last for         plaintiffs. The agreement, which still
were not disclosed to policyholders        several weeks. National Century was       requires court approval, covers eight
and in return received other lucrative     paying some health care companies         million passengers in the United States
business, according to knowledgeable       money well in excess of what they         and Britain who bought tickets from
sources.                                   needed to cover operating costs while     either British Airways or Virgin
Source: Insurance Journal                  concealing extra payments from            between August 11, 2004, and March
                                           National Century investors.               23, 2006.The airlines will pay one-third
                                              National Century had been the          of the fuel surcharge the passengers
$24 MILLION SETTLEMENT IN DOW JONES        nation’s largest source of financing to   paid for each ticket.
TRADING CASE                               health care providers. Doctors, hospi-       Last year, British Airways agreed to
                                           tals and other providers received         pay roughly $247 million in a settle-
  The Securities and Exchange Com-
                                           money from the company rather than        ment with British authorities for dis-
mission has settled its case with a
                                           waiting for insurance payments, usually   cussing fuel surcharges with Virgin.The
former director of Dow Jones and three
                                           getting 80 or 90 cents on the dollar.     latest agreement resolves a civil lawsuit
others. David Li, the former Dow Jones
                                           National Century was then to collect      brought in the United States that con-
board member, had been accused of
                                           and keep the full amount of the pay-      tended that passengers were over-
passing confidential information about
                                           ments owed by insurance companies.        charged on the fuel surcharges and
Rupert Murdoch’s $5 billion offer for
                                           National Century raised the money to      were told that the added fees were nec-
the company to a friend, Michael
                                           fund its business by selling bonds to     essary to cover the rising cost of fuel,
Leung. Li, the chairman and CEO of the
                                           investors, who received interest pay-     but in reality were used to increase the
Bank of East Asia, will pay an $8.1
                                           ments followed by a lump-sum              airlines’ profits. The amount to be
million civil penalty to resolve the
                                           payment. The government alleges           refunded to passengers will be up to
matter. Leung will disgorge the $8.1
                                           National Century executives routinely     £10 ($19.65) for each flight segment.
million profit he made off the tip, and
                                           overpaid some health care providers,      The Washington law firms of Cohen
pay a further penalty of $8.1 million.
                                           many of them entities in which the        Milstein Hausfeld & Toll and Cotchett,
This brings to an end one of the biggest
                                           executives had a financial interest.      Pitre & McCarthy in Burlinigame, Cali-
inside-trading investigations of 2007.
                                           National Century told investors it was    fornia, represented the plaintiffs.
The total amount of the settlement is
                                           making the proper payments, accord-       Source: Reuters
$24 million.
Source: USA Today
                                           ing to the government.The government
                                           expects to call 45 witnesses during the
                                           trial, which is expected to last six to
HEALTH CARE FINANCING COMPANY STOLE        eight weeks.
$1.9 BILLION FROM INVESTORS                Source: Associated Press

  Executives of National Century
Financial Enterprises, a failed health



16                                    www.www.BeasleyAllen.com
VII.                                        involving rollovers include too many        worker before the accident, was
                                            variables to design a reliable test. Each   injured in August 2004 while driving in
PRODUCT
                                            year, nearly 10,000 people die in           south Texas, near San Antonio. He sus-
LIABILITY UPDATE                            rollover crashes, but government data       tained severe brain damage and will
                                            suggest that only a small percentage of     need someone to take care of him for
                                            vehicle occupants are killed by collaps-    the rest of his life. Bill Newman, a very
ROOF STRENGTH RULE DELAYED AGAIN
                                            ing roofs. Public Citizen President Joan    good lawyer from Texas, represented
  Safety regulators at the National         Claybrook had this to say about the         the plaintiff and did a very good job in
Highway Traffic Safety Administration       proposed rule:                              this case. Ford says it will appeal.
(NHTSA) are having a difficult time                                                     Source: Bloomberg
                                              The proposal absolutely ignores
updating the controversial standard for
                                              ejection and containment in the
vehicle roof strength.The present stan-
                                              vehicle during rollovers, in which        YAMAHA RHINO ATV ACCIDENTS
dard has been on the books since 1971
                                              10,500 people die each year and
and a proposed new standard has been                                                       The issue of ATV safety has become a
                                              another 17,000 are seriously
repeatedly delayed. Now, NHTSA has                                                      growing concern nationwide. In
                                              injured. To justify a strong
asked for additional information from                                                   November 2007, Consumer Reports
                                              rollover protection standard, the
automakers, safety advocates, and the                                                   published findings of a five-year study
                                              agency should address roof crush,
public about the proposed new stan-                                                     comparing the prevalence of ATV and
                                              ejection and containment as one
dards. The most recent version of the                                                   bicycle crashes from 2000-2004, noting
                                              standard.
rule under consideration at NHTSA                                                       that “hospitalizations from ATV inci-
would require both sides of a vehicle         Congress most recently directed           dents are growing at a markedly higher
roof to support at least two and half       NHTSA to adopt a new roof standard          rate than those caused by bicycle
times the vehicle’s weight. But safety      by April 2009. NHTSA plans to issue a       injuries even though there are far more
advocates aren’t buying it. Public          new rollover rule later this year. I hope   bicycle owners.” (source: www.blogs.
Citizen President Joan Claybrook, who       the agency will put the safety and          consumerreports.org) The study was
headed NHTSA from 1977 through              welfare of people first and foremost        funded by the Concerned Families for
1981, observed:                             and get the job done.                       ATV Safety and the Arabella Legacy
                                            Source: Consumeraffairs.com
  The proposal is still a static test—                                                  Fund, a private charitable organization
  one based on mathematical cal-                                                        that also supports the Responsible
  culations, rather than a dynamic                                                      Trails Alliance.
                                            $6.5 MILLION VERDICT AGAINST FORD
  physical test— and it still is at 2.5     MOTOR CO. IN EXPLORER ROLLOVER CASE            One of the most dangerous ATVs on
  times the weight of the vehicle.                                                      the market is the Yamaha Rhino. Since
                                              A state of Texas jury has awarded         the Yamaha Rhino All Terrain Vehicle
   The agency has played games with         $6.5 million to a 41-year-old man left      was introduced to the market in the
the regulation since the first NHTSA        brain-damaged in a 2004 rollover acci-      United States in 2003, it has caused a
revision of the roof strength rule came     dent involving an Explorer sport utility    large number of devastating rollover
about. Everybody knows the current          vehicle. Ruben Zamora lost control of       accidents that left adults and a number
rule is very weak.The existing standard     the 1993 Explorer when a tire lost its      of children seriously injured, perma-
mandates that just one side support at      tread. He was ejected from the vehicle      nently maimed and in some instances
least one and half of the weight of a       as it rolled over. His mother, suing on     dead.With the popularity of ATVs, the
vehicle weight. The initial revision of     his behalf, said the tread separation set   number of accidents occurring has
the roof strength rule from NHTSA           off vibrations in the rear of the vehicle   risen over the years, and in most
required support of two and half times      that made it skate sideways because of      instances these accidents are attributed
vehicle weight but would have contin-       a defect in the SUV’s suspension. Ford      to driver error and/or dangerous riding.
ued testing on one side only. NHTSA         has known about the problem for             But, in the case of the Yamaha Rhino
Administrator Nicole Nason now says         years, but has failed to fix it.The state   ATV, these injuries can be directly
that double-sided testing is a viable       court jury in Cotulla,Texas, found the      linked to Yamaha’s defective design of
alternative approach.                       Explorer defective and awarded $10          this ATV.These design defects include:
   Safety activists have demanded a         million in damages.The jury found that
“dynamic” rollover test, which would                                                    • High center of gravity
                                            Mr. Zamora was 35% responsible for
require rolling a moving vehicle to         the accident, leaving a verdict of $6.5     • Small wheels
gather data.Automakers insist that such     million against Ford.
a test will be costly, and that accidents     Mr. Zamora, a disabled oil field          • Narrow wheelbase / frame



                                            www.BeasleyAllen.com                                                              17
  When these design defects are               CHINA PLANT PLAYED ROLE IN DRUG TIED         that have never been inspected.” The
coupled with a powerful engine, fast          TO 4 DEATHS                                  agency also had varying counts of how
acceleration ,and quick turning radius,                                                    many overseas facilities ship drug
the Rhino can become very unstable,              A Chinese facility that hasn’t been       ingredients to the U.S. The FDA has
even at slow speeds. In addition to the       inspected by the U.S. Food and Drug          admitted that it hadn’t inspected the
aforementioned design defects, the            Administration (FDA) made the active         Chinese facility that made the active
Yamaha Rhino provides inadequate              ingredient in much of the widely used        ingredient in the Baxter drug.
protection for driver’s and passenger’s       Baxter International Inc. blood-                The plant making the active ingredi-
limbs in the event of an accident.The         thinner that is under investigation. Hun-    ent was “supposed to be inspected”
original design was manufactured              dreds of allergic reactions and four         according to the FDA, but “due to
without doors of any kind.The design          deaths among the drug’s users have           human error, and inadequate informa-
resulted in arms, legs, and bodies being      been reported.The disclosure adds to         tion technology systems, a pre-approval
crushed when the defectively                  already grave concerns about the safety      inspection, which would normally be
designed ATV rolled over. Consumers           and quality of products imported from        conducted, was not done.” A major
need to be very concerned if they have        China and elsewhere in the developing        competitor of Baxter’s, APP Pharma-
purchased a Rhino, especially if chil-        world.A tide of tainted goods ranging        ceuticals Inc., of Schaumburg, Ill., also
dren ride in it.We are currently looking      from pet food to children’s toys has         gets the active ingredient for much of
at a number of potential claims involv-       prompted recalls and increased               its heparin from a Chinese supplier.
ing these ATVs.                               scrutiny of Chinese-made wares around        Source: Wall Street Journal
Source: CPSC
                                              the world. The fact that the Chinese
                                              plant was the supplier to Baxter will
                                              fuel questions about U.S. regulators’        VERDICT FOR $11 MILLION AGAINST
COURT APPROVES VAN CRASH LAWSUIT              ability to ensure the safety and quality     MITSUBISHI
SETTLEMENT                                    of imported drugs and drug ingredi-
                                              ents. I have to wonder how the Bush             A jury in Florida has ordered Mit-
   A federal judge has approved a settle-     Administration and Congress could            subishi to pay $11 million in compen-
ment between DaimlerChrysler Corp.            allow the FDA to be underfunded and          satory damages to a couple whose son
and a number of plaintiffs in a case          understaffed and expect the agency to        died after being partially ejected from a
arising out of a 15-passenger van             do its job.                                  sport utility vehicle. As has been
rollover. The lawsuit was brought by             Baxter temporarily halted production      reported, Mitsubishi put its Montero
two survivors and the families of seven       of its version of the generic anticlotting   SUV on the market despite known
Utah State University students killed in      drug heparin because of about 350 bad        problems with the seat belt.The plain-
a 2005 van rollover. U.S. District Court      reactions potentially tied to the drug,      tiffs’ 25-year-old son, Scott, died hours
Judge Tena Campbell signed an order           including four fatalities, primarily in      after a rollover crash in 2004. Even
accompanying the settlement. Daimler-         patients undergoing kidney dialysis and      though he was wearing his passenger-
Chrysler made the 15-passenger Dodge          heart surgery. It should be noted that       side seat belt, Scott was catapulted
van that rolled several times, killing        China is now the world’s largest pro-        backward through the rear window.
eight students and their instructor.The       ducer of active pharmaceutical ingredi-      The Japanese auto giant took the
victims were returning to the USU             ents—the       chemical      compounds       unprecedented step of releasing a new
campus from an agricultural field trip.       needed to make finished pills and other      version of the vehicle halfway through
The plaintiffs reached a settlement           drugs. In 2005, China had $4.4 billion,      the 2000 model year to correct the
with the van maker late last year, but it     or 14%, of the world’s $31 billion           flaws, but never told customers about
had to be approved by Judge Campbell.         market for active drug ingredients,          the defect in the earlier model.The car-
The maker of the van’s tires, Copper          according to a report last year from         maker has admitted design changes
Tire & Rubber, remains a defendant in         Credit Suisse.                               were prompted by poor crash tests.
the case, which is set for trial in July.As      Recent testimony from the federal            Jurors awarded the couple $10
we have written on numerous occa-             Government Accountability Office said        million for pain and suffering and the
sions, these 15 passenger vans are            that the FDA may only inspect around         rest for funeral expenses and other
unsafe and should never be used to            7% of foreign drug-making facilities in a    losses. The lawsuit was filed in Palm
transport passengers.                         given year, and it would take the            Beach County Circuit Court because
Source: Salt Lake Tribune
                                              agency more than 13 years at that rate       the car company has business opera-
                                              to inspect all the plants.The testimony      tions based in the area. As you may
                                              also said the FDA “cannot provide the        recall, Mitsubishi was rocked by a
                                              exact number of foreign establishments       scandal about the systematic cover-up



18                                            www.BeasleyAllen.com
of design defects in vehicles that          Plaintiffs’ Negotiating Committee has          ing 17 trials. Rightly, the settlement has
resulted in massive recalls.The scandal     announced an agreement with Merck              been well received by claimants and
surfaced in 2000, when the company          to provide a grace period for the sub-         counsel around the country. Andy
acknowledged it had hidden defects for      mission of releases and other docu-            Birchfield, head of our Mass Torts
decades, secretly repairing them            ment to the Claims Administrator.              section, not only was central in the
without proper recalls despite reports      claimants or their lawyers were                negotiation of the Settlement Program,
of dozens of accidents.                     required to indicate by February 29,           but continues to be a primary person
Source: Associated Press                    2008, that they plan to enroll but they        guiding the settlement during these
                                            will have the benefit of a 30-day grace        early stages. His work, as well as the
                                            period to submit the necessary forms           work of Leigh O’Dell, Roger Smith, and
VIII.                                       to the Claims Administrator.                   a great team of lawyers and staff per-
                                               At the time of this writing, well over      sonnel, has been exemplary—excellent
MASS TORTS
                                            80% of eligible clients have already           for our clients and essential to the
UPDATE                                      enrolled and many more are expected            success of what is the largest settle-
                                            to enroll before the deadline.This is a        ment in the history of pharmaceutical
                                            very encouraging sign in light of the          litigation.We are proud to have been a
VIOXX SETTLEMENT UPDATE
                                            short time-frame in which claimants            major part in providing justice to a
   As we have reported last fall Merck &    and their lawyers have had to accom-           tremendous number of Vioxx victims.
Co. agreed to a Settlement Program to       plish the necessary steps for enroll-
compensate individuals who suffered a       ment. It is expected that over 95% of
heart attack or stroke while using the      the appropriately 47,000 eligible              THE FIRST BEXTRA TRIAL IN MDL IS SET
pain reliever, Vioxx. The settlement        claimants will be enrolled by Febru-
                                                                                             The Multi-District Litigation (MDL)
process is progressing on schedule.The      ary 29th—in fact, I believe the enroll-
                                                                                           Court for the Bextra/Celebrex litigation
first step in cementing the $4.85 billion   ment will exceed 90%. After the 95%
                                                                                           has set the first Bextra trial for May 5,
dollar settlement deal was the registra-    of Eligible Claimants enroll, the Settle-
                                                                                           2008. Pfizer is the company that manu-
tion of all Vioxx claims that were filed    ment Program will become effective,
                                                                                           factures both Bextra and Celebrex.
in court or tolled with Merck before        and Merck’s walk-away rights under
                                                                                           Bextra, a Cox-2 inhibitor, was not as
November 9, 2007. The registration          the Settlement Agreement will be
                                                                                           widely prescribed as Vioxx and Cele-
deadline expired on January 15, 2008,       extinguished.
                                                                                           brex, which are in the same class of
with over 58,000 claims having been            Following the enrollment stage, the
                                                                                           drugs. This is because Bextra was a
registered. This necessary step served      third step will be for claimants, or their
                                                                                           second generation Cox-2 inhibitor and
as a census so that the parties and         lawyers to submit medical records to
                                                                                           was not put on the market until 2002.
supervising courts could gain a better      the Claims Administrator, including hos-
                                                                                           Celebrex and Vioxx went on the
understanding of the total number of        pitalization records and pharmacy
                                                                                           market in 1999. Nonetheless, Bextra
Vioxx-related claims pending through-       records that prove that they suffered
                                                                                           was prescribed to millions of patients,
out the country.                            heart attack or stroke while using
                                                                                           and in 2004 exceeded $1.2 billion in
   The second step in effectuating the      Vioxx. The Claims Administrator will
                                                                                           prescription sales.
settlement is the enrollment of eligible    determine whether the claim passes
                                                                                             Similar to the manufacturer of Vioxx,
claims. Only previously filed and tolled    through the three gates necessary for
                                                                                           Pfizer had early signs that Bextra data
heart attack and stroke cases are eligi-    compensation—injury, duration of
                                                                                           showed a potential increase in cardio-
ble to enroll or participate in the         Vioxx usage, and proximity of usage.
                                                                                           vascular risks associated with Bextra.
Program. In order for the Settlement        The deadline for the submission of
                                                                                           Specifically, a Coronary Artery Bypass
Program to become effective, 85% of all     claims information or packages is July
                                                                                           Graft surgery study (CABG 1) in July,
eligible heart attack and stroke claims     1, 2008.Though the deadline is months
                                                                                           2000 showed an increased cardiovascu-
must be enrolled in the program.            away, several hundred claims packages
                                                                                           lar signal with Bextra in high risk
   Claimants, or lawyers on their           have already been submitted.
                                                                                           patients. A Pfizer clinician even com-
behalf, were required to enroll by Feb-        The Vioxx Settlement Program pro-
                                                                                           mented on the “Vioxx-like” safety
ruary 29, 2008, in order to participate     vides a very good resolution for those
                                                                                           profile of Bextra when compared to
in the Program and qualify for an           injured while taking the drug. We
                                                                                           Vioxx. After other studies indicated
interim payment. Enrollment is accom-       believe it’s is in the best interests of all
                                                                                           similar risk, the CABG 2 study com-
plished through the submission by a         of our clients and we have recom-
                                                                                           pleted in January 2004 echoed the
lawyer of an enrollment form as             mended that they participate.The set-
                                                                                           CABG 1 study, by showing a significant
well as a release and certain authoriza-    tlement was hard-won after more than
                                                                                           increased risk of heart attacks and
tions for each claimant. The Vioxx          5 years of strenuous litigation, includ-


                                            www.BeasleyAllen.com                                                                  19
strokes linked to Bextra. Only months        according to a report by The New York       FDA officials estimated U.S. makers of
after Merck removed Vioxx from the           Times.The U.S.Attorney’s office for the     the highest-risk products are exam-
market, on September 30, 2004, the           Eastern District of Pennsylvania is         ined, on average, every three years.
Food and Drug Administration (FDA)           investigating Zyprexa marketing.About       Domestic manufacturers of moderate-
requested that Pfizer remove Bextra          30 state attorneys general also have        risk devices get inspected every five
from the market because of the               subpoenaed documents detailing Lilly’s      years. Both are supposed to be looked
increased risk of heart attacks and          sales practices for Zyprexa as part of a    at every two years. It’s pretty scary
stroke, among other risks.                   civil investigation under state con-        when you consider that the FDA is
   The Bextra/Celebrex MDL court,            sumer protection laws. Lilly also faces     unable to do its job when it comes to
located in San Francisco, California, has    lawsuits from several states and some       protecting the public relating to
ordered limited discovery to be taken        third-party payers accusing it of pro-      health and safety issues.
in a group of 45 Bextra and Celebrex         moting the “off-label” use of Zyprexa       Source: Wall Street Journal
MDL cases. From this group of cases,         for treatments not approved by the U.S.
the presiding MDL judge has recently         Food and Drug Administration.
announced that he wanted the parties            For example, a complaint filed in        FDA LETS DRUG COMPANIES OFF THE
to have several Bextra cases ready for       Utah accuses Lilly of pushing doctors       HOOK
trial on May 5, 2008. The court only         to prescribe it for conditions like            The Food and Drug Administration
plans to try one case at a time, but         Alzheimer’s and dementia and depres-        issued a proposed rule recently that
wants several Bextra cases ready in the      sion. Doctors are free to prescribe         directly      contradicts      Congress’
event that any case set first is resolved    drugs for uses not approved by the          expressed intent when it passed the
before the first trial date. The MDL         FDA, but pharmaceutical companies           Food and Drug Administration Amend-
court’s commitment to allow these            are prohibited by law from marketing        ments Act of 2007 (FDAAA), an act
cases to go to trial will help determine     drugs for non FDA-approved uses.The         which encompasses the Prescription
the value and ultimate resolution of         latest complaint was filed by the share-    Drug and User Fee Act. If the pro-
these cases. Navan Ward and Frank            holders in U.S. District Court for the      posed rule becomes final, drug compa-
Woodson from our firm are actively           Southern District of Indiana.               nies will enjoy more relaxed labeling
involved in this litigation and have         Source: Associated Press
                                                                                         requirements and will surely use the
done outstanding work.                                                                   rule to claim immunity for failing to
Source:
                                                                                         warn patients of potential drug
                                             THE FDA DOES A POOR JOB OF
                                             REGULATING                                  hazards. When Congress passed the
                                                                                         FDAAA, it included language confirm-
SHAREHOLDERS SUE LILLY OVER ZYPREXA
                                               The Food and Drug Administration          ing the responsibility of the drug manu-
   Two shareholders have sued Eli Lilly      simply can’t keep up with require-          facturer to promptly update its drug
and Co. accusing Lilly executives and        ments to inspect domestic makers of         label when they become aware of new
directors of recklessly disregarding         medical devices to assure manufactur-       safety information. Congress was clear
risks posed by illegal drug marketing        ing quality. In fact, the agency rarely     that it intended to keep the burden
tactics. This is the latest in a string of   examines foreign facilities, according to   squarely on the drug companies to
challenges over Zyprexa, which has           congressional investigators. In testi-      update warning labels.
generated billions of dollars—and lots       mony delivered before a House Energy           Nevertheless, the FDA has promul-
of lawsuits—for Lilly. The drug maker        and Commerce subcommittee, the              gated this new rule against Congress’
has settled thousands of patient law-        Government Accountability Office told       expressed wishes. Congress explicitly
suits over the drug, an anti-psychotic       lawmakers that it found “weaknesses”        stated that it did not intend to ease the
approved to treat schizophrenia, acute       in the agency’s oversight of an industry    requirements on drug companies to
mania, and bipolar disorder.These set-       that makes products ranging from            inform consumers of potential drug
tlements have cost Lilly more than $1        contact lenses to defibrillators.           hazards. It reiterated the need for drug
billion. The company failed to warn            According to FDA officials’ own esti-     companies to change its label if the
about the potential for diabetes or          mates, overseas makers of the riskiest      drug company learns of reasonable evi-
weight gain associated with the drug,        products, such as pacemakers, were          dence of that risk. In fact, the drug
and that is a claim in most of the law-      examined only every six years, and          companies fought and lobbied hard to
suits.                                       moderate-risk device manufacturers          include language to loosen warning
   Lilly also could pay more than $1         on average went an estimated 27 years       label obligations that the Congress
billion to state and federal governments     between FDA inspections. The                specifically left out of the final bill.
resulting from a separate investigation,     medical-device testimony was that           But because the drug companies could-



20                                           www.BeasleyAllen.com
n’t get Congress to agree to lessen their   summers at the warehouse. The three         pneumonia. An analysis by Public
responsibilities towards consumers,         men wore the same work clothes for          Citizen of FDA data found that the
they turned to a political ally, the Bush   several days bringing home cancer-          makers of the drugs had reported 180
Administration.                             causing fibers every day from work,         U.S. cases of people developing
   Unfortunately, the FDA’s tactics are     unknowingly letting the microscopic         serious conditions after receiving
not new to Bush Administration              fibers fragments waft throughout their      injections, including 16 deaths.
bureaucrats. Unelected federal agen-        home and settle.The jury found against         The FDA could—and should—do
cies have been ignoring congressional       Asbestos Corp. Ltd. of Canada, which        much more than send out a press
directives in a number of other cases.      provided material for GM brakes, and        release about their concerns. Every
The Environmental Protection Agency,        BorgWarner Inc. of Michigan, which          doctor who is injecting botulinum
National Highway Traffic Safety Admin-      made clutches. Moshe Maimon repre-          toxin needs to know about the dangers
istration, Consumer Product Safety          sented the plaintiff in this case and did   of the toxin spreading to other parts of
Commission, and others are also engag-      a very good job.                            the body.The only way this is going to
ing in this tactic of Bureaucratic                                                      happen is by requiring the makers of
Activism.This system of backdoor tort                                                   the drug to send warning letters to all
reform is being pushed by none other        VERDICT RETURNED IN ASBESTOS CASE           doctors who use Botox and Myoboloc.
than the President, the Vice-President,                                                 Every patient needs to know about
                                              A jury in Baltimore, Maryland, has
and the infamous Karl Rove, who is the                                                  these risks, and the only way this is
                                            ordered a sealant company to pay a 73-
real brain behind the Administration’s                                                  going to happen is if doctors are
                                            year-old man $15.3 million after deter-
push to protect corporate wrongdoing.                                                   required to hand patients a written
                                            mining that he developed mesothelioma
   Congress must take action to safe-                                                   warning every time they receive an
                                            from exposure to asbestos-containing
guard Congressional prerogatives and                                                    injection.
                                            products made by the company.
protect the public. Let your member                                                        It’s not enough that the FDA publicly
                                            George J. Linkus worked at Key
of Congress hear from you on this                                                       acknowledges the risks of using botu-
                                            Highway Shipyard from 1952 to 1959.
issue. They must be made to under-                                                      linum toxin. In fact, the agency did this
                                            In 1954, Mr. Linkus moved to the
stand that this issue matters to folks                                                  much in a published article three years
                                            machine shop and worked on lining
who are victims of corporate wrongdo-                                                   ago. The FDA must immediately force
                                            valves using rope made by the defen-
ing.We must put an end to this unjust                                                   the drug makers to send out warning
                                            dant, John Crane Inc. The jury found
form of backdoor tort reform.The FDA                                                    letters to doctors, similar to what drug
                                            that the rope used by Linkus contained
is letting drug companies off the hook                                                  regulatory agencies in Europe already
                                            asbestos.As you know, mesothelioma is
and ignoring Congressional intent, and                                                  require.The FDA also should label the
                                            a cancer directly linked to asbestos.The
it’s up to us to teach our elected offi-                                                products with a “black box” warning,
                                            verdict came after a three-week trial.
cials the truth. If they get away with                                                  the strongest warning the agency can
                                            David L. Palmer of Baltimore, Maryland
the FDA preemption, you can rest                                                        make and require doctors to hand out
                                            represented the plaintiff and did a very
assured the concept will be carried to                                                  medication guides to patients, warning
                                            good job.
other regulatory agencies.                                                              them of the early symptoms of an
                                            Source: Baltimore Sun
Source: Action Network                                                                  adverse reaction. The FDA needs to
                                                                                        move quickly to educate physicians
                                            FDA’S BOTOX WARNING FALLS SHORT             and patients. Nobody should be dying
NEW JERSEY JURY AWARDS $30.3 MILLION                                                    from injected botulinum toxin, and the
TO FAMILY IN ASBESTOS DEATH                   The Food and Drug Administration          FDA should do its job.
                                            (FDA) reported that botulinum toxin,        Source: Public Citizen
   The family of a man who died from
                                            available as Botox and Myoboloc, has
an asbestos-related cancer was awarded
                                            been linked to adverse reactions,
$30.3 million by a New Jersey jury last
                                            including respiratory failure and death.    CVS CAREMARK CORP. REACHES
month.The award is believed to be the                                                   SETTLEMENT
                                            Public Citizen has petitioned the FDA
largest in New Jersey for mesothe-
                                            to immediately increase its warnings
lioma, an aggressive lung cancer. The                                                     CVS Caremark Corp. has agreed to
                                            about the serious risks of using Botox
disease killed 50-year-old Mark Buttitta                                                pay $38.5 million to 28 states to settle
                                            and Myoboloc. Adverse reactions can
in 2002. He had handled auto parts                                                      charges that Caremark duped doctors
                                            include paralysis of the respiratory
containing asbestos while working                                                       into switching drug brands for their
                                            muscles and difficulty swallowing (dys-
summers at giant GM warehouses in                                                       patients by promising that switching
                                            phagia), a condition that can allow
New Jersey. Buttitta’s father had                                                       would save the patients or their health
                                            food or liquid to enter the respiratory
worked there. His brother also spent                                                    plans money. Caremark Rx LLC and
                                            tract and lungs, causing aspiration


                                            www.BeasleyAllen.com                                                              21
two of its subsidiaries got rebates from     me nowadays.This politically powerful        JUDGE REDUCES $134 MILLION JUDGMENT
drug manufacturers, but kept the             industry has pretty well ignored the         IN WYETH CASE
money themselves. Caremark has set           law and does as it pleases.
aside $2.5 million more to reimburse         Source: Associated Press
                                                                                            The $134 million jury award to three
patients who required extra tests or                                                      Nevada women who were injured by a
monitoring when their cholesterol-con-                                                    drug made by Wyeth that caused their
trolling drugs were switched at Care-        JUDGE INCREASES DAMAGES IN STENT             breast cancer has been reduced. Judge
mark’s behest.                               PATENT CASE TO $501 MILLION                  Robert Perry, who presided over the
  Caremark LLC and CaremarkPCS (for-                                                      case, granted the drug maker’s motion
                                                A patent verdict against Boston Sci-      to reduce the jury’s award. Judge Perry
merly AdvancePCS) operate a mail-            entific Corp. has been increased to
order pharmacy service and administer                                                     reduced the Plaintiffs’ verdict to just
                                             $501 million after a judge tacked on an      under $60 million in total damages.The
pharmacy benefits for companies and          additional $69 million in interest. U.S.
organizations that include drug cover-                                                    judge reduced each of the three
                                             District Judge T. John Ward ruled to         women’s past and future damages to
age in their health insurance plans.The      expand the damages award, decided by
settlement prohibits the company from                                                     $7.2 million; $7.5 million and $7.9
                                             a federal jury in Marshall, Texas, to        million and reduced the punitive
soliciting drug switches when:               cover interest on royalties dating to the    damages to $10 million, $12 million
• The net cost of the proposed drug is       medical device maker’s 2004 U.S.             and $13 million. Wyeth had argued
  greater than the net cost of the one       launch of drug-coated heart stents. As       that the original awards were excessive
  originally prescribed.                     you know, heart stents are tiny, mesh-       and motivated by “passion and preju-
                                             wire tubes that prop open coronary           dice.” In agreeing with Wyeth, Judge
• The cost to the patient will be            arteries after they have been surgically     Perry noted:
  greater.                                   cleared of fatty plaque. Jurors awarded
                                             $432 million to Dr. Bruce Saffran, who         The Court is mindful of the fact
• The originally prescribed drug has a
                                             argued the stents violated his 1997            that the jury found that Defen-
  generic equivalent and the proposed
                                             patent covering technology to deliver          dant’s conduct was the legal cause
  drug doesn’t.
                                             medication within the body to heal             of Plaintiffs having gotten cancer
• The patient was switched from a            injuries.                                      and that cancer is a terrifying and
  similar drug in the last two years.           Boston Scientific and a unit of             devastating illness. Further, there is
                                             Johnson & Johnson dominate the                 no doubt that the loss, or surgical
• If patients are to be switched, the set-                                                  alteration, of a woman’s breast
                                             market for newer-model stents coated
  tlement, which must be approved by                                                        has serious and life-long physical
                                             with drugs released to prevent post-sur-
  the court, requires Caremark, among                                                       and emotional consequences, as
                                             gical scar tissue from creating new
  other things, to:                                                                         does the possible recurrence of
                                             blockages. Dr. Saffran, a radiologist from
• Inform doctors and patients about          Princeton, New Jersey, filed a similar         cancer, however unlikely it may
  the effect a drug switch will have on      patent challenge against Johnson &             be. Who would volunteer to suffer
  a patient’s co-pay.                        Johnson over its Cypher stent.That case        these consequences for any sum of
                                             is pending in Judge Ward’s court, in east      money?
• Reimburse patients for out-of-pocket       Texas.
  expenses (like testing) related to the                                                    As to punitive damages, the judge
                                                Dr. Saffran’s award involving Boston
  switch.                                                                                   wrote
                                             Scientific covers only past royalties.The
• Allow patients to decline a drug           judge also ordered that the question of        There was substantial evidence
  switch.                                    future royalties be split into a separate      from which the jury could con-
                                             case after the doctor files a new com-         clude that Wyeth knew that its
• Tell doctors whether Caremark is           plaint covering that issue. Judge Ward         product could cause breast cancer,
  getting financial incentives for the       ordered Boston Scientific to file quar-        that it intentionally failed to
  switch.                                    terly reports with the court on sales of       conduct adequate studies, that it
• To refrain from restocking and             its top-selling product, the Taxus             financed and manipulated scien-
  reshipping returned drugs unless it is     Express stent, and the next-generation         tific studies, and sponsored articles
  lawfully allowed to do so.                 Taxus Liberte.                                 in professional and scientific jour-
                                             Source: Associated Press                       nals that deliberately minimized
  There is so much fraud and abuse                                                          the risk of cancer while over-pro-
involving the pharmaceutical industry                                                       moting certain benefits and citing
that nothing that is reported surprises                                                     others which it knew to be unsub-



22                                           www.BeasleyAllen.com
  stantiated”… The jury could justifi-         This issue went the printer before           The plaintiffs successfully argued
  ably find a significant degree of          the same jury in Little Rock heard evi-     that these communications could com-
  reprehensibility in defendant’s            dence on March 3rd on whether Wyeth         promise the doctor-patient relationship
  actions..                                  and Upjohn should pay punitive              and result in certain medical informa-
                                             damages in the case. Wyeth has lost         tion being disclosed that would not be
   We don’t fault Judge Perry for reduc-
                                             four of seven trials over its hormone-      relevant to the litigation. The Court
ing the jury’s award. In fact, those of us
                                             replacement medicines, Premarin and         stated further:
who try this type lawsuit applaud
                                             Prempro, since the cases began going
Judge Perry for highlighting Wyeth’s                                                        Judge Fallon ultimately con-
                                             to trial in 2006.Wyeth won two earlier
reprehensible conduct in his Order.                                                         cluded that ‘the just option…is to
                                             cases brought against it in federal court
Who could fault a jury for developing a                                                     protect the relationship between a
                                             in Little Rock and was cleared by a
little passion or prejudice after learning                                                  doctor and patient by restricting
                                             state court jury in Philadelphia. The
what Wyeth did to millions of women                                                         defendants from conducting ex
                                             company faces about 5,300 lawsuits
in order to improve its financial bottom                                                    parte communications with
                                             over the hormone-replacement drugs,
line? Judge Perry has demonstrated                                                          plaintiffs’ treating physicians but
                                             which are still on the market.
once again that our justice system func-                                                    allowing plaintiffs’ counsel to
                                             Source: Bloomberg
tions very well.                                                                            engage in ex parte interviews
   The reduced judgment remains the                                                         with those doctors who have not
largest personal injury award in Nevada      BARD COMPOSIX KUGEL MESH PATCH                 been named as defendants.
history, and it’s the largest award to       UPDATE
                                                                                            According to the defendants, Davol
date against the Madison, New Jersey-
                                                As we have previously reported, a        and C.R. Bard, approximately 180
based company, which faces about
                                             number of Bard Composix Kugel Mesh          federal cases and 60 state court cases
5,300 similar lawsuits across the
                                             Patches used to repair hernias have         have been filed to date. The federal
country in state and federal courts.All
                                             been recalled. Our firm has recently        cases have been consolidated into mul-
the cases involve the drugs Premarin,
                                             filed suit on behalf of several clients     tidistrict litigation in Rhode Island. Our
an estrogen replacement, and Prempro,
                                             who received one of these hernia            firm continues to investigate and file
a combination of estrogen and prog-
                                             patches and as a result suffered serious    claims involving the Bard Composix
estin. The drugs are prescribed to
                                             harm.These injuries include bowel per-      Kugel Mesh Patch. If you need addi-
women to ease menopause symptoms.
                                             forations, infection and major intestinal   tional information concerning these
Ted Meadows and Russ Abney from our
                                             problems requiring extensive hospital-      claims, contact Chad Cook at 334-269-
firm are actively involved in the prose-
                                             ization, which can ultimately lead to       2343 or 800-898-2034.
cution of HRT cases throughout the
                                             death.                                      Source: Portfolio Media, Inc.
country.
Source: Forbes                                  In a new development in the litiga-
                                             tion, U.S. Magistrate Judge Lincoln
                                                                                         STUDY FINDS DEATH RISK FROM ANEMIA
                                             Almond recently denied the defen-
                                                                                         DRUGS
WYETH AND PFIZER ORDERED TO PAY              dants’ motion to conduct ex parte com-
$2.75 MILLION OVER DRUGS                     munications with the plaintiff’s treating      A new study released last month
                                             physicians. In other words, the defen-      revealed that widely-used anemia drugs
   Just after completing the report on
                                             dants were denied permission to speak       sold by Amgen and Johnson & Johnson
the Nevada case, another development
                                             with the treating doctors outside the       raise the risk of death among cancer
occurred relating to the HRT cases. A
                                             presence of the plaintiff and/or their      patients by about 10%.The new analy-
federal court jury in Arizona found
                                             attorneys. Judge Almond, citing an          sis of previous clinical trials was the
Wyeth and a Pfizer Inc. unit caused an
                                             earlier decision from the Vioxx litiga-     basis for the report. The study is the
Arkansas woman’s breast cancer and
                                             tion in his ruling, stated:                 first compilation of clinical trial data,
awarded $2.75 million in compensa-
                                                                                         called a meta-analysis, to show a statisti-
tory damages.This was the companies’           Balancing all of the competing
                                                                                         cally significant increase in the risk of
first loss in federal court. The jurors        factors and guided by Judge
                                                                                         death from the drugs. Dr. Charles L.
found the combination of Wyeth’s Pre-          Fallon’s practical resolution of
                                                                                         Bennett, a professor at Northwestern
marin and Pharmacia & Upjohn’s                 this issue in the Vioxx litigation, I
                                                                                         University, was the study’s lead author.
Provera menopause drugs helped                 conclude that the better course at
                                                                                         The Food and Drug Administration is
cause Donna Scroggin’s cancer. The             this point is to deny defendants’
                                                                                         planning to convene an advisory com-
former factory worker had a double             motion seeking ex parte contacts
                                                                                         mittee this month to discuss whether
mastectomy after taking hormone-               with plaintiff’s treating physi-
                                                                                         to impose further restrictions on the
replacement drugs for about 10 years.          cians.


                                             www.BeasleyAllen.com                                                                23
use of the drugs,Aranesp from Amgen        accepted fraudulent, unsigned checks         rejected.” As a side note, I wonder
and Procrit from Johnson & Johnson,        that withdrew funds from the accounts        they Wachovia didn’t elect to use
with cancer patients.The Amgen drug        of victims, often elderly. Wachovia          arbitration rather than burden the
Epogen, is the same as Procrit, but it’s   would then forward those checks to           court system with a lawsuit.
aimed at kidney dialysis patients.Appar-   other banks that were unaware of the         Source: Bloomberg
ently, this drug will not be directly      frauds, which in turn sent money to the
affected by the discussions.The study      swindlers. Wachovia contends that it
will be published in the Journal of the    has taken aggressive steps to correct        X.
American Medical Association.              the processes related to this situation.A
                                                                                        INSURANCE AND
Source: New York Times                     spokeswoman for Wachovia stated that
                                           the bank was not currently working           FINANCE UPDATE
                                           with any telemarketers, would review
IX.                                        any future clients who do work with
                                                                                        PATIENT WHOSE INSURANCE COVERAGE WAS
                                           telemarketers, and would reject any
BUSINESS                                                                                CUT OFF WILL RECEIVE $9 MILLION
                                           client focused solely on telemarketing.
LITIGATION                                 It will be interesting to follow this case     When you think you have heard the
                                           and see how things develop.                  worst of the continuing horror stories
                                           Source: New York Times                       coming out of the insurance industry
DOCUMENTS PROVE WACHOVIA AWARE OF
THEFTS                                                                                  in dealing with policyholders, some-
                                                                                        thing else happens that further shakes
   A lawsuit was filed almost a year ago   WACHOVIA SUES PROVIDENCE OVER BUYOUT         your confidence in the industry.
alleging Wachovia bank of allowing         OF TV STATIONS                               Recently, a woman who had her
fraudulent telemarketers to use the           On another front, Wachovia Corp.          medical coverage canceled as she was
bank’s accounts to literally steal mil-    has filed a lawsuit against Providence       undergoing treatment for breast cancer
lions of dollars from unsuspecting         Equity Partners trying to get out of         has been awarded more than $9 million
victims. Bank executives have main-        providing financing for the buyout           in a lawsuit filed against one of Califor-
tained that they were unaware of the       firm’s revised $1.1 billion purchase of      nia’s largest health insurers. The 52-
thefts, but recently released documents    television stations from Clear Channel       year-old plaintiff had been left with
in the lawsuit prove that Wachovia had     Communications Inc. Wachovia, the            more than $129,000 in unpaid medical
known about the allegations of fraud       fourth-largest U.S. bank, claims Provi-      bills when Health Net Inc. canceled her
for quite a while. Those same docu-        dence officials changed the terms of         policy in 2004. An arbitration judge
ments also show that Wachovia contin-      the accord without consent from the          ordered Health Net to repay that
ued to provide banking services to         bank and voided the agreement. The           amount and awarded $8.4 million in
several companies that helped steal at     lawsuit was filed in state court in          punitive damages and $750,000 for
least $400 million from unsuspecting       North Carolina last month. Providence        emotional distress.The judge wrote in
victims even after being alerted by        and two of its investment banks,             his opinion:
other banks and federal agencies on        Goldman Sachs Group Inc. and UBS               It’s hard to imagine a situation
the ongoing deceptions.                    AG, reportedly has agreed to drop the          more trying than the one Bates
   In spite of this,Wachovia continued     price from $1.2 billion for the Clear          has had to endure. The rug was
to process fraudulent transactions for     Channel unit.                                  pulled out from underneath, and
the accounts, partially because               The lawsuit was filed against Provi-        that occurred at a time when she
Wachovia would charge fraud artists a      dence and its Newport Television LLC           is diagnosed with breast cancer,
large fee every time a victim spotted a    unit. San Antonio, Texas, based Clear          one of the leading causes of death
phony transaction and demanded their       Channel, the largest U.S. broadcaster,         for women.
money back. According to investiga-        has been in talks with Providence
tors, Wachovia was paid about $1.5         about changing the terms of the sale           The city of Los Angeles has also sued
million alone from one company in less     of the 56 TV stations, located in cities     Health Net, claiming it illegally can-
than a year. Lawyers pursing the Penn-     such as Memphis, Tennessee, and              celed the coverage of about 1,600
sylvania federal court based lawsuit       Syracuse, New York. Wachovia claims          patients.The company illegally ran an
against Wachovia have asked a judge to     “Providence renegotiated key terms           incentive program in which it paid
declare the case a class action.A ruling   of its deal with Clear Channel, but          bonuses to an administrator for
by the judge on the class action request   then demanded that the lenders be            meeting targets of policy cancelations.
is expected by this summer.                held to the terms of the deal it had         Health Net acknowledged that such a
   The lawsuit claims that Wachovia                                                     program existed in 2002 and 2003 but


24                                         www.BeasleyAllen.com
was subsequently halted.Tying bonuses       Management, posted outstanding               information, call either of them at 334-
to the number of health insurance poli-     results then two separate but related        269-2343 or 800-898-2034.
cies cancelled is about as close to crim-   factors crushed Kelsoe’s funds.
inal as it gets. The plaintiff had been        First, reaching for yield, Kilsoe allo-
insured with another company but was        cated a large chunk of his funds to          JURY RETURNS VERDICT AGAINST MET LIFE
persuaded to switch over to a Health        exotic and illiquid asset-backed securi-
                                                                                            A jury in Pennsylvania has returned a
Net policy after an agent suggested she     ties (and relatively little to standard
                                                                                         $285,000 verdict in a civil case against
could save money. She had undergone         high-yield corporate bonds) that have
                                                                                         Metropolitan Life Insurance Co. and
surgery to remove a tumor and had           been devastated by the upheaval in
                                                                                         one of its former sales representatives.
received her first two chemotherapy         credit markets this year. For example, as
                                                                                         The plaintiff, a 65-year-old woman, told
treatments when doctors stopped             of June 30, 2007, 45% of Intermediate
                                                                                         the jury that then-Met Life representa-
treating her because her bills were         Bond’s assets were invested in collater-
                                                                                         tive misappropriated money the plain-
going unpaid.The plaintiff completed        alized debt obligations and home-
                                                                                         tiff had given the agent to invest in
her cancer treatment through a state-       equity loans. He also stuffed his
                                                                                         various financial products with Met
funded program. Health Net has said it      portfolios with airline leasing obliga-
                                                                                         Life.The agent was accused of taking a
will review its practices and the way its   tions, which suddenly have been buf-
                                                                                         total of $40,000 from the plaintiff and
brokers and agents are trained.             feted by market turbulence this year.As
                                                                                         paying her back $15,000 to make it
Source: Associated Press                    a result, the values of his funds’ assets
                                                                                         appear that her money was invested
                                            plunged. Second, and equally devastat-
                                                                                         with Met Life. The jury awarded
                                            ing, was the rising tide of shareholder
REGIONS AND MORGAN KEEGAN                                                                $112,000 in compensatory damages
                                            redemptions, which forced Kelsoe to
INVESTMENTS SINK LIKE A ROCK IN   A POND                                                 and $175,000 in punitive damages.The
                                            sell illiquid assets (investments that are
                                                                                         case was one of 250 filed against Met
   For years, bond funds run by Morgan      not readily marketable) at the worst
                                                                                         Life locally in the 1990s, all of which
Keegan’s Jim Kelsoe soared. Unfortu-        possible time. In both July and August,
                                                                                         have been settled except this claim and
nately Kelsoe’s high-flying strategy        for instance, shareholders yanked more
                                                                                         one other by a different client.
finally caught up with him. Kelsoe’s        than $100 million out of High Income,
                                                                                         Source: Pittsburgh Post-Gazette
losses just as of the end of 2007 have      which at last word held $291 million in
been stunning. The two open-ended           assets. There are only a handful of
funds Regions Morgan Keegan                 trading desks in the country that            CLASS CERTIFIED IN OHIO CASE AGAINST
Select High Income and Regions              handle airline lease-related securities.     TITLE INSURANCE FIRM
Morgan Keegan Select Intermedi-             That’s why it’s clear that illiquid assets
                                            such as these are ill-suited to open-end        A federal judge in Toledo, Ohio has
ate Bond have each lost more than
                                            funds, which are subject to abrupt and       granted class action status in a lawsuit
half their value. Results of four closed-
                                            mass redemptions.                            that could result in refunds for tens of
end Morgan Keegan fixed-income
                                               The Morgan Keegan disaster is a           thousands of Ohio homeowners who
funds—Regions Morgan Keegan Multi-
                                            reminder that investors need to under-       may have been overcharged for title
Sector High Income, Regions Morgan
                                            take a bit more investigation than usual     insurance. Fidelity National Title Insur-
Keegan Strategic Income, Regions
                                            when they contemplate buying into a          ance Co. is among the nation’s largest
Morgan Keegan High Income Fund, and
                                            bond fund that has delivered abnor-          issuers of policies to protect buyers
Regions Morgan Keegan Advantage
                                            mally high returns.That requires some        and lenders from hidden liens and
Income, all managed by Kelsoe—have
                                            understanding of the assets the fund         other deed problems. In his opinion
been even worse.
                                            holds. In general, you shouldn’t invest      U.S. District Judge James Carr wrote:
   Multiple arbitrations are being filed
by institutional and private investors      in something that you don’t under-             The interests of fairness, efficiency,
alike. In particular, an Indiana charity    stand.We believe that Morgan Keegan’s          and judicial economy are all best
has filed an arbitration complaint          failure to disclose material facts relat-      served by a class action. Certifica-
against Morgan Keegan for alleged mis-      ing to the nature of the risk and the          tion in this case is important
representation of risk of the Regions       illiquidity of certain securities in           because each individual class
MK Select Intermediate Bond fund,           which the Funds invested lead                  member’s claim may be small,
which, on the surface, seems to be a        investors to believe these funds were          resulting in a diminished incen-
plain vanilla, low-risk bond fund. For a    much safer investments. Roman Shaul            tive to sue to enforce his or her
while, Kelsoe, the chief fixed income       and Scarlette Tuley from our firm are          rights.
investment officer of the Memphis,Ten-      representing a number of individuals
                                            and institutions that have been harmed         The suit was filed early 2006 on
nessee-based brokerage’s Morgan Asset
                                            by these investments. If you need more       behalf of Jerry and Dianne Randleman


                                            www.BeasleyAllen.com                                                                25
who alleged that Fidelity failed to give     purchase of valid healthcare receiv-         XI.
them and other customers posted dis-         ables. But, National Century diverted
                                                                                          PREDATORY
counts on policies issued in mortgage        substantial amounts of the money for
refinancing transactions that took           other uses. The company’s collapse is        LENDING
place within 10 years of the original        one of the largest defaults of “AAA”
home purchase. Typical discounts at          rated debts securities in decades. Credit
                                                                                          PREDATORY LENDERS ARE A PRETTY
Fidelity were supposed to be $100 to         Suisse marketed $3 billion of National       SLEAZY BUNCH
$250 a customer. If they win their           Century’s asset-backed securities.
case, up to 94,000 homeowners who               Judge James Graham, who presided             Several years ago, the predatory
bought policies from Fidelity since          over the case, sits on the United States     lenders began to come under attack
February. 15, 2000, could be affected.       District Court for the Southern District     and with justification.The first groups
Members of the class probably will           of Ohio. His ruling is highly significant    to be targeted were payday lenders and
most likely be notified by mail. They        for purchasers of asset-backed notes,        subprime lenders in the automobile
are required to do nothing to partici-       and is particularly interesting in the       lending primarily. More recently, the
pate in the case. But if they choose to      wake of the subprime loan crisis.            practices of mortgage lenders have
attempt to file their own separate           Credit Suisse argued that disclaimers        come under increased scrutiny. Some
suits, they must formally “opt out” of       included in the offering memorandum          of the lenders were misrepresenting
the case. Fidelity Title is part of          required the dismissal of Plaintiffs’        the terms of loans, making loans
Fidelity National Financial Inc., a          fraud claims, an argument that the           without regard to consumers’ ability to
Fortune 500 company based in Jack-           court categorically denied.The opinion       repay, making loans with deceptive
sonville, Florida. Mark Koberna, a           held that Suisse’s disclaimer stating that   “teaser” rates that later ballooned astro-
Cleveland, Ohio lawyer, represents           it had done no independent investiga-        nomically, packing loans with undis-
the plaintiffs.                              tion of its own “would seem beyond           closed charges and fees, or even paying
Source: Toledo Blade                         credulity,” particularly to investors who    illegal kickbacks.These and other ques-
                                             knew that Credit Suisse “had helped          tionable practices were having a devas-
                                             devise the note programs and helped          tating effect on home buyers. The
CREDIT SUISSE CANNOT ESCAPE LIABILITY        draft the offering materials.”               widespread nature of these practices,
BY USING ´BOILERPLATE DISCLAIMER’               The court noted that “it would defeat     which were largely unregulated and
   Recently, the United States District      the securities laws if parties could         unchecked ,are now threatening the
Court for the Southern District of Ohio      escape liability for their own deliberate    financial markets worldwide. Even
denied motions to dismiss over $1.6          misrepresentations by including boiler-      though predatory lending was becom-
billion in claims filed against Credit       plate disclaimers into offering materi-      ing a national problem, the Bush
Suisse First Boston (Credit Suisse) by       als.” A boilerplate disclaimer is a          Administration looked the other way
investors who formerly held “AAA”            standard provision in a contract, form,      and did absolutely nothing to protect
rated notes issued by now-defunct            or legal pleading that is apparently         American homeowners. In fact, the gov-
National Century Financial Enterprises       routine and often preprinted. Nearly         ernment chose instead to align itself
of Columbus, Ohio (National Century).        every sector of the investment market        with the banks that were victimizing
As you may know, the “AAA” rating is         was affected by this fraud. Plaintiffs       consumers.That has been the hallmark
the highest rating this type of invest-      include major banks, mutual funds, and       of this President and his buddies.
ment can hold.                               insurance companies, along with the             It’s very clear that the practice of
   Plaintiffs filed this lawsuit after       State of Arizona and a number of             predatory lenders has caused a national
National Century, a company that secu-       Arizona government entities. In total,       crisis.The void left by the federal gov-
ritized healthcare receivables, collapsed    these plaintiffs held over $1.6 billion in   ernment’s inaction the burden of
in late 2002.As has occurred in similar      National Century notes.                      dealing with the predatory lenders on
cases, several of National Century’s offi-   Source: PR Newswire                          the backs of state attorneys general of
cers and employees have pled guilty to                                                    both parties and trial lawyers.The sub-
fraud or other federal crimes. Mean-                                                      prime lenders that were engaged in
while the company’s president, Lance                                                      predatory lending practices have
Poulsen, and other top officers await                                                     turned out to be a real sleazy bunch.
trial in Ohio.The complaints and crimi-                                                   Sadly, they aren’t all payday lenders.
nal indictments allege that National                                                      Banks and other financial institutions
Century raised billions of dollars that                                                   let greed get them into deep water
were supposed to be invested only by                                                      without any obvious way to get out.
                                                                                          Hundreds of thousands of homeown-


26                                           www.BeasleyAllen.com
ers are now facing foreclosure, and our     part. Taking advantage of elderly and          mortgages who’ve seen their
financial markets are reeling. Not only     disabled folks is about as sorry and           monthly payments skyrocket beyond
did the Bush Administration do nothing      lowdown as it gets.                            their means.
to protect consumers, it embarked on          What these payday lenders is doing
                                                                                         • Colorado is considering a law that
an aggressive and unprecedented cam-        should be illegal. Unscrupulous lenders
                                                                                           would make it a criminal offense for
paign to prevent states from protecting     should not be allowed to get their
                                                                                           appraisers to falsely inflate the value
their residents from the very problems      hands on the benefits of some of the
                                                                                           of homes in mortgage proceedings.
to which the federal government was         most vulnerable members of our
turning a blind eye in order to protect     society. But so far, the Alabama Legisla-    • Legislation is under consideration in
the Administrator’s corporate patrons.      ture has not shown much interest in            Indiana that would create free con-
This is another sad chapter in the          stopping these predators. In fact, every-      sumer counseling for homeowners
legacy that will be left by George W.       thing done in past sessions has been to        facing mortgage problems.
Bush, Dick Cheney, and Karl Rove.           protect the industry.The law passed in
Source: USA Today                           2003 actually legitimized the payday         • At least four states have set up task
                                            loan industry, which was on the verge          forces to study foreclosures and rec-
                                            of being shut down for charging inter-         ommend solutions.
THE PAYDAY LENDERS REACH A NEW LOW          est rates higher than allowed under the      • At least a dozen states have enacted
                                            state’s Small Loan Act. Currently, under       laws designed to crack down on
   It has been reported that some
                                            that law, payday lenders can charge a          fraud by so-called “foreclosure con-
payday lenders are capitalizing on a
                                            455% annual percentage rate on loans.          sultants” who claim to help home-
new line of business involving people
                                            The people of Alabama should demand            owners in trouble.
getting Social Security or other govern-
                                            that their legislators clamp down on
ment checks.The payday loan industry                                                       The instances of fraud by so-called
                                            the payday lenders operating in
realized in recent years it needed to try                                                mortgage consultants who promise to
                                            Alabama.
and change its sleazy image. It went on                                                  save homes from foreclosure have
                                            Source: Birmingham News
the offensive and started a full-fledged                                                 grown along with foreclosure rates.
public relations campaign. This cam-                                                     New York is one of a dozen states,
paign was designed to counteract            STATES FIGHT BACK AGAINST FORECLOSURE        including California, Colorado, Florida,
media stories about desperate people        FRAUD                                        Georgia, Illinois and Michigan, enacting
who got payday loans, were charged                                                       laws that put limits on mortgage con-
usurious interest rates, and ended up in       Some states are taking action to
                                                                                         sultants. Foreclosure rescue fraud has
even worse shape. Payday lenders            combat soaring foreclosure rates.Their
                                                                                         become a big problem across the
created a Council for Fair Lending.They     goal is to protect homeowners from a
                                                                                         United States. In some parts of the
even had a code of ethics in an attempt     new crop of scam artists who claim
                                                                                         country, whole neighborhoods are
to show how they were dedicated to          they will “rescue” borrowers. At the
                                                                                         affected, according to Carolyn Carter, a
running their businesses in a responsi-     same time, some states are creating
                                                                                         lawyer with the National Consumer
ble and trustworthy way.A recent story      funds that could provide affordable
                                                                                         Law Center in Boston.
by The Wall Street Journal pretty well      fixed-rate mortgages to those on the
                                                                                         Source: MSN.com
shot down the payday lenders’ public        precipice of losing their homes. The
relations efforts. The story told of the    stakes are high: As many as 130,000
latest twist in payday loans, involving     American homeowners, the most in 30          FEDERAL PROSECUTORS LOOK AT MERRILL
people who get Social Security or other     years, are going into foreclosure each       LYNCH
government checks.The story featured        month. Some elected officials are
Alabama payday lenders and Alabami-         calling for federal legislation to prevent     According to a report in the Wall
ans who signed away their future bene-      predatory lending and asking lenders         Street Journal federal prosecutors have
fits to get cash in a hurry.                to voluntarily hold off on raising mort-     asked the Securities and Exchange
   Although the elderly and disabled        gage rates for those most in trouble.        Commission (SEC) for information
can’t send their government checks          The following are some of the ways           gathered from an investigation of
directly to the lenders, they can have      states are trying to help:                   Merrill Lynch & Co’s activities in mort-
their checks deposited in a friendly                                                     gage securities.Apparently, the SEC has
                                            • Ohio, which has one of the highest         been examining issues such as whether
bank, which in turn will transfer the
                                              foreclosure rates in the country,          Merrill booked inflated prices of mort-
money to the payday loan shops. The
                                              started taking applications last week      gage bonds it held, despite knowing
payday lender takes his cut of the
                                              to give fixed-rate loans to homeown-       the valuations had dropped. It was
checks, then gives the borrowers their
                                              ers with subprime adjustable-rate          unclear whether the SEC had already


                                            www.BeasleyAllen.com                                                               27
handed over information to the U.S.         tank.The complaint, filed in Los Angeles    METLIFE AND BLACKROCK ARE SUED OVER
Attorney’s office in Manhattan.As previ-    Superior Court, also names as a defen-      ACCOUNT
ously reported, Merrill recorded about      dants KB Home Mortgage Co., Country-
$24 billion in write-downs during the       wide Home Loans Inc., Countrywide              Israel Discount Bank of New York has
second half of last year, mostly because    KB Home Loans, a joint venture of           filed suit against MetLife Inc. and
of its exposure to subprime mortgage-       Countrywide and the builder; and two        BlackRock Inc. in state court over
related assets.                             real estate appraisers.The plaintiffs are   losses on subprime investments. IDB, a
Source: Wall Street Journal                 seeking unspecified restitution as          New York commercial bank and a sub-
                                            well as compensatory and punitive           sidiary of financial-services company
                                            damages. They also want class-action        Israel Discount Bank Ltd., of Tel Aviv,
FBI AND SEC JOIN COMPLEX PROBE OF           status to cover KB Home customers in        filed the lawsuit in New York State
HOUSING CRISIS                              California who obtained financing           Supreme Court. IBD also took out a
                                            through Countrywide and closed on           half-page advertisement about the case
   Investigators are probing dozens of                                                  in The Wall Street Journal on February
companies for fraud and insider trading     their purchases between August 1,
                                            2005 and July 31, 2006.                     20th. The complaint alleges the defen-
in connection with the subprime mort-                                                   dants were in breach of contract and
gage crisis. Currently, the FBI is con-        In the lawsuit, the couples claim
                                            prospective homebuyers were pre-            their fiduciary duty by investing a
ducting criminal investigations of 16                                                   certain separate account in subprime
companies. The Securities and               sented with false or misleading data on
                                            previously sold homes in order to           mortgage-backed securities that have
Exchange Commission is probing                                                          declined in value. The complaint also
nearly two dozen more companies.            justify higher asking prices on new pur-
                                            chases. KB customers were presented         alleges that MetLife didn’t subsequently
Attorneys General in at least four states                                               transfer the money out of the account
are also involved and class-action law-     with comparable sales data from
                                            homes that were dissimilar, nowhere         despite IDB’s repeated requests to do
suits that target home builders, lenders,                                               so.
credit-rating agencies and the banks        near the KB property being sold, or
                                            from sales that had not yet closed,            At issue is the Libor Plus account that
that packaged groups of mortgages into                                                  IDB used in connection with a private-
securities has been filed.                  according to the lawsuit. When inde-
                                            pendent appraisers evaluated compara-       placement variable life insurance
   Pat Huddleston, a former SEC lawyer                                                  policy offered through MetLife. The
who now runs Investors’Watchdog, an         ble home sales, the values were
                                            between 10% and 15% lower than the          account was subadvised by BlackRock
Atlanta, Georgia-based company that                                                     and generally sought to maximize total
provides vetting services for investors,    price the plaintiffs paid for their KB
                                            homes. These practices propped up           returns measured in relation to the
says that civil authorities would bring                                                 three-month London interbank offered
several accounting fraud cases alleging     falling prices into the summer of 2006.
                                            The complaint suggests the alleged          rate, or Libor, according to disclosure
that brokerage firms inflated values on                                                 materials. Libor Plus documents stated
subprime loan packages or disguised         scheme likely affected other KB cus-
                                            tomers.                                     the account would primarily invest in
their own losses on the bad invest-                                                     publicly traded debt such as U.S. gov-
ments. Firms may have been using dif-          Countrywide’s lending practices
                                            have drawn consumer complaints and          ernment and agency securities, mort-
ferent models to price securities on                                                    gage-backed          and     asset-backed
their own books as opposed to those         litigation amid a surge in home loan
                                            defaults as the housing market went         securities, and municipal debt. But,
of their clients. Unfortunately corpora-                                                certain account holdings have taken a
tions hiding the truth from investors in    from boom to bust.A former employee
                                            at Countrywide KB Home Loans sued           hit. By last August, Libor Plus held about
order to prop up their stock price is                                                   $100 million in assets, and the market
nothing new. But that certainly doesn’t     the company last month claiming he
                                            was wrongly fired after he criticized       value of IDB’s account was about $9
make it right.                                                                          million, according to the complaint.
                                            the firm’s lending practices.The lawsuit
                                            contends the lender fired him after he         Late last year, IBD learned that 42% of
                                            blew the whistle on fellow employees        the account had been invested in
KB HOME AND COUNTRYWIDE SUED FOR
INFLATING HOME PRICES                       and outlined instances in which             riskier securities related to subprime
                                            appraisers were being strongly encour-      mortgages. IDB said it requested the
  Two California couples are suing KB       aged to inflate homes’ appraised value.     funds in the account be moved in
Home and mortgage lender Country-           Source: Associated Press
                                                                                        November. But in an early December
wide Financial Corp., claiming the com-                                                 letter, MetLife informed IDB it wasn’t
panies schemed with real estate                                                         filling its November reallocation
appraisers to inflate prices paid for                                                   demand. Such losses can have a particu-
homes as the housing market began to                                                    larly severe impact on relatively small



28                                          www.BeasleyAllen.com
employee life insurance funds like           lawsuit contends the swimming pool          Jeurissen settled his claim for $3.5
those at IDB.                                “fell well short” of minimum state          million, of which IHP was to pay $1.92
Source: Wall Street Journal                  safety standards, containing seven          million,Triumph, $350,000; Epstein and
                                             serious code violations, each of which      Sons, $787,500; and MGE $437,500.
                                             had the potential to cause fatal entrap-    Brad and Catherine Smith settled for $3
XII.                                         ment. Any proceeds from the lawsuit         million, with IHP paying $1.65 million,
                                             will go to the family’s Zac Foundation      Triumph, $300,000; Epstein and Sons,
PREMISES
                                             for Children’s Safety, according to Paul    $675,000; and MGE $375,500. Terry
LIABILITY UPDATE                             Slager, a Stamford, Connecticut lawyer      Younger settled for $2.5 million, with
                                             who is representing the family. The         IHP paying $1.37 million, Triumph
                                             victim’s father, who had been president     paying $250,000, Epstein and Sons
PARENTS OF POOL DROWNING VICTIM FILE
SUIT                                         of SAC Capital Advisors, one of the         paying $562,500 and MGE paying
                                             world’s largest hedge funds, resigned       $312,500.Another 16 plaintiffs settled
   The parents of a 6-year-old boy who       recently. I am told he will continue to     for $1 million to be divided between
drowned after his arm got trapped in a       be an advocate for safety in the swim-      the claimants.Triumph, meanwhile, has
powerful underwater swimming pool            ming pool industry. Why hasn’t Con-         lawsuits pending in Jackson County
suction drain have filed a lawsuit alleg-    gress and every state legislative body      Circuit Court, mostly against insurance
ing the pool violated safety require-        passed safety legislation to deal with      companies, trying to recoup damages
ments designed after a rash of similar       this problem?                               from the explosion.
tragedies. The lawsuit was filed in a        Source: USA Today                           Source: Houston Chronicle
Connecticut state court by the parents
against the town of Greenwich, Shore-
line Pools, and others. The lawsuit          TRIUMPH TO PAY $12.3 MILLION IN             MOTORCYCLE RACE PROMOTER LIABLE FOR
alleges Shoreline had a history of violat-   SETTLEMENT                                  WANTON CONDUCT
ing building code requirements, and            A 2005 natural gas explosion that            Heartland Park, a racetrack operator
accuses the town of failing to conduct       ripped through a pork-processing            in Topeka, Kansas, entered into a track
a proper inspection before issuing a         plant, killing one person and injuring      rental agreement with SFX Motor
permit.                                      several others, has led to settlements      Sports.The agreement authorized SFX
   The 6-year-old was trapped when his       totaling nearly $12.3 million. Investiga-   to stage Formula USA Series and Cham-
arm became stuck in an intake valve on       tors determined that gas leaking from       pionship Cup Series motorcycle races
the wall in the deep end.Water enter-        an uncapped valve fueled the explo-         at the track. SFX placed corner workers
ing an intake valve is pumped through        sion which occurred in October of           at various stations along the track to
the filtering system under suction           2005 at the Triumph Foods plant in St.      warn racers by flags when they needed
before being pumped back into the            Joseph, Missouri. The defendants            to proceed with caution or were
pool.When the boy got trapped in the         named in the lawsuits were plumbing         approaching an accident. During one of
pool underwater on July 26th, his father     contractor IHP Industrial of St. Joseph,    the races,Arthur Wagner, a participant,
and another adult jumped into the in-        Triumph Foods, construction manage-         crashed into an unprotected concrete
ground pool to try to free him but the       ment firm Epstein and Sons, and South-      barrier: was engulfed in flames; and suf-
pool’s suction was too powerful. The         ern Union Co., the parent company of        fered severe injuries. He filed a lawsuit
boy’s parents could not find a mecha-        Missouri Gas Energy. The lawsuits           against Heartland, SFX, Clear Channel
nism to turn off the suction pump.           claimed the companies were negligent        Communications, Inc., and the track
Only after power to the house, includ-       in failing to follow procedural safe-       lessor, alleging negligence and wanton
ing the pool’s drain pump was cut off,       guards that could have prevented the        failure to provide protection.The Dis-
was the father able to free his son and      explosion.                                  trict Court dismissed all parties except
perform CPR, but it was too late.              Melinda Fisher, mother of Andrew          Heartland and SFX.The court also dis-
   Since 1985, there have been more          Bauer, 24, of Stewartsville, the masonry    missed the negligence claim against
than 150 reported cases of swimming          worker killed in the explosion, settled a   both of those defendants based on a
pool drain entrapments, leading to at        wrongful death lawsuit in November          pre-race release signed by the plaintiff.
least 48 deaths and many serious             2007 for $2.25 million. In that settle-        The jury found SFX as race promoter
injuries, including disembowelment of        ment, IHP was responsible for paying        liable for the plaintiff’s injuries, but
children and adults. Because of the          $1.5 million.Triumph, Epstein and Sons      found Heartland, as track operator, free
safety issues, Connecticut in 2004           and MGE were responsible for paying         of fault.The District Court stated that to
implemented new safety requirements          $250,000 each. Injured worker Theo          establish wanton conduct under
for pool circulation systems. The


                                             www.BeasleyAllen.com                                                               29
Kansas law, a plaintiff must show that       owns the building and several contrac-        high-low agreement.The jury returned a
the defendant realized the imminence         tors, charging they knowingly created         verdict for the plaintiff in the amount of
of danger and recklessly disregarded, or     dangerous conditions that led to her          $85 million. But under the high end of
showed a complete indifference or            brother’s death.The plaintiff contends        the pretrial agreement the plaintiff will
lack of concern for, the probable conse-     that her 53-year-old died because of          only receive $18 million. Because of the
quences of the wrongful act. Circum-         conditions caused during the disman-          agreement, no matter what the jury
stantial evidence is sufficient to prove     tling of the building, including piles of     verdict was the defendant will pay the
wanton conduct. Preventative meas-           combustible debris, dismantled fire           top end. There will be no post-verdict
ures can preclude a finding of wanton        connections, compromised stairwell            motions and no appeal as a result of the
conduct, but only if the measures mate-      walls, and barricaded exits.The lawsuit       high-low agreement.
rially lessened the chances of injury.       says the Lower Manhattan Develop-               Gustafsson, a graduate of German-
The District Court found that:               ment Corporation, which owned the             town Friends School and Brown Uni-
                                             building, and several private companies       versity, was working toward both a
• there was sufficient evidence for a
                                             knew of the potentially fatal conditions      medical degree and a doctorate in
  jury to find that SFX knew that the
                                             before the fire.                              molecular biology. He has completed
  corner where the accident occurred
                                                Neither New York City nor the city’s       the biology degree, but hasn’t been
  was dangerous,
                                             Fire Department was sued, even                able to finish his medical education
• that there was a lack of sufficient        though city officials relieved three          because of difficulty standing for long
  safety measures, and                       senior fire officers of their posts about     periods during clinical work.The trial
                                             10 days after the fire. The conditions        showed that Trigen had known for 10
• that SFX recklessly        disregarded     created by the defendants were too            years that homeless men were remov-
  obvious dangers.                           much for the firefighter to withstand,        ing manhole covers. In fact, it has
  The verdict included $264,625 for          according to the complaint, and he was        welded some of them closed.
non-economic loss to date, $758,150          killed by toxic smoke, unable to escape       Source: Inquirer

for future economic loss, and $263,380       because of the stairwell barricades
for loss of services as a spouse. The        erected by the defendants.The Lower
total was $1.3 million in non-economic       Manhattan Development Corporation             XIII.
                                             and the contractors at the site “know-
losses and $1.2 million as economic                                                        WORKPLACE
losses. SFX asserted that the Kansas         ingly created those conditions,” accord-
                                             ing to the plaintiff’s lawyer, who says,      HAZARDS
statutory cap on non-economic
damages should have been applied to          “they had a responsibility to let the fire-
the damage award.The court reduced           fighters know, and they failed to do
                                                                                           OSHA HIT FOR LACK OF SAFETY RULES
the non-economic damage award to             that.”The suit seeks unspecified puni-        ON DEADLY DUST EXPLOSIONS
$250,000 under applicable Kansas law.        tive and compensatory damages. The
Although the plaintiff had argued that       two firefighters died when a broken              Top federal safety officials urged the
the loss of services award should be         standpipe in the basement could not           Labor Department in 2006 to adopt
considered an economic loss, the court       deliver water to the fire, which fire         critical regulations to prevent deadly
held that because there was no evi-          marshals said was probably started by a       dust explosions— like the deadly blast
dence as to the monetary value of            cigarette.The family of the second fire-      in a Georgia sugar plant last month. But
spousal services, it was a non-economic      fighter killed will also file suit.           for some reason the government has
loss award. All of SFX’s post-trial          Source: New York Times                        failed to do so. Over the past 28 years,
motions were denied, except for the                                                        about 300 dust explosions have killed
reduction of the non-economic loss                                                         more than 120 workers and injured
                                             MAN RECEIVES $18 MILLION IN LAWSUIT           several hundred others in sugar plants,
award to $250,000 total.                     RESULTING FROM A FALL INTO OPEN
Source: Associated Press                                                                   food processors, and many industrial
                                             MANHOLE
                                                                                           and wood manufacturers. Most could
                                               Trigen-Philadelphia Energy Corp., the       be prevented by removing fine-grain
AGENCY SUED OVER DEATH OF                    company that operates the steam system        dust as it builds up. But that has not
FIREFIGHTER AT TOWER                         under Philadelphia streets, will pay $18      been required by the federal Occupa-
                                             million to a former University of Pennsyl-    tional Safety and Health Administration
  The sister of one of the two firefight-
                                             vania medical student who broke his           (OSHA). The U.S. Chemical Safety
ers killed in August of last year fighting
                                             back when he fell 18 feet into an open        Board, which investigates industrial
a fire at the former Deutsche Bank
                                             manhole in 2004. Prior to the trial, the      accidents, concluded in a report in
building in New York City has filed suit
                                             parties to the lawsuit had entered into a     2006 that OSHA had no comprehensive
against the government agency that


30                                           www.BeasleyAllen.com
regulation to prevent dust explosions         Merritt, who was appointed in 2002 by       of those rooftop dust collectors where
and that its program “inadequately            President Bush and left the Board last      the minor explosion occurred weeks
addresses” the problem.                       year, said she and her colleagues repeat-   before blast of February 7th, which was
   A 20-year-old OSHA dust regulation         edly pressed OSHA to do something.          caused by clouds of tiny sugar dust par-
aimed only at grain plants and silos is          Guy R. Colonna, an official with the     ticles that, when airborne in confined
effective, according to the Safety Board.     National Fire Protection Association        spaces, can ignite like gunpowder.
It shows why regulations are needed           (NFPA), says his organization drew up       Source: Associated Press
for other companies. OSHA officials           voluntary guidelines 85 years ago,
began stepped-up enforcement on dust          which, combined with other building
issues in October, but other safety offi-     safety standards, guard against fires.      DAMAGES AWARDED TO FORMER DUPONT
cials say that’s not enough and that          Many companies and cities have              WORKER
detailed dust safety regulations are          adopted NFPA’s standards, which the            A New Jersey jury has awarded a
needed. Former Safety Board chair-            Chemical Safety Board says are effec-       former DuPont Co. worker more than
woman Carolyn Merritt told the Associ-        tive. Dust explosions have been around      $1.2 million in damages after he
ated Press:                                   for more than a century, including a        accused the company of retaliation for
                                              sugar mill explosion in Chicago in 1890     reporting toxic hazards at the Cham-
  This is an extremely dangerous
                                              that killed 11 people. In 1985, OSHA        bers Works plant in Deepwater, New
  component that is not regulated.
                                              officials even met with the Georgia         Jersey. The jury awarded the former
  Dust explosion situations are so
                                              plant’s owners at the time and told         worker, Jack Seddon, $724,000 in eco-
  dangerous that people have got to
                                              Congress that powdered sugar and            nomic damages and $500,000 in puni-
  pay attention to this.There should
                                              other food dust “are considered to be       tive damages after a four-week trial.
  be an outcry.
                                              ‘strong’ explosion hazards.” Just last      DuPont was sued under New Jersey’s
   Minuscule dust particles—the smaller,      year downtown Baltimore was rocked          “whistleblower” law.
the more explosive—often form clouds          when a Domino sugar refinery had a             In October 2003, Mr. Seddon, who
in enclosed places, like manufacturing        dust explosion.Three major explosions       was then an employee of DuPont, com-
plants or sugar mills. These clouds are       at a variety of plants in 2003 prompted     plained to the Occupational Safety and
the perfect fuel for a fire that can be set   the Safety Board to study the issue and     Health Administration about risks of
off by any spark or form of ignition.The      make its recommendations.                   leaks from a reactor containing toxic
first explosion kicks up more dust, and       Source: Insurance Journal
                                                                                          phosgene gas, an industrial chemical
even more and bigger explosions follow                                                    that was used as a deadly weapon
in rapid succession, according to James                                                   during World War I. Mr. Seddon, who
Dahn, president of Safety Consulting          SUGAR REFINERY HAD PRIOR EXPLOSION
                                                                                          had been with DuPont for 30 years,
Engineers. Concerning the problem, Mr.          Dust that collected in a piece of         said he was investigated, suspended
Dahn observed:                                safety equipment caused a small explo-      with pay, and placed on probation after
  The biggest problems we have in             sion at the Georgia sugar refinery          returning to work. He eventually left
  plants is that people are not               weeks before the recent deadly blast        the Deepwater plant on disability. Neil
  aware of the amount of dust                 that killed nine workers, according to a    Mullin, one of Seddon’s lawyers, says
  that’s in their plant. I’ve walked          federal investigator. Thus far, the offi-   that,“they destroyed his reputation and
  into plants where dust is nearly            cial, Stephen Selk, who is Investigations   career. That’s the way they paid him
  half a foot deep and people are             Manager for the federal Chemical            back for blowing the whistle.” An
  saying, ‘It’s just dust, we don’t           Safety Board, has furnished few details     outside expert testified that the
  worry about it.’ They did when it           about the previous explosion at the         reactor could have created a 1,000-by-
  blew the plant apart. Dust can be           Imperial Sugar refinery in Port Went-       1,000-foot deadly plume if only 10% of
  an explosive hazard.                        worth. He won’t say whether the             its contents had escaped. The trial
                                              earlier explosion, in which nobody was      judge will award attorney’s fees to the
  By law OSHA was supposed to                 injured, contributed to the February 7th    plaintiff, to be paid by DuPont.
respond within six months to the              blast.Apparently minimal damage was         Source: The News Journal
Safety Board’s November 2006 recom-           incurred and that was quickly repaired.
mendations to adopt a mandatory regu-         The refinery was equipped with fans
lation. Except for a letter a year ago        and ducts designed to prevent dust          WOMAN HURT IN NYC STEAM EXPLOSION
acknowledging receipt of the report                                                       SUES UTILITY
                                              explosions by sucking particles out of
and its recent special enforcement            the plant and transferring them to dust       A woman who almost lost part of her
emphasis, OSHA hasn’t responded. Ms.          collectors on the roof. It was inside one   leg in a Manhattan steam explosion



                                              www.BeasleyAllen.com                                                             31
that occurred last summer has filed suit     federal labor officials. Roberto Sanchez,    subsidiaries have changed practices to
against Consolidated Edison.The plain-       the Birmingham-area director for the         avoid further litigation.
tiff, who spent months in the hospital,      Occupational Safety and Health Admin-        Source: Associated Press
claims the utility was responsible for       istration, observed:
her severe injuries.The lawsuit follows
                                               Finding repeat violations at three         FORMER FEDEX WORKER AWARDED
a state Public Service Commission
hearing in which it was revealed that a
                                               different job locations demon-             DAMAGES
                                               strates to us that Gilco Contract-
Con Ed employee had warned that an                                                           A jury in Houston,Texas, has awarded
                                               ing is indifferent to its employees’
84-year-old pipe at the center of the                                                     $2.9 million to a former employee of
                                               safety.
July 18 explosion needed to be                                                            FedEx Corp. in a discrimination
replaced. During the PSC hearing, a             The company has 15 days to contest        lawsuit, finding the delivery company
June 2006 picture of the pipe that           the citations. Inspectors visited the job    retaliated after the worker leveled
erupted was produced, along with a           sites in August 2007 and November            charges of race discrimination against
notation.The employee who took the           2007. Gilco Contracting was cited for        the company.The employee worked in
photograph wrote: “Pipe is dented &          seven repeat citations totaling              security at FedEx in Houston when he
pitted in several places. Should change      $315,000 for not following OSHA’s            sued the company in 1999 after he was
pipe!”                                       rules regarding protection of employ-        passed over for promotion. The suit
   A PSC staff member said dents in the      ees in trenching and excavating opera-       was dismissed and the worker lost his
pipes were also detected in March            tions. The Tuscaloosa contractor had         appeal in 2002. Later that year, the
2005. Ken Thompson, one of the lead          received citations for similar violations    worker, who is black, began receiving
plaintiff’s lawyers in the case against      after inspections in May 2005 and            reprimands from his supervisors about
Con Ed and the city, said the picture        October 2006.The company was also            his work performance. A second suit
was “evidence of reckless indifference       cited for three serious violations, with     was filed. The worker’s job was to
on the part of Con Ed.” He added             a fine of $10,800, for not keeping con-      investigate reports of lost packages and
“Based on this evidence, Con Ed had to       veyor belt work areas free from fall         allegations of employee time-card
know there was a problem with their          hazards and other unsafe conditions.         fraud.When he tried to tell his side of
pipe.They left that dangerous pipe in        OSHA issued three other citations            the story by getting statements from
the ground to explode, and ran a safety      with a fine of $2,700 for record-            his co-workers to rebut claims that he
risk. How many other steam pipes are         keeping violations.                          dealt with a customer unprofessionally,
also in a dangerous condition that Con       Source: Insurance Journal                    he was reprimanded for that.
Ed knows about and has failed to take                                                        The worker, who joined FedEx in
action?” The blast left three people                                                      1984, was terminated in 2005 after
severely injured, including two persons      DYCOM TO SETTLE CLAIMS FOR $10
                                                                                          receiving his third warning letter in 12
who were badly burned escaping a tow         MILLION
                                                                                          months, according to his lawsuit. The
truck.Another woman had a fatal heart                                                     jury award included $2.5 million in
                                               Dycom Industries Inc., which pro-
attack blamed on the explosion. More                                                      punitive damages. The trial judge will
                                             vides contracting services to telecom-
than 100 businesses were affected and                                                     award attorney’s fees and future earn-
                                             munications businesses, has agreed to
at least 20 people have filed lawsuits                                                    ings for the worker. The worker, who
                                             settle wage and hour claims against
alleging they were injured.                                                               was earning $65,000 a year when he
                                             three of its subsidiaries for $10 million.
Source: Associated Press
                                             The claims against its UtiliQuest LLC,       was at FedEx, is an airport screener in
                                             STS LLC and Locating Inc. units cover a      South Carolina and earns $13,000 a
                                             period from 2003 through January 31,         year for the part-time job.The jury obvi-
$328,500 IN FINES PROPOSED FOR
ALABAMA CONTRACTOR                           2007. Several states in which the sub-       ously felt that FedEx needs to learn a
                                             sidiaries did business are involved.The      lesson and that it had to pay force
   The federal Occupational Safety and       $10 million settlement is subject to         FedEx to a substantial amount of
Health Administration (OSHA) has pro-        court approval and is the maximum            money to get FedEx’s attention. G. Scott
posed $328,500 in fines for Gilco Con-       payout assuming all those eligible           Fiddler, an employment lawyer in
tracting Inc., a firm based in Tuscaloosa,   accept the settlement terms.The settle-      Houston, represents the worker.
Alabama. The company allegedly               ment is part of a structured mediation       Source: Houston Chronicle
exposed workers to serious and               process. In order to get court approval
repeated safety hazards at two job sites     for the process, lawyers have filed com-
in Lakeview, Alabama and another in          plaints in the U.S. District Court in the
Northport, Alabama according to              Middle District of Florida. Dycom says



32                                           www.BeasleyAllen.com
XIV.                                        Connecticut five years ago have             crew enforced the policy of not allow-
                                            received a settlement of more than $3.2     ing passengers to stay in their vehicles,
TRANSPORTATION
                                            million from the ferry company and the      Mr. Zuber would have been safe in the
                                            Workers Compensation Commission.            ferry cabin. William M. Bloss, of the
MOTOR VEHICLE CRASH LAWSUIT SETTLED         The ferry company has added safety          Bridgeport, Connecticut, law firm of
                                            equipment as a result of the accident.      Koskoff Koskoff & Bieder, represented
   A woman, who was badly injured           Michael Zuber, 53, a father of three, was   the family.
when her car slid into a tree on a          hauling a rock crusher from Branford,       Source: theday.com
stretch of a county road, a road that       Connecticut, to Long Island when he
was described as treacherous, will          boarded the ferry in New London, Con-
receive $13 million in a settlement.This    necticut, back in 2002. The ferry was       $1.1 MILLION AWARD TO 3 FERRY WORKERS
is the largest personal injury settlement   less than a mile away from the dock at      FOR GAS EXPOSURE
in Nassau County, New York history.         Orient Point, New York, when the truck         Three Washington State Ferries
The accident, involving 37-year-old         rolled off the back of the boat and sank    workers have been awarded more than
Merryl Kihl, occurred in the early hours    into the turbulent waters of Plum Gut.      $1.1 million for injuries they suffered
of January 13, 1995.The short stretch of    Mr. Zuber was found unconscious in an       because of exposure to chlorine gas on
road had been the scene of numerous         oil slick and was pronounced dead at a      the ferry Tacoma in 2004.According to
bad vehicle crashes, including one fatal    local hospital.                             the lawyer for the men, the ferry
crash in which the car hit the very            Mr. Zuber’s wife of 20 years sued the    system allowed the absorbent powder
same tree.The county was not allowed        ferry company alleging that the ferry       Hi ‘N Dri and bleach on the ferries
in Kihl’s case to argue that the road       crew had not secured the truck’s back       without investigating the potential
was safe because of earlier court           wheels with blocking devices known          harm from combinations of the chemi-
rulings. A jury rendering a $3 million      as chocks. Also, the crew allowed Mr.       cal products during normal cleaning
verdict in favor of the children of the     Zuber to stay in the truck’s cab during     operations. When the workers were
other victim, later reduced, found the      the trip despite the company’s policy       cleaning a restroom, the products
stretch of road to be unsafe.               that passengers leave their vehicles        created a toxic cloud of chlorine gas,
   The jury verdict in the case had been    while the ferry is under way.The ferry      causing them coughing, shortness of
appealed.The victim suffered a broken       crews have said they often allowed          breath and wheezing that will require
neck and other injuries in the crash,       truck drivers to remain in their cabs to    lifetime medications. The court found
and operations to ease her pain caused      catch up on their rest.Apparently, that     that “the chlorine gas which resulted
further complications. She has had          was a common practice.                      from the mixture of Hi ’N Dri and
spinal fusion surgery, undergoes pain          In October 2007, the ferry company’s     bleach constituted an unseaworthy
management treatments, and takes “a         insurer, settled the case for $2.25         condition.” All three of the crew
combination of narcotics, analgesics        million and a Probate Court approved        members, who were exposed to the
and muscle relaxants.”The woman has         the agreement. Mr. Zuber’s widow and        chlorine, “developed significant and
a morphine pump implanted in her            his estate also received around $1          permanent occupational asthma.” The
stomach, which must be replaced             million from the Workers Compensa-          judge ruled that “the storage and com-
every four or five years for as long as     tion Commission. Multiple witnesses         bination of Hi ‘N Dri and bleach was
she lives. Her doctors testified that her   had testified at depositions that the       neither reasonably fit for its intended
“pain was intractable and unremitting,      truck’s wheels were not chocked, and        use, nor a safe method of operation.”
and that it would increase over time.”      the ferry company admitted to that.The      This was a most interesting case.
Once the appeals court upheld the jury      defendant took the position that Coast      Source: Seattle Times
verdict a the settlement came shortly       Guard regulations relating to chocking
thereafter.                                 were ambiguous and legally they didn’t
Source: NewsDay.com                         need to chock the truck.The brakes on       WOMEN STRUCK BY BUS WINS HER CASE
                                            the truck, which was manufactured in
                                            Europe, failed when pinhole leaks             A Middlesex County, Massachusetts,
FAMILY OF FERRY ACCIDENT VICTIM SETTLES     caused the air to bleed out. Interest-      jury awarded $10 million to a 58-year-
LAWSUIT                                                                                 old woman who suffered brain damage
                                            ingly, had the truck been made in
                                            America, the brakes would have locked       when she was hit by a Massachusetts
  The survivors of a truck driver who
                                            when the air pressure bled out. But, this   Bay Transportation Authority (MBTA)
died when his tractor-trailer rolled off
                                            tragedy wouldn’t have happened even         bus while waiting to get to work.
the stern of a Cross Sound ferry
                                            if a single chock had been used. Had the    Louise Scialdone, who is unable to
between Long Island, New York and



                                            www.BeasleyAllen.com                                                              33
work and has trouble with her balance       overturning it so that the driver’s side    “retiring in droves” over the past
and her memory, is sensitive to light       hit and then slid along the roadway—        several months. Some of this was
and noise and, though formerly an avid      with Ms. Ford’s arm trapped between         expected because many controllers
reader, she can now handle only third-      the door and the asphalt. Medical           hired after the 1981 air-traffic con-
grade-level reading material.               complications eventually forced Ms.         troller strike are becoming eligible to
   With interest, the MBA will owe Ms.      Ford, a widowed mother of four, to          retire. You will recall that President
Scialdone close to $12.8 million from       have her arm amputated almost up to         Regan fired more than 12,000 con-
the date the suit was filed.The Author-     the shoulder.                               trollers in 1981 because of that strike.
ity’s insurance will apparently cover          There is a cell phone statute in         But the retirement surge has apparently
damages only beyond the first $7.5          Georgia that says a driver of a motor       accelerated beyond the projections of
million.The financially troubled agency     vehicle is not to do things that are dis-   the Federal Aviation Administration
had already been expecting to run a         tracting.This essentially means reason-     (FAA) projections because of a bitter
$75 million deficit in the coming           able cell phone use “may be acceptable      labor feud that has dragged on since
budget year that begins in July. Ms.        within the purview of the statute.”The      2006.
Scialdone will use the money to             International Paper employee’s cell           In January, there were roughly
upgrade her care, which she needs           phone use was, however, not reason-         11,000 fully certified controllers,
around the clock, at a cost of about        able.The employee had set her cruise        marking the lowest level in more than a
$200,000 a year. She will move from a       control at 77 miles per hour—in a 70        decade. In September 2002, the FAA
nursing home to a brain injury rehabili-    mph speed zone—and that’s not good.         employed 12,801 fully certified con-
tation center.                              The combination of using her cell           trollers. The National Air Traffic Con-
   Ms. Scialdone, who used a walker         phone and 77 mph speed raised the           trollers Association, which represents
because of arthritis, was waiting at a      issue of intentional negligence on the      the FAA’s work force of roughly 15,000
bus stop, on her way to work.The bus        part of the employee and International      fully and partially certified controllers,
driver lost control of the vehicle on the   Paper, and allowed for the jury to con-     has declared staffing emergencies at
icy road, fishtailed onto the sidewalk,     sider and award punitive damages.           high-intensity facilities in Atlanta,
and knocked Ms. Scialdone off her feet,        International Paper contended that       Chicago, Dallas, New York, and South-
throwing her some 5 feet. Her head hit      the employee was not actually on the        ern California.The Association calls the
a parked car, knocking her uncon-           phone at the moment the collision           loss of so many veteran controllers a
scious.The bus driver was traveling too     occurred. The employee testified in a       “growing crisis” amid surging traffic
fast for the slick roads. A witness esti-   pretrial deposition that she had used       volumes.The FAA says in efforts to sta-
mated that the bus, which was out of        the cell phone just before getting on       bilize the situation, the agency is hiring
service, was moving about 30 miles per      the interstate, and the accident            hundreds of trainees and offering
hour. Paul Mitchell and John DeSimone       occurred nearly two miles later. A          bonuses of as much as $24,000 to
represented Scialdone at trial.             witness, however, testified that he had     retain wavering controllers. But the
Source: Boston Globe                        seen her with the phone to her ear at       pace of departures is leaving fewer
                                            the time of the collision. Katherine L.     experienced eyes to watch over the
                                            McArthur, a Macon lawyer, who has           skies and that’s not good!
CELL PHONE USE IN CAR RESULTS IN $5.2       published several articles on the           Source: Wall Street Journal
MILLION SETTLEMENT                          dangers of cell-phone use while driving
   International Paper Co. has agreed       a vehicle, represented the plaintiff and
                                            did a very good job.                        HELICOPTER CRASH LAWSUITS SETTLED
to pay $5.2 million to settle a personal
                                            Source: Fulton County Daily Report
injury suit related, at least in part, to                                                  Three families have agreed to settle
one of its employees’ use of a cell                                                     their lawsuits over a 2002 medical heli-
phone while driving.According to the                                                    copter crash in Norfolk, Virginia, that
                                            POTENTIALLY DANGEROUS CONDITIONS
complaint filed in Fulton County,           REPORTED AT AIRPORTS                        killed three people aboard.The details
Georgia, Superior Court in 2006, an                                                     of the settlement were still being nego-
International Paper employee was                It is being reported that there are     tiated at press time.The LifeNet of the
using her company-supplied cell             not enough air-traffic controllers at our   Heartland helicopter had just left a
phone as she drove west along an            nation’s airports.This shortage not only    Norfolk hospital on June 21, 2002,
interstate highway near Dublin,             causes flight delays, but it has the        when the pilot reported trouble. It
Georgia, when she rear-ended a              potential of having an effect on the        crashed at the airport. Killed in the
vehicle driven by Debra Ford.The col-       safety of commercial aviation. Fully cer-   crash were the pilot, an emergency
lision pushed Ms.Ford’s vehicle into        tified controllers have, according to a     room nurse, and a paramedic.
the ditch on the right side of the road,    report in the Wall Street Journal, been        The National Transportation Safety


34                                          www.BeasleyAllen.com
Board ruled in 2004 that a faulty tail                   which addresses exempt commodities.                      Federal Motor Carrier Safety Regula-
rotor and an inexperienced pilot were                    Because most log trucks are intrastate                   tions were applicable to log trucks, I
the likely causes of the crash. Other                    carriers as opposed to interstate carri-                 am convinced that the number of acci-
factors included the binding of a mech-                  ers, the safety regulations adopted by                   dents involving log trucks would be
anism controlling the tail rotor, gusty                  the Alabama Public Service Commis-                       reduced sharply.
winds, and the pilot’s lack of experi-                   sion don’t apply to the log trucks in
ence with that type of helicopter,                       Alabama.The safety regulations in the
according to the agency. Rocky Moun-                     Act would cover areas such as driver                     XV.
tain Holdings, LifeNet’s parent                          qualifications, log books, truck equip-
                                                                                                                  ARBITRATION
company, and its insurer were also                       ment, and reporting requirements.
listed as plaintiffs in the lawsuit along                   In January of 2006, the Forest                        UPDATE
with the families.                                       Resource Association released a study
   The lawsuit in Lancaster County Dis-                  of heavy truck accidents between 1991
                                                                                                                  SEX ASSAULT SUIT AGAINST HALLIBURTON
trict Court originally named more than                   and 2004 in the State of Georgia.This                    KILLED
a dozen different defendants who                         study showed that log trucks were
played some role in the design, manu-                    three times more likely to have acci-                       We wrote in a recent issue about the
facture, sale, or operation of the heli-                 dents because of mechanical failures                     Halliburton case involving a mother of
copter.The judge has dismissed several                   than other heavy trucks.The most cited                   five who was sexually harassed and
defendants from the case including                       cause of log truck accidents was driver                  assaulted while working for Hallibur-
Duncan Aviation of Lincoln; CIT                          decision and/or behavior.This generally                  ton/KBR. Her case is now headed for a
Leasing Corp.; and Societe D’ Applica-                   relates back to the issue of training. Sta-              highly secretive arbitration process
tions Des Machines Motrices. The                         tistics from the Alabama Department of                   rather than being presented to a court
remaining defendants include Ameri-                      Public Safety reveal the number of                       and jury.A judge in Texas has ruled that
can Eurocopter; Eurocopter S.A.; Tur-                    times that inspectors made companies/                    Tracy Barker’s case will be heard in
bomeca Engine Corp.;Turbomeca, S.A.;                     owners park (out of service) their rigs.                 arbitration because of terms in her
and Dunlop Limited. Gary Robb of                         The following data tell the story relat-                 initial employment contract. Ms. Barker
Kansas City, Missouri, represented the                   ing to the out-of-service percentages                    says that while in Iraq she was con-
families and did good work as usual.                     for three years: 55% of the log trucks                   stantly propositioned by her superior,
Source: Associated Press                                 inspected in 2002 were put out-of-                       threatened, and isolated after she
                                                         service, 71% in 2003 and 63% in 2004.                    reported an incident of sexual assault.
                                                         The statistics available for 2005 are                    Her        lawyers     argued        that
THE LOGGING INDUSTRY IS LARGELY                          skewed because regulations were                          Halliburton/KBR had created a “boys
UNREGULATED IN OUR STATE                                 relaxed, following the hurricanes of                     will be boys” atmosphere at their
  Over the years we have all observed                    Ivan and Katrina: compared to all                        camps and what Ms. Barker was put
log trucks traveling on the highway.                     trucks inspected in Alabama, only 25%                    through was not the type of dispute
This is especially true if you live in the               of the log trucks were put out of                        that she could have expected to be
southeast region of the United States                    service.                                                 within the scope of an arbitration pro-
and have driven in rural areas where                        In January of 2007, all intrastate                    vision. However, District Judge Gray
timber is a big commodity. Most Ameri-                   trucks were required to have a DOT                       Miller, disagreed and wrote in his order:
can citizens assume trucks hauling logs                  number affixed to the truck. This has
                                                                                                                    Whether it is wise to send this
are regulated.That’s because commer-                     allowed inspectors to keep better
                                                                                                                    type of claim to arbitration is not
cial trucks are regulated by the Federal                 records of companies who are repeat
                                                                                                                    a question for this court to decide.
Motor Carrier Safety Regulations                         violators. The reason why most states
                                                                                                                    Sadly, sexual harassment, up to
(FMCRS). But log trucks are not regu-                    have regulations that are not as strin-
                                                                                                                    and including sexual assault, is a
lated, at least not in Alabama and                       gent as the Federal Motor Carrier Safety
                                                                                                                    reality in today’s workplace.
Georgia.1                                                Regulations is because the timber
  In Alabama, log trucks and other                       industry lobbied state legislatures to                     KBR’s efforts to have all of this
commodity haulers are exempt from                        pass laws that exempted the timber                       women’s claims heard in private arbi-
the Alabama Motor Carrier Act (Code of                   industries and loggers from the regula-                  tration, instead of a public courtroom,
Alabama §37-3-1 et. seq.) pursuant to                    tions.When a log truck is involved in a                  as provided under the terms of her
the Public Service Commission Rule                       wreck, a contributing factor is usually a                original employment contract, have
2.2 or Code of Alabama §47-3-4(c),                       safety or driver issue. If the stringent                 been successful. In arbitration, there is

1 In Georgia, the state legislature has adopted regulations published by the Georgia Public Service Commission, known as “The Georgia Forest Product Trucking Rules”.




                                                        www.BeasleyAllen.com                                                                                        35
no public record or transcript of the        United States shall not be enforceable.”        organization with input from all
proceedings, meaning that her claims           There are two exceptions to this ban.         participants in the arbitration
will not be heard before a judge and         One is for post-dispute arbitration             process. Now it’s time to make fun-
jury. Halliburton, which has since           agreements.Therefore, employees and             damental changes to make the
divested itself of KBR, is trying hard to    employers would be allowed to agree             system fair.
distance itself from this matter. If this    to use arbitration to resolve their differ-
                                                                                             The survey received responses from
case doesn’t get the attention of Con-       ences after a dispute arises.The other
                                                                                           over 3000 investors nationwide who
gress on the evils of arbitration, nothing   exception is for arbitration clauses in
                                                                                           had been involved in arbitration. Over
will. Arbitration was intended to            collective bargaining agreements. If
                                                                                           62% believed the arbitration process
involve only disputes between large          enacted, the proposed legislation
                                                                                           was unfair, 60% had an unfavorable
corporations. Never in their wildest         would have retroactive effect.
                                                                                           view of arbitration, and 70% were dis-
dreams did the members of Congress,          Source: ADRWorld.com
                                                                                           satisfied with the outcome. Schultz
who voted for the FAA when it was
                                                                                           pointed out that these results should
passed ever contemplate cases like that
                                             INVESTORS’ NEGATIVE VIEW OF ARBITRATION       be of little surprise since well over half
involving Ms. Barker going to arbitra-
tion for resolution.                         SUPPORTS NEED FOR REFORMS                     of investors who arbitrate their cases
                                                                                           against the brokerage industry get a
Source: ABC News
                                                The Public Investors Arbitration Bar       zero award; and based on a study of
                                             Association (PIABA), a national associa-      awards made in 2006, those who
                                             tion of lawyers who represent                 recover are awarded an average of just
CIVIL RIGHTS BILL WOULD BAR MANDATORY
ARBITRATION IN WORK CONTRACTS                investors in arbitrations against the bro-    over 10% of the amount claimed.Worse
                                             kerage industry, has urged the Financial      yet, investors, whether they win or
  Sweeping civil rights legislation has      Industry Regulatory Authority (FINRA)         lose, are typically assessed fees by arbi-
been introduced in Congress that,            and the Securities and Exchange Com-          trators that can run into several thou-
among other things, would amend the          mission (SEC) to take immediate reme-         sands of dollars.The time has come to
Federal Arbitration Act (FAA) to create a    dial action to reform mandatory               clean up the investor arbitration
broad exception in Section 1 for             investor arbitration. The results of a        process. Investors shouldn’t be forced
employment agreements and make pre-          new survey confirm that investors             to submit their valid claims to an arbi-
dispute arbitration agreements in these      view securities arbitration as biased         tration process that is run and con-
agreements unenforceable.The thrust          and unfair.The survey, conducted under        trolled by the brokerage industry.
of the legislation (S. 2554 and H.R.         the direction of the Securities Industry      Source: Newswire
5129) is to guarantee individuals a          Conference on Arbitration (SICA), was
private right of action under civil rights   in response to a 2002 evaluation of the
laws to challenge disparate impact dis-      fairness of arbitration funded by the         XVI.
crimination.The FAA, which generally         SEC.The SEC-sponsored evaluation had
makes enforceable arbitration agree-         recommended an empirical analysis of          NURSING HOME
ments in contracts affecting com-            investors’ perceptions of fairness in the     UPDATE
merce, contains an exemption in              arbitration process. SICA was created in
Section 1 for contracts of employment        the 1970s at the behest of the SEC to
“of seamen, railroad employees, or any       maintain a uniform code of arbitration        GOVERNMENT LISTS WORST NURSING
                                                                                           HOMES
other class of workers engaged in            procedure and to serve as a sounding
foreign or interstate commerce.”             board on issues of importance to the             After initially resisting their disclo-
  The proposed legislation would call        arbitration system. Laurence S. Schultz,      sure, the Bush Administration has
for certain language to be removed           President of PIABA, observed:                 finally allowed the names of 131
from FAA Section 1, so that this provi-                                                    nursing homes with poor inspection
                                               The SICA survey confirms once
sion would say that the FAA does not                                                       records to be made public. The list
                                               and for all that investors who
apply to contracts of employment. Fur-                                                     released by the Centers for Medicare
                                               have been involved in arbitration
thermore, it would create a ban on arbi-                                                   and Medicaid Services identifies trou-
                                               distrust the arbitration process
tration clauses in employment                                                              bled facilities cited as a “special focus
                                               and have concluded it is biased
agreements by providing, “Notwith-                                                         facility,” a designation used to identify
                                               and unfair. And although the
standing any other provision of law, any                                                   those that merit more oversight. For
                                               industry and FINRA may not like
clause of any agreement between an                                                         these homes, states conduct inspec-
                                               the results, they must accept them.
employer and an employee that                                                              tions at six-month intervals rather than
                                               The survey was sponsored and
requires arbitration of a claim arising                                                    annually.
                                               overseen by an independent
under the Constitution or laws of the                                                         Last November, the government


36                                           www.BeasleyAllen.com
released a partial list of 54 nursing         mentally disabled man suffered when           by nursing homes. The study found
homes that ranked among the worst in          he was placed in a tub of scalding            agreements that improperly limited a
their states, balking at releasing the full   water. A Madison, Indiana Superior            nursing home’s obligations. Others
list of homes with the “special focus”        Court jury found in favor of Audrey           allowed discharges for vague reasons,
designation.After a group of Democra-         McGhee’s estate against home operator         or stuck relatives with bills they legally
tic lawmakers began pushing for full          Residential CRF Inc. and the Indiana          didn’t owe.
disclosure, CMS agreed to publish the         Family and Social Services Administra-           Eric Carlson, the author of the study,
names. CMS will update its list of trou-      tion. Residential CRF of Connersville,        said that some of the agreements con-
bled nursing homes on a quarterly             Indiana provides services to develop-         flict with the federal Nursing Home
basis, with its next release scheduled        mentally disabled clients through an          Reform Law and laws in some states.
for April.                                    agreement with Family and Social Ser-         The federal law requires nursing homes
   The list shows 52 nursing homes as         vices. Mr. McGhee, who lived at the           to provide care that helps residents
not showing improvement after they            now-defunct New Castle State Develop-         reach the “highest practicable” level of
were cited as a higher-risk nursing           mental Center until 1998, was placed in       functioning. But Mr. Carlson said some
home, while another 52 did show               a Residential CRF-operated home in            agreements instead attempt to get
some improvement. Twenty-seven                Anderson, Indiana the following year.         seniors or their families to lower their
nursing homes were added to the list             The jury decided Residential CRF           expectations of care and assume more
in the last six months. Out of the 54         must pay $1.125 million in damages,           of the risks of injury, such as falling or
nursing homes initially disclosed as          while Family and Social Services owes         choking. Nursing homes can’t be
poor performers last November, 21             $375,000. Charles R. Clark, a lawyer in       allowed to ignore existing law and
have shown improvement, CMS said,             Muncie, Indiana who represented               require residents and their families to
adding that publicity about the prob-         McGhee’s legal guardian, First Mer-           give up legal rights.
lems might have played a factor.There         chants Bank. During the trial plaintiffs’     Source: Kansas City Star
are about 16,400 nursing homes                counsel argued that the 42-year- old
nationwide, and taxpayers spend               plaintiff deserved about $1.4 million
about $72.5 billion annually to subsi-        from the defendants to cover individu-        XVII.
dize nursing home care.                       alized care for the rest of his life, which
                                                                                            HEALTHCARE
   Most nursing homes have some defi-         counsel estimated at 30 years. Mr.
ciencies, with the average being six to       McGhee was said to have the mental            ISSUES
seven deficiencies per survey. But, the       aptitude of a baby, has cerebral palsy,
special focus facilities typically have       and is blind, mute and deaf.
                                                                                            PFIZER WILL PULL SOME LIPITOR ADS IN
about twice that number, and continue         Source: Courier Journal
                                                                                            WAKE OF PROBE
to have problems over a long period of
time. The states determine which                                                               Pfizer Inc. has pulled its advertise-
nursing homes should get the designa-         CLAUSES IN NURSING HOME AGREEMENTS            ments featuring Dr. Robert Jarvik, the
tion, and inspection standards vary           VIOLATE THE LAW                               inventor of an artificial heart, marketing
among the states.The offenses typically         A study by the National Senior Citi-        its Lipitor cholesterol-lowering drug.
involve unnecessary use of medication         zens Law Center has found that some           The New York drug maker said it
for elderly residents, or inadequate safe-    admission agreements ignore the laws          would stop using print and television
guards to protect residents such as           in some states, as well as federal laws,      ads featuring Dr. Jarvik after the House
those with Alzheimer’s from day-to-day        and mislead consumers about the care          Committee on Energy and Commerce
hazards in the nursing home. Ameri-           they can expect.The residents’ families       launched a probe in January into his
cans should have access to as much            are induced to sign away critical con-        credentials and celebrity drug endorse-
information about a nursing home as           sumer protections. Elderly consumers          ments. Obviously, Pfizer acted in
possible, and making information like         and their families should be wary when        response to the mounting criticism and
this known to the public is necessary.        signing long and often complex                this congressional investigation. The
Source: Associated Press
                                              nursing home agreements, according to         committee’s chairman, Rep. John
                                              this new study.                               Dingell, sent letters to both Pfizer and
                                                The National Senior Citizens Law            the Food and Drug Administration
JURY AWARDS BURN VICTIM $1.5 MILLION                                                        saying that the ads could mislead
                                              Center, a Washington-based nonprofit
                                              legal advocacy group for seniors and          patients because Dr. Jarvik isn’t a prac-
  An assisted-living home and the state
                                              elder-care lawyers, reviewed 175 admis-       ticing physician.
must pay $1.5 million in damages for
                                              sion agreements voluntarily provided             The commercials were part of
the first- and second-degree burns a
                                                                                            Pfizer’s defense of Lipitor in the face of


                                              www.BeasleyAllen.com                                                                 37
competition from the generic version        ing animal-abuse scandal.The Humane          baby shampoos, lotions, and powders
of another cholesterol drug, Merck &        Society of the United States distributed     may expose infants to chemicals that
Co.’s Zocor. Lipitor, the world’s best-     an undercover video on January 30th          have been linked with possible repro-
selling drug, posted sales $12.9 billion    that showed workers kicking sick             ductive problems.The chemicals, called
in 2006 and of $12.7 billion in 2007.       cows and using forklifts to force the        phthalates, are found in many ordinary
Pfizer spent $119 million on Lipitor ads    cows to walk. The video raised ques-         products, including cosmetics, toys,
in the first nine months of 2007, com-      tions about the safety of the meat,          vinyl flooring, and medical supplies.
pared with $91 million in the first nine    because cows that cannot walk, called        They are used to stabilize fragrances
months of 2006, according to TNS            “downer cows,” pose an added risk of         and make plastics flexible. In the study,
Media Intelligence. Dr. Jarvik was the      diseases, including mad cow disease.         they were found in elevated levels in
star attraction in six campaigns for        The federal government has banned            the urine of babies who’d been
Pfizer. One ad shows the doctor at a        downer cows from the food supply.            recently shampooed, powdered, or
lake discussing why he takes Lipitor. It       Agriculture officials claim there was     lotioned with baby products. Phtha-
plays up the fact that he is a physician,   little health risk from the recalled meat    lates are under attack by some environ-
saying, “Just because I’m a doctor          because the animals had already passed       mental advocacy groups, but experts
doesn’t mean I don’t worry about my         pre-slaughter inspection and much of         are uncertain what dangers, if any, they
cholesterol” and “Lipitor is one of the     the meat had already been eaten. In          might pose. The federal government
most researched medicines.You don’t         addition, the officials noted that           doesn’t limit their use, although Califor-
have to be a doctor to appreciate that.”    although mad cow disease was                 nia and some countries have restricted
   While I concede the ad campaign          extremely rare, the brains and spinal        their use.
was effective, I have never understood      cords from the animals—the area most            Concerned parents can seek prod-
why Congress and the FDA allow drug         likely to harbor the disease—would not       ucts labeled “phthalate-free,” or check
companies to advertise drugs regardless     have entered the human food chain. I         labels for common phthalates, includ-
of who the “pitch person” happened to       hope that assessment is correct. In any      ing DEP and DEHP. But the chemicals
be. There can be no justification for a     event, this is a major recall and one that   often don’t appear on product labels.
drug company advertising a prescrip-        causes great concern for consumers,          That’s because retail products aren’t
tion drug to the public. Congress           including children.                          required to list individual ingredients of
should ban all ads by drug companies                                                     fragrances, which are a common phtha-
and leave decisions on prescription                                                      late source. The new study, which
drugs to trained medical doctors and        PARENTS MUST BE CAREFUL WITH COLD            appears in February’s issue of the
pharmacists.                                MEDICINES FOR CHILDREN                       journal Pediatrics, involved 163 babies.
Source: Wall Street Journal                                                              Source: Associated Press
                                              The federal government has esti-
                                            mated that cough and cold medicines
                                            send about 7,000 children to hospital
LARGEST RECALL OF GROUND BEEF IS
ORDERED                                     emergency rooms each year. About             XVIII.
                                            two-thirds of the cases were children        ENVIRONMENTAL
  The largest beef recall in history was    who took the medicines unsupervised.         CONCERNS
issued last month involving 143             But about one-quarter involved cases in
million pounds of beef. Some of the         which parents gave the proper dosage
beef was actually used in school lunch      and an allergic reaction or some other       APPELLATE PANEL REJECTS EPA EMISSION
programs, according to the Depart-          problem developed, the study by the          LIMITS
ment of Agriculture. More than a third      Centers for Disease Control and Pre-
of the contaminated meat had already        vention reported. Recently, the Food           A three-judge federal appeals panel in
been used in federal nutrition pro-         and Drug Administration warned               Washington struck down the Environ-
grams, including school lunches. Of the     parents that over-the-counter cough          mental Protection Agency limits on
143 million pounds of recalled meat,        and cold medicines were too danger-          mercury emissions from coal-fired
just over 50 million pounds was             ous for children younger than 2.             power plants.The panel said the agency
bought for use in the federal programs,     Source: New York Times
                                                                                         had ignored its legal obligation to
according to the department.About 20                                                     require the strictest possible controls
million pounds of that has already                                                       on the toxic metal or to justify an alter-
been consumed.The recall by the West-       REPORT FUELS CONCERN OVER CHEMICALS          native approach. The ruling against a
land/Hallmark Meat Company, based in        IN BABY PRODUCTS                             signature environmental policy of the
Chino, California, came after a widen-                                                   Bush Administration is the latest to
                                              A recently released study reveals that     reverse agency actions as inconsistent


38                                          www.BeasleyAllen.com
with environmental laws. The regula-        said that the EPA’s reading of the law        We are very pleased with this set-
tion, which the panel unanimously           would make sense “only in a Humpty            tlement, which provides for robust
struck down, was issued in 2005. It         Dumpty world.” The court, invoking            measures to protect human health
aimed to reduce power-plant emissions       “Alice in Wonderland,” said the EPA’s         and the environment. The settle-
of mercury 70% by 2018, through a           reasoning in the mercury case recalled        ment puts into place measures
system that capped total emissions, set     “the logic of the Queen of Hearts, sub-       that will reduce PCB levels in fish
the amounts of mercury that power           stituting the agency’s desires for the        and bring about a day when fish
plants could emit, and let cleaner plants   plain text” of the law.The Bush Adminis-      in Clear Creek, Stout’s Creek, and
sell unneeded allowances.A coalition of     tration has been public enemy number          Richland Creek can be safely
environmental groups in alliance with       one when it comes to protecting the           eaten by people and animals
17 states, mostly on the receiving end of   environment and public health.That is         alike.
power plant emissions, sued, arguing        another part of the Bush legacy and not
                                                                                           The agreement includes a provision
that the law required tighter, more         a good thing.
                                                                                        whereby CBS will take over a water
expensive controls that could eliminate     Source: New York Times
                                                                                        treatment plant and expand it to
up to 90% of mercury emissions.
                                                                                        capture and remove 99.9% of PCBs
                                            CBS CORP. WILL PAY $31 MILLION IN PCB       being released into Clear Creek, which
THE BUSH ADMINISTRATION IS PUBLIC           SETTLEMENT                                  flows through the Bloomington city
ENEMY NUMBER ONE ON ENVIRONMENTAL                                                       limits. CBS also agreed to make pay-
ISSUES                                         CBS Corp. has agreed to pay more         ments to EPA to reimburse it for
                                            than $31 million to settle liability for    response costs and to the Department
  The federal courts have come down         the cleanup of six PCB-contaminated         of the Interior to restore natural
hard against the Bush Administration’s      Superfund sites in the Bloomington,         resources damaged by PCBs.Along with
relentless efforts to weaken 40 years’      Indiana area. CBS also agreed to addi-      responses under previous settlements,
worth of environmental law, including       tional groundwater and stream cleanup       CBS will have spent an estimated $247
statutes protecting the nation’s forests,   worth $22.8 million. The Justice            million in addressing PCB contamina-
wetlands, and endangered species.The        Department, Environmental Protection        tion at the Bloomington Superfund
courts have been especially important       Agency, and the State of Indiana            sites.
in resisting the administration’s assault   announced the settlement last month,        Source: Associated Press
on the 1970 Clean Air Act, which            which was filed in U.S. District Court in
began with Vice President Dick              Indianapolis.
Cheney’s 2001 energy report and con-           CBS is the successor to Westing-         CHILDREN WILL RECEIVE $20.7 MILLION IN
tinues to this day. In 2006 and 2007,       house, which used PCBs, or polychlori-      ASARCO SETTLEMENT
the United States Court of Appeals for      nated biphenyls, in the manufacture of
the District of Columbia and the                                                           Asarco Mining Company has settled
                                            electrical capacitors at a Bloomington
Supreme Court ordered the Environ-                                                      a lawsuit brought by over 200 Okla-
                                            plant until the 1970s. In the 1950s and
mental Protection Agency (EFA) to                                                       homa families.The residents of the Tar
                                            1960s, dumps and other locations in
follow the law and require utilities to                                                 Creek Superfund Site had filed suit
                                            the area were contaminated by an esti-
install pollution controls when upgrad-                                                 claiming Asarco had contaminated the
                                            mated 2 million pounds of PCBs con-
ing power plants. Another Supreme                                                       area with arsenic, cadmium, lead, and
                                            tained in electrical capacitors. PCBs
Court decision last year held that the                                                  other heavy metals. Citing blood tests
                                            were widely used as insulating materi-
Clean Air Act required the EPA to regu-                                                 detecting high levels of the toxic
                                            als in electrical equipment before the
late greenhouse gas emissions from                                                      chemicals, the families sought damages
                                            cancer-causing chemical was banned in
automobiles, an obligation the agency                                                   based on the health problems experi-
                                            the late 1970s because of its toxicity
continues to duck. The D.C. Circuit’s                                                   enced by their children.The company
                                            and persistence in the environment.
ruling relating to mercury emissions—                                                   filed bankruptcy in 2005 and will pay
                                               The settlement resolves a lawsuit
mentioned above—is another example                                                      the settlement from the company’s
                                            filed in 1985. Under a previous settle-
of the court challenging the Bush                                                       continuing copper mine operations.
                                            ment, CBS was required to dig up and
Administration.                                                                         Several of the families are also involved
                                            incinerate contaminated materials at
  The D.C. Circuit, by no means a                                                       in a separate suit against the company
                                            each site. But the incineration plan was
radical group of judges, has become so                                                  for property damage attributed to the
                                            abandoned in the early 1990s. EPA
exasperated that it has taken to quoting                                                piles of waste in the area and heavy
                                            Regional Administrator Mary Gade
Lewis Carroll. In 2006, in a reference to                                               strip mining below the surface.
                                            commented on the settlement:
                                                                                        Source: Associated Press
“Through the Looking Glass,” the court



                                            www.BeasleyAllen.com                                                              39
HONEYWELL CORP. SETTLES HEXAVALENT          emitted in trailers still housing tens of    looking for ways to protect folks in our
CHROMIUM CONTAMINATION SUITS                thousands of survivors of Hurricanes         state.
                                            Katrina and Rita. It is being alleged that
   The Jersey City Council and the          FEMA “ignored, hid and manipulated
Hackensack Riverkeepers have agreed         government research on the potential         COMPANIES INDICTED IN PET FOOD CASE
to a settlement with Honeywell, Inc.        impact of long-term exposure to
that will resolve at least three federal                                                   Two Chinese businesses and a U.S.
                                            formaldehyde” on Katrina and Rita
lawsuits filed by the City and the River-                                                company have been indicted in the
                                            victims now living in the FEMA trailers.
keepers. The City’s two suits alleged                                                    tainted pet food incidents that killed
                                            If FEMA has suppressed the adverse
that Honeywell’s corporate predeces-                                                     potentially thousands of animals last
                                            health effects, that is inexcusable.Any
sor (Mutual Chemical Co.) dumped                                                         year and raised worries about products
                                            level of exposure to formaldehyde may
tons of cancer-causing hexavalent                                                        made in China. Xuzhou Anying Biologic
                                            pose a cancer risk, regardless of dura-
chromium on 100 acres of west Jersey                                                     Technology Development Co.; Suzhou
                                            tion, according to most experts.
City, New Jersey, property, 41 of which                                                  Textiles, Silk, Light Industrial Products
                                               More than 40,000 trailers are still
belonged to the city.The Riverkeeper’s                                                   Arts and Crafts I/E Co.; and Las Vegas-
                                            being used by families displaced by
suit alleged that the Hackensack River,                                                  based ChemNutra Inc. were charged in
                                            Katrina in August 2005 and Rita weeks
which runs through the western part                                                      two separate but related indictments.
                                            later. FEMA announced last July that it
of Jersey City, was heavily polluted by                                                  The U.S. Attorney’s Office in Kansas
                                            would test occupied trailers, after con-
chromium seeping into the water.                                                         City, Missouri, said the U.S. Food and
                                            gressional investigators disclosed that
   As part of the settlement, Honeywell                                                  Drug Administration has received con-
                                            the agency had suppressed warnings
has agreed to pay the City $25 million                                                   sumer reports suggesting 1,950 cats
                                            for more than a year from its field
over the course of the next two years                                                    and 2,200 dogs died after eating food
                                            workers about health problems experi-
and also make a $13 million contribu-                                                    contaminated with the toxic chemical
                                            enced by Katrina survivors. Tests on
tion towards the relocation of the                                                       melamine. One of the indictments
                                            500 trailers, finally begun in December,
Jersey City Department of Public Works                                                   charges Xuzhou Anying Biologic,
                                            are being performed by CDC. I have to
and the Jersey City Incinerator. The                                                     located in China’s Jiangsu Province, and
                                            wonder how much longer Congress
agreement also requires Honeywell to                                                     Suzhou Textiles, in Suzhou, China, with
                                            will put up with the antics of FEMA?
undertake a major clean-up of the con-                                                   13 felony counts of introduction of
                                            Source: Washington Post
taminated property.The City is hopeful                                                   adulterated food into interstate com-
that the settlement will spur the devel-                                                 merce and 13 felony counts of intro-
opment of thousands of housing units                                                     duction of misbranded food into
plus commercial and retail space on
                                            XIX.                                         interstate commerce. The indictment
the city’s west side. If successful, the    THE CONSUMER                                 also names Mao Linzhun, Xuzhou’s
City expects that the clean-up project      CORNER                                       owner, and Zhen Hao Chen, Suzhou’s
will reap $60 million to $150 million                                                    president.
over the next 20 years in land sales                                                     Source: Associated Press

and, when complete, $50 million in          IDENTITY THEFT INCREASES IN ALABAMA
annual tax revenue.Although the clean-
                                              Identity theft is still a major problem    TOXIC BABY BOTTLES
up plan must be approved by the New
                                            across the U.S. Unfortunately, the
Jersey Department of Environmental                                                          Common baby bottles sold across
                                            number of identity theft cases in
Protection and the overall settlement                                                    North America contain “very signifi-
                                            Alabama rose last year. ID theft again
must be approved by the federal Dis-                                                     cant” levels of a chemical linked to
                                            topped the national list of consumer
trict Court, the City views the settle-                                                  infertility and cancer, according to a
                                            complaints, according to a Federal
ment as both the answer to its current                                                   report released by a coalition of scien-
                                            Trade Commission (FTC) report. The
budget problems and an opportunity                                                       tists and environmental health advo-
                                            FTC says Alabama had 3,221 identity
for new growth.                                                                          cacy groups.The chemical bisphenol A,
                                            theft complaints last year, equal to 69.6
Source: The Hudson Reporter
                                            cases per 100,000 residents, ranking         which is a synthetic hormone that can
                                            17th among the states. In 2006,Alabama       leech out of certain plastics when
                                            had 2,774 ID theft complaints, or 60.3       heated, turned up in nine different poly-
FEMA IS AT IT AGAIN
                                            per 100,000 residents, ranking the state     carbonate bottles commonly sold in
  It appears that the Federal Emer-         No. 27. Alabama ranked 40th in overall       Canada by three different manufactur-
gency Management Agency (FEMA)              fraud complaints per capita, up from         ers. Bisphenol A, or BPA, is used to make
manipulated scientific research into the    44th the year before, according to the       hard polycarbonate plastic, and can be
potential danger posed by a toxic gas       FTC. I hope the Alabama Legislature is       found in many items, including hard



40                                          www.BeasleyAllen.com
plastic bottles and in a lining of tin or   they are concerned that U.S. health offi-   GM TO RECALL 180,000 CHEVY HHRS
aluminum cans.The report claims 95%         cials need to do a better job of pin-
of all baby bottles contain BPA, a          pointing     potential    sources      of      General Motors is recalling 181,516
number which is referenced as accord-       contamination before unsafe food            Chevrolet HHR wagons. It was discov-
ing to ScienceNews.org.                     winds up on supermarket shelves.            ered that some of the vehicles don’t
Source: CBS News                            There are a number of obstacles to          meet government standards for pro-
                                            overcome. The first is an agricultural      tecting occupants from head injury in a
                                            industry that’s becoming increasingly       crash. Chevy HHRs not equipped with
TOYS “R” US TIGHTENS SAFETY STANDARDS       monopolized by a handful of high-           optional roof rail-mounted airbags and
                                            volume producers, which means no            sold between 2006 and 2008 failed
  Toys “R” Us will soon have stricter                                                   GM’s side-impact tests. Roof rail-
                                            contamination is small in size or scope.
safety standards for the products it                                                    mounted airbags are designed to
                                            Making matters worse, we are dealing
sells in its more than 1,500 stores.                                                    reduce the risk of head injury in the
                                            with an outdated, imbalanced food-sur-
Starting on March 1st, the Wayne, New                                                   event of a side-impact collision. In a
                                            veillance system that can’t really police
Jersey-based toy retailer is setting a                                                  letter to dealers, the automaker said
                                            the nation’s entire food supply. Obvi-
much tighter standard for the amount                                                    dealers would need to install a piece of
                                            ously, there is lots to handle when it
of lead allowed in toys made just for                                                   energy-absorbing plastic to the head-
                                            comes to food safety.
the chain. It’s also barring two chemi-                                                 liner trim. The recall will begin later
                                            Source: HealthDay
cals that have raised safety concerns                                                   this month, when the parts become
in products for infants and young chil-                                                 available. The company will send out
dren. By the end of the year, there also                                                notification letters to customers.
won’t be nickel-cadmium batteries in        XX.
                                                                                           In 2007, about 99,000 Chevy Cobalt
Toys “R” Us products—a move meant           RECALLS UPDATE                              sedans were recalled for a similar
to help the environment. The                                                            problem. The Cobalt and HHR share
company says the changes should                                                         their underlying engineering.The retro-
meet or exceed new federal standards        ENGINE FIRES LINKED TO 4.6 MILLION
                                            RECALLED FORDS                              styled Chevy HHR wagon is a competi-
expected from Congress.                                                                 tor to Chrysler’s PT Cruiser. Owners of
                                               The government is warning the            affected Chevy HHR models can
                                            owners of about 4.6 million recalled        contact Chevrolet at 1-800-630-2438 or
HOME-GROWN PROBLEMS THREATEN U.S.
FOOD SAFETY                                 Ford vehicles to immediately bring          go to chevrolet.com. The National
                                            their cars and trucks into dealerships      Highway Traffic Safety Administration
   The American people are extremely        to disconnect faulty cruise control         can be contacted at 1-888-327-4236 or
concerned about the safety of the food      switch systems that have been linked        safercar.gov.
they buy and consume—and with good          to engine fires.The National Highway
reason. In little less than a year-and-a-   Traffic Safety Administration issued the
half, the nationwide recalls of tainted     consumer advisory to the owners of          FORD RECALLS 225,000 VEHICLES FOR
                                            certain Ford, Lincoln and Mercury           CRUISE CONTROL
products have formed their own pecu-
liar food pyramid: meats, vegetables,       sport utility vehicles, pickup trucks,        Ford Motor Co. is recalling about
salad, snacks, fast food, even dessert      vans and passenger cars. About 9.6          225,000 vehicles that were already
items.The various pathogens in those        million Ford Motor Co. vehicles have        repaired as part of an earlier recall to
products killed at least three people,      been recalled and about 5 million have      address concerns about a cruise
sickened more than 1,300 others, and        been fixed. NHTSA said they have            control deactivation switch.According
touched almost every state in the           received about 60 complaints of engine      to Ford, the affected vehicles represent
country as well as Canada.Although the      fires in the Ford vehicles since August     a small portion of the about 10 million
number of outbreaks has leveled off         2007. There are a number of involved        vehicles that have been recalled since
over the past few years, it’s the variety   vehicles in this recall. You can get a      1999 related to the cruise control
of outbreaks that most troubles the sci-    complete list by going to the NHTSA         switch problem. Ford dealt with the
entists and government health officials     Web site www.nhtsa.gov. If you don’t’       cruise control switch problem by
who deal with them. Records reflect         have access to the Internet, let us know    installing new wiring harnesses in the
that many of the contaminations are         and we will furnish this information.       recalled vehicles. Now, the automaker
showing up in foods never before asso-                                                  says some of those wiring harnesses
ciated with poisoning.                                                                  appear to be defective. Ford discovered
   Not only are scientists puzzled about                                                the wiring harnesses problem while
how such staples became tainted, but                                                    repairing a vehicle in its own fleet.The


                                            www.BeasleyAllen.com                                                             41
automaker says no accidents or injuries     potentially leading to a fire.There have     has also been recalled. On certain
have been caused by the problem.            been no reports of fires, injuries, or       motor homes built on Freightliner
   The cruise control switch recall was     crashes according to Ford. Dealers will      chassis and equipped with Bendix sr-7
in response to engine fires linked to       replace the fuel rail assembly.The recall    spring brake modulating valves, the
the cruise control systems in trucks,       was expected to begin in late February       internal rubber check valve may leak.
sport-utility vehicles, and vans. The       for the handle spring. The fuel hose         This causes a delay in the application
vehicles in the new recall include          recall will begin this month. For more       of the spring brakes to park the vehicle
185,000 E-Series vans with model years      information, owners may contact Ford         after the operator pulls the dash valve
ranging from 1992 to 2003. Other            at (800) 392-3673.                           button. This could cause a delay or
affected vehicles include 1993-95 Ford                                                   failure in applying the parking brakes,
Taurus SHO; 1992-98 Ford Crown Victo-                                                    which could result in a vehicle roll-
ria and Mercury Grand Marquis; 1992-        VOLVO TO RECALL 1,502 S40 SEDANS IN          away, increasing the risk of a crash.
95 Lincoln Town Car; 1993 Ford              CHINA BECAUSE OF FUEL PUMP PROBLEM           Four Winds is working with Freight-
Bronco; 1993 gas powered Ford Super            Volvo AB is recalling 1,502 imported      liner and Bendix to repair these vehi-
Duty; and 1995-97 gas-powered Ford          S40 sedans in China as part of its global    cles. Bendix will install a check valve
Super Duty stripped chassis. Ford said      recall efforts because of a technical        repair kit for the affected sr-7 spring
not all vehicles in those model years       problem with the fuel pumps. The             brake modulating valve free of charge.
had the faulty wiring harness installed.    problem is with the fuel pump elec-          Owners may contact Freightliner at 1-
Affected owners will be contacted by        tronic modules, which monitor the fuel       800-547-0712, Bendix at 1-440-329-
the company.                                pump.The electronic modules run the          9000, or Four Winds at 1-937-596-6849.
                                            risk of causing corrosion, according to      Customers may also contact the
                                            the company.The recall affects vehicles      National Highway Traffic Safety Admin-
FORD RECALLS VEHICLES OVER DOOR                                                          istration’s vehicle safety hotline at
HANDLES AND FUEL HOSES                      made between September 15, 2004 and
                                            August 22, 2005.                             1-888-327-4236 or go to http://www.safer
   Ford Motor Co. is recalling more than                                                 car.gov.
180,000 sport utility vehicles and vans
in two separate recalls to fix interior     MOTOR HOMES RECALLED
                                                                                         ENTERTAINMENT CENTERS BY AMERIWOOD
door handles and faulty fuel hoses.The                                                   RECALLED
                                               Tiffin Motorhomes, Inc. has recalled
larger of the two recalls involves nearly
                                            the 2005-2008 Allegro Bus. Certain
124,000 Ford Expedition and Lincoln                                                         Ameriwood Industries Inc., of Tiffin,
                                            motor homes built on Freightliner
Navigator SUVs from the 2007-2008                                                        Ohio is recalling about 138,000 enter-
                                            chassis and equipped with zf model
model years. The automaker said the                                                      tainment centers. The entertainment
                                            8018 steering gears may have been
spring system in the inside door                                                         centers can collapse if the back panel
                                            assembled with the incorrect recircu-
handles could break. The problem                                                         is not secure, posing a risk of death or
                                            lating ball spacer.This could allow the
could prevent the door handles from                                                      serious injury to consumers. The firm
                                            recirculating balls to escape from the
returning to a closed position, but                                                      has received a report of a fatality when
                                            recirculating ball circuit, resulting in a
according to Ford, the latches work                                                      the entertainment center collapsed on
                                            loss of steering. The operator may
properly. But, in a side crash there                                                     a 19-month-old child. The firm has
                                            notice higher required steering wheel
could be a risk of the door latch                                                        received three other reports of minor
                                            inputs. Also, the operator may notice
opening because of the problems. Ford                                                    injuries involving the entertainment
                                            the need for more steering wheel
says there have been no reports of                                                       center. The recalled entertainment
                                            adjustments while driving in a straight
injuries or accidents. Dealers will                                                      centers are black with two lower miter-
                                            line. Metallic cracking noises may occur
replace the interior handle spring on                                                    framed doors, two glass doors at the
                                            before a loss of steering.A loss of steer-
all side doors.The recall involves 2007-                                                 top, and CD storage racks. They
                                            ing could result in a vehicle crash.Tiffin
2008 Expedition and Navigator vehi-                                                      measure about 54 inches wide, 71
                                            is working with Freightliner to replace
cles built from March 3, 2006 through                                                    inches high, and 20 inches deep.They
                                            the steering gear free of charge.
August 9, 2007.                                                                          were        sold        under        the
                                            Owners may contact Freightliner at 1-
   The second recall involves more than                                                  Ridgewood/Charleswood brand name.
                                            800-547-0712. Customers may also
57,000 2006-2007 E-150, E-250 and E-                                                     Model number 93956 is printed on the
                                            contact National Highway Traffic Safety
350 vans, and 2007 Expedition and                                                        instruction manual.They were sold at
                                            Administration’s vehicle safety hotline
Navigator SUVs with 5.4 liter engines.                                                   mass merchandisers nationwide,
                                            at     1-888-327-4236, or        go     to
The automaker said the engine’s fuel                                                     including K-Mart stores, from June
                                            http://www.safercar.gov.
rail crossover hose, which connects the                                                  2000 through May 2005 for about
                                               The 2008 Four Winds Presidio 360
fuel rails, could crack and leak fuel,                                                   $200.The entertainment centers were


42                                          www.BeasleyAllen.com
manufactured in the United States. Con-      manufacturer Chattem, Inc. to order a        we mentioned in another section of
sumers should immediately stop using         recall. Icy Hot Heat Therapy is a self-      this issue the company’s heparin
the recalled entertainment centers and       heating disposable patch designed to         products have been associated with
contact Ameriwood to receive a free          soothe muscular and joint pain.The fol-      as many as four deaths and more than
support panel repair kit. For additional     lowing Icy Hot Heat Therapy products         400 reports of severe allergic reac-
information, contact Ameriwood toll-         are being recalled:                          tions. The FDA has acknowledged it
free at (877) 732-8252 or visit the firm’s                                                didn’t inspect a Chinese plant that
                                             • Icy Hot Heat Therapy Air Activated
Web site at www.ameriwood.com.                                                            supplies the active ingredient for
                                               Heat—Back
                                                                                          Baxter’s heparin before approving it
                                             • Icy Hot Heat Therapy Air Activated         because the agency mixed up the
EVENFLO BABY SEAT RECALL                       Heat—Arm, Neck and Leg                     plant’s name with a different
                                                                                          company.
   Evenflo is recalling the Evenflo Dis-     • Icy Hot Heat Therapy Air Activated
covery car seats.The company says the          Heat—Arm, Neck, and Leg
seat may separate from its base in a                                                      FENTANYL PATCHES RECALLED
crash.The model numbers recalled are           Some of the recalled products were
390, 391, 534, and 552. Evenflo will         samples of the Icy Hot that were issued         Patches containing the prescription
contact registered owners.You can call       with a promotional package of the 3          painkiller fentanyl were recalled for the
800-356-2029 for more details. Con-          oz. size of Aspercreme Pain Relieving        second time in a week last month.The
sumer Reports Magazine rated this seat       Crème.The product label warns against        reason for the recalls was a flaw that
“Not Acceptable” last year, but it had to    using Icy Hot for more than eight hours      could cause patients or caregivers to
retract the rating after questions about     in any 24-hour period.) Other warnings       overdose on the potent drug inside.
its testing procedures. I am not sure the    advise against using the product while       Sold in the United States by Actavis
recalls are related to the issues dis-       sleeping, or on thin, damaged skin or        South Atlantic LLC, the newly recalled
cussed by Consumer Reports.                  open wounds. Elderly people with             patches have both this name and the
                                             more sensitive skin are at a greater risk    company’s former name, Abrika Phar-
                                             of getting burned from Icy Hot.              maceuticals Inc., on their packaging.
CAMPBELL HAUSFELD RECALLS AIR                  After receiving the first wave of          The old name is on the pouches that
COMPRESSORS                                  injury reports in September, the             contain the patches and the new name
                                             company expanded the warning label           is on the outer carton. Just a week
   Campbell Hausfeld, of Harrison, Ohio
                                             to include specific instructions for         before, PriCara, a division of Johnson &
has recalled about 233,000 Campbell
                                             people 55 and older, whose sensitive         Johnson, announced a recall of fentanyl
Hausfeld and Husky Air Compressors.
                                             skin might be better protected by            patches manufactured by its affiliate
Protective covers on the compressor’s
                                             applying the patch to their clothing         ALZA Corp.
motor are not made from proper flame
                                             instead of directly to their skin. Persons      The second and most recent recall
retardant material and can ignite,
                                             who have purchased one of the                includes 25-microgram-per-hour, 50-
posing a fire hazard to consumers.
                                             recalled products can exchange it for a      microgram-per-hour, 75 microgram-per-
While the firm has received 11 reports
                                             full refund by calling Chattem’s Con-        hour, and 100 microgram-per-hour
of fires, no injuries have been reported.
                                             sumer Affairs Department at 1-877-742-       patches with expiration dates of May
Consumers should stop using the air
                                             6275.                                        through August 2009. Some of the
compressor immediately and contact
Campbell Hausfeld for a free repair kit.                                                  patches may have a defect that can
For further information, contact Camp-                                                    cause them to leak, putting patients
                                             BAXTER RECALLS MOST HEPARIN PRODUCTS
bell Hausfeld at (800) 241-0448                                                           and caregivers at risk of coming into
                                             AFTER ALLERGIC REACTIONS
between 8 a.m. to 5 p.m. ET Monday                                                        direct contact with the powerful
through Friday, or visit the firm’s Web         On February 28th, Baxter Interna-         “opioid” drug inside.This could result
site at www.chpower.com.                     tional recalled nearly all of its heparin    in difficulty breathing and a potentially
                                             blood-thinning products just six             fatal overdose.The company said it had
                                             weeks after they were linked to              not received any reports of injuries
ICY HOT PATCHES RECALLED AFTER BURNS         severe allergic reactions in some            related to this defect. Damaged patches
REPORTED                                     patients.The full recall was delayed to      should be flushed down the toilet and
                                             ensure that another manufacturer             not handled. Skin that has been
  More than 200 people have reported                                                      exposed to the gel should be thor-
                                             would have enough supply to prevent
getting first, second, and third degree                                                   oughly rinsed with water, but not
                                             a shortage. Heparin is vital in many
burns and other skin irritations from                                                     washed with soap.The recalled patches
                                             medical and surgical procedures. As
Icy Hot Heat Therapy products, leading


                                             www.BeasleyAllen.com                                                               43
were manufactured for Actavis Inc. by         XXI.                                        American Universities and Colleges.
Corium International Inc.Activis Inc. is                                                     Melissa is a member of several associ-
                                              FIRM ACTIVITIES
a division of Actavis Group hf.                                                           ations and has served as a guest scoring
Source: Associated Press                                                                  judge in local moot court competi-
                                              EMPLOYEES’ SPOTLIGHT                        tions. She serves as a mentor to
                                                                                          members of the Women Students Asso-
BABY CRIB RECALL                                                                          ciation at Jones School of Law. Melissa
                                              MARY PAT CROOK
                                                                                          has been a guest speaker at local semi-
  Some baby cribs are being recalled.           Mary Pat Crook was born in South
                                                                                          nars and at senior citizen centers on
The recall includes Bassettbaby drop-         Bend, Indiana. After attending high
                                                                                          pharmaceutical litigation. Melissa is
side cribs. Officials say spindles on the     school at North Carolina School of the
                                                                                          married to Michael Prickett, and they
drop-side of the crib could loosen, cre-      Arts, Mary Pat graduated from Purdue
                                                                                          have seven-year old twin sons, Jake and
ating a gap that poses an entrapment          University with a degree in Environ-
                                                                                          Sam. The Pricketts are members of
and strangulation hazard. The cribs’          mental Science. While in college, she
                                                                                          Frazer United Methodist Church and
model number is 5446-0504. Basset-            spent her summers as an intern for the
                                                                                          are active in the Children’s Ministry.
tbaby says it has received three reports      Indiana Department of Environmental
                                                                                          Melissa is a very good lawyer who
of spindles coming loose, but no              Management. Mary Pat then earned her
                                                                                          works very hard, and is a valuable
injuries have been reported. The crib         law degree from Ohio Northern Uni-
                                                                                          member of the firm.We are most fortu-
was sold at Babies “R” Us stores nation-      versity, where she received recognition
                                                                                          nate to have Melissa with us.
wide from November 2007 through               for her studies in Land Use and was on
January 2008 for about $400. Con-             the Dean’s List.                            REBECCA HUFF
sumers should stop using the crib               Mary Pat joined Beasley Allen as an          Rebecca Huff has been with the firm
immediately and contact Bassettbaby           associate on January 2, 2008. Before        for almost 7 years as a Medical Advisor
for a free replacement or a full refund.      becoming an associate, she worked as a      in our Mass Torts Division. She works
                                              staff attorney in the firm’s Toxic Tort     on a number of different types of cases
                                              Section. Mary Pat is currently working      in the section, but specifically works
RINNAI RECALLS WALL FURNACES DUE TO           on several environmental cases involv-      with the cases involving Stevens
CARBON MONOXIDE HAZARD                        ing issues such as nuisance and tres-       Johnson Syndrome, a severe form of an
   Rinnai America Corp., of Peachtree         pass resulting from noxious odor            adverse reaction to a drug. Rebecca’s
City, Ga. Has recalled about 52,000           emissions. She is a member of the Hugh      duties include collecting, organizing,
Direct-Vent Wall Furnaces, Models             Maddox Inns of Court. She is married        and reviewing medical records. She
RHFE 431 and RHFE 556. A gasket in            to C. McDowell Crook, Jr., an associate     summarizes and analyses the informa-
the unit can fail, posing a risk of poison-   with the law firm Haskell, Slaughter,       tion and assists lawyers and legal assis-
ous carbon monoxide gas leaking into          Young and Gallion, LLC. Mary Pat is a       tants in that area and with other
the home. Rinnai has received 11              hard worker and is doing good work          healthcare documents.
reports of carbon monoxide leaking            for her clients.We are most fortunate to       Rebecca has been married to Dwight
from the furnace. No injuries have            have her with us.                           R. Huff, who has worked as an account-
been reported.The recall involves                                                         ant for the U.S Dept of Treasury for 31
                                              MELISSA PRICKETT
Rinnai EnergySaver Direct-Vent Wall                                                       years. She has been a nurse for 31 years
                                                Melissa Prickett, a shareholder in our
Furnaces, Models RHFE 431 and RHFE                                                        and worked at Baptist East as a nurse
                                              Mass Torts Section, is currently investi-
556. They are either natural gas or LP                                                    manager of a medical surgical/pediatric
                                              gating all of our Celebrex and Bextra
gas (propane) fueled. The recall                                                          unit before coming to the law firm. She
                                              claims. She is also involved in the
includes only those units manufactured                                                    and Dwight have two sons. Andrew
                                              Hormone Therapy Litigation and serves
from February 2000 through Decem-                                                         was married last year to Anne and they
                                              on several committees in the Prempro
ber 2007. For additional information,                                                     live in Atlanta, Georgia. Anne is the
                                              MultiDistrict Litigation. Melissa gradu-
contact Rinnai toll-free at (866) 746-                                                    daughter they never had. Matthew, who
                                              ated from Jones School of Law in 2001.
8344 anytime, or visit the firm’s Web                                                     worked at the law firm as a staff assis-
                                              While at Jones, she served as a member
site at www.wallfurnacerecall.com.                                                        tant for two summers while in college,
                                              of the Law Review Board and was rec-
                                                                                          is finishing a Master’s Degree in Public
                                              ognized as Outstanding First Year
                                                                                          Health Administration from the Univer-
                                              Student. She was active in the Student
                                                                                          sity of North Carolina. He will graduate
                                              Bar Association and held the positions
                                                                                          in May and already has a job in adminis-
                                              of First-Year Senator and Vice-President.
                                                                                          tration at Pitt County Memorial Hospi-
                                              The Montgomery native was also
                                                                                          tal in Greenville, North Carolina.
                                              selected Who’s Who Among Students in


44                                            www.BeasleyAllen.com
  Rebecca graduated magna cum laude        Auburn, where he posted a 3.6 grade         tests. The next morning, she was
from Troy University in 1976 with a        point average in finance. Considering       told she’d had a mild heart
Bachelor of Science in Nursing. She has    the demands placed on college ath-          attack. After a catheterization—
worked in many different nursing expe-     letes, and especially those playing foot-   just to make sure nothing signifi-
riences including: teaching in a           ball, Ben’s academic successes were         cant had happened—Cawley
diploma school of nursing in Gadsden,      even more impressive.                       woke up to hear her husband
Alabama; working as a Public Health           In his time away from football, Ben      talking on the phone to her
Nurse in Baldwin County, Alabama;          spends much of his time speaking to         mother about bypass surgery.“I’m
working as an Obstetrical and GYN          young people. He is in great demand as      thinking, ‘Bypass? I don’t need
nurse for over 10 years; and either        a speaker and has a great message for       bypass! I’m 43 years old!’ But the
working on or managing the medical         his audiences. Not only is Ben a tremen-    tests showed she had seven major
surgical unit at Baptist East.             dous athlete, he is an even better          blockages. Doctors had stented
  The Huffs were members of East-          person. He is a strong Christian who        three during the catheterization.
mont Baptist Church for over 20 years      has his priorities in order. It’s good to   To repair the rest would require
and until recently taught 5th grade        know that there are athletes like Ben       quadruple bypass surgery. The
Sunday School there. They recently         who are willing to help young people        operation was to take place the
moved to Pine Level, which is north        at a critical juncture in their lives.      following Monday.“But Saturday
of Prattville. They are searching for a                                                morning, being the drama queen
new church home to serve in.                                                           that I am, I had another heart
Rebecca says one of her proudest           A STORY THAT MAKES ALL OF US FEEL           attack,” Cawley said.“We had to go
moments here at the law firm,              GOOD                                        into emergency surgery for the
involves her work with Stevens               The following is an article that          quadruple bypass.”
Johnson Syndrome cases. Our firm           appeared last month in the Montgomery       Before this crisis, Cawley was
was able to help two clients who lost      Advertiser relating to Jill Cawley, a       taking prescription medication for
their eyesight because of this disor-      longtime employee of our firm. I            high blood pressure, but she never
der. Now both are getting help to          believe this is something that you will     anticipated she would experience
improve their living surroundings and      enjoy reading. Jill is a valuable           serious heart problems.There was
their ability to perform everyday life     employee at Beasley Allen and hope-         no way she saw this coming.“That
activities. She says that was especially   fully her story will inspire our readers    was one of the things I want to
gratifying. Rebecca is a very good         to in a number of areas.                    emphasize—a lot of times, women
employee who is dedicated to her
                                                                                       don’t have those typical heart at-
work and the clients we represent.We
                                                                                       tack symptoms, like the crushing
are truly blessed to have her with us.       CAWLEY NOW EATS HEALTHIER,
                                             EXERCISES MORE                            chest pain and pain radiating
                                                                                       down the left arm,” she said.“All I
                                                                                       had felt was a rapid heartbeat.”
XXII.                                        On January 28, 2002, as Jill              She had some difficulties after the
SPECIAL                                      Cawley was getting ready for bed,         surgery, such as fluid around her
                                             she felt her heart rate accelerate. It
RECOGNITIONS                                                                           lungs and shortness of breath that
                                             lasted about 10-15 minutes. She           was remedied by a pacemaker.
                                             thought it was just stress—things         Eight weeks after all of this, she
SEATTLE SEAHAWKS RECEIVER’S GUIDE TO         had been very busy at work, and           was back at work. One big lifestyle
SUCCESS                                      she and her husband, Rob, were            change she’s made is losing
                                             getting ready to go on vacation.          weight. She was fairly overweight
   As many of you—especially Auburn          Knowing that her family has a             when her heart problems began.
football    fans—will     know, Ben          history of heart problems, she            Now she’s part of Weight Watchers
Obomanu is now a wide receiver with          and her husband went to the               and has lost 52 pounds. “It just
the Seattle Seahawks. Ben, a native of       emergency room. “I really didn’t          clicked with me: You’ve had two
Selma, was an outstanding receiver           expect it to be anything,” said           heart attacks; you’re on the fast
during his college days at Auburn.At a       Cawley, 49.“I think Rob realized I        track for the third one and if that
time when many athletes—both in              was in trouble before I did.” Her         happens, the outcome is not going
college and the professional ranks—are       heart rate returned to normal,            to be good,” Cawley said of chang-
not setting a very good example for          but her doctors decided to keep           ing her eating and exercise habits.
youngsters, Ben Obomanu is an excep-         her overnight for observation and         “I just had to do it.” Now, she’s exer-
tion. Ben was a cum laude graduate at


                                           www.BeasleyAllen.com                                                              45
  cising, eating healthier foods—               ing order. Make God first in all          races and the crew. Grant and the firm
  “just paying attention,” she said.            that you do, trust Him and be             promote the Cystic Fibrosis Foundation
                                                obedient to His commands; your            to help fight this serious disease, which
  “My husband being a profes-
                                                family must come next if you are          impacts the lives of many young
  sional chef, I put him to work,” she
                                                to be successful over the course of       people and their families. Grant has
  said.“I told him, ‘We need to use
                                                a career in law; and finally your         been told by race fans of their appreci-
  your skills to plan healthier
                                                work must be important to you             ation for highlighting this genetic
  meals.’ Healthy food can be
                                                and you must strive to be the very        disease.The racing Web site has a link
  wonderful, too. I can eat a little
                                                best that you can be as a lawyer.         to the Foundation’s Web site, which
  less of what I want, or a little dif-
                                                It’s hard to follow this set of prior-    provides information and hope in the
  ferent from what I want and stay
                                                ities, but it is absolutely a neces-      fight against CF.
  healthier, or I can eat what I
                                                sity if you are to have a                    Grant works on the firm’s race car at
  want and continue digging my
                                                productive life and one that              night and weekends, while working
  grave with my fork.” Her advice to
                                                brings real satisfaction. In my           days in a race shop in Charlotte. He is
  women: Use your feminine intu-
                                                business helping folks who need           learning the ins and outs of ARCA and
  ition. “If something unusual is
                                                help and who without a lawyer             NASCAR, and we look forward to him
  going on with your body and
                                                would be left out of the system, is       taking the Beasley Allen race team to a
  your instinct tells you that some-
                                                very important. It is also essential      higher level. Race results and a sched-
  thing’s not right, get it checked
                                                to remember that the client’s             ule of races can be found at the race
  out,” Cawley said.“Don’t wait. If I
                                                interest comes first and must be          team’s Web site. We are all excited
  had waited, I might not be here.
                                                honored in the lawyer-client rela-        about the upcoming racing season!
  We were supposed to be leaving
                                                tionship. Finally, you must learn
  that Thursday for a cruise, and if
                                                to say “no” when that is the right
  this had happened while we were                                                         FAVORITE BIBLE VERSES FOR THE MONTH
                                                response regardless of the context
  at sea, I probably would have
                                                in which a decision-making situa-
  come home in a shipping crate,”                                                           Leigh O’Dell and Andy Birchfield sup-
                                                tion arises. Sometimes, that is also
  she said. “I came very close to                                                         plied some of their favorite Bible verses
                                                difficult to do, but again a
  being one of those women you                                                            this month. Since all of them seemed
                                                requirement in this field of work.
  hear about that hits the floor and                                                      appropriate, I am including more than
  never knew what happened.”                    I believe that this advice would be       one verse this month.
                                              good for folks who work in other occu-
  Jill is a strong Christian who has her                                                    Trust in the LORD with all your
                                              pations or vocations. I only wish some
priorities in life in order. She has been a                                                 heart and lean not on your own
                                              older lawyer had taken the time to
real inspiration for all of us at Beasley                                                   understanding; in all your ways
                                              advise me when I first started to work
Allen. I am pleased to send her message                                                     acknowledge him, and he will
                                              as a young lawyer.
on to our readers for their enjoyment                                                       make your paths straight.
and edification.                                                                            Proverbs 3:5-6
                                              RACE SEASON IS HERE                           Rejoice in the Lord always. I will
                                                                                            say it again: Rejoice! Let your gen-
XXIII.                                           Grant Enfinger, the driver of the
                                                                                            tleness be evident to all. The Lord
                                              firm’s race car, recently graduated from
SOME CLOSING                                  the University of South Alabama. He has
                                                                                            is near. Do not be anxious about
OBSERVATIONS                                  moved to Charlotte, North Carolina,
                                                                                            anything, but in everything, by
                                                                                            prayer and petition, with thanks-
                                              which is the center of the stock car
                                                                                            giving, present your requests to
                                              racing world. Grant will continue
SOME ADVICE TO YOUNG LAWYERS                                                                God.And the peace of God, which
                                              racing the firm’s 82 Super Late Model
                                                                                            transcends all understanding,
  I was asked recently to contribute to       in the Alabama/Florida region in addi-
                                                                                            will guard your hearts and your
an article for publication in a state bar     tion to races in the Carolinas. In the
                                                                                            minds in Christ Jesus. Finally,
journal.They asked me to write some-          opinion of real experts, Grant has a
                                                                                            brothers, whatever is true, what-
thing that might be of some benefit to        bright future in stock car racing. He has
                                                                                            ever is noble, whatever is right,
young lawyers.The following is what I         the potential to be as good as they
                                                                                            whatever is pure, whatever is
furnished:                                    come.
                                                                                            lovely, whatever is admirable—if
                                                 The race team has upgraded its Web
  It is essential for a lawyer to set                                                       anything is excellent or praise-
                                              site—www.BeasleyAllenRacing.com—
  his or her priorities in the follow-                                                      worthy—think about such things.
                                              with photos and articles about the


46                                            www.BeasleyAllen.com
Whatever you have learned or            which He loved us, even when we           would apply to all of us. I know that it
received or heard from me, or           were dead in trespasses, made us          does for me. I would like to hear from
seen in me—put it into practice.        alive together with Christ (by            our readers on the subject.
And the God of peace will be with       grace you have been saved), and
you.                                    raised us up together, and made
Philippians 4:4-9:                      us sit together in the heavenly           XXIV.
                                        places in Christ Jesus, that in the
For this reason, ever since I heard                                               SOME PARTING
                                        ages to come He might show the
about your faith in the Lord Jesus
                                        exceeding riches of His grace in          WORDS
and your love for all the saints, I
                                        His kindness toward us in Christ
have not stopped giving thanks
                                        Jesus. For by grace you have been
for you, remembering you in my                                                       At one of our firm’s weekly devo-
                                        saved through faith, and that not
prayers. I keep asking that the                                                   tions last month, Pastor Carmen Fal-
                                        of yourselves; it is the gift of God,
God of our Lord Jesus Christ, the                                                 cione reminded us that if we are
                                        not of works, lest anyone should
glorious Father, may give you the                                                 believers in Jesus Christ, our faith is not
                                        boast. For we are His workman-
Spirit of wisdom and revelation,                                                  in a limited god—but an all-powerful,
                                        ship, created in Christ Jesus for
so that you may know him better.                                                  all-knowing, and ever present God. It
                                        good works, which God prepared
I pray also that the eyes of your                                                 was a reminder that no matter what
                                        beforehand that we should walk
heart may be enlightened in                                                       happens in life, God is neither sur-
                                        in them.
order that you may know the                                                       prised nor shocked. Nothing is out of
                                        Ephesians 2:4-10
hope to which he has called you,                                                  His control. Carmen’s message was
the riches of his glorious inheri-      Therefore, since we are sur-              most reassuring. Romans 8:28 tells us,
tance in the saints, and his            rounded by such a great cloud of          “And we know that God causes all
incomparably great power for us         witnesses, let us throw off every-        things to work together for good to
who believe.That power is like the      thing that hinders and the sin            those who love God, to those who are
working of his mighty strength,         that so easily entangles, and let         called according to His purpose.” Or, as
which he exerted in Christ when         us run with perseverance the              I heard a preacher say one time,“when
he raised him from the dead and         race marked out for us. Let us fix        things look like they are falling apart,
seated him at his right hand in         our eyes on Jesus, the author and         God is really making them fall into
the heavenly realms, far above all      perfecter of our faith, who for the       place.” It is encouraging that even with
rule and authority, power and           joy set before him endured the            all the uncertainties and trials and
dominion, and every title that          cross, scorning its shame, and sat        tribulations in life, we can be confident
can be given, not only in the           down at the right hand of the             that there is an all-powerful, all-
present age but also in the one to      throne of God                             knowing, ever present God who loves
come.                                   Hebrews 12:1-2                            us and who promises He will sustain
Ephesians 1:15-21                                                                 us, strengthen us, provide for us,
                                        Andy says that he has favorite verses
                                                                                  protect us, comfort us, and be with
But God, who is rich in mercy,        at different times depending on what
                                                                                  us—always.
because of His great love with        he is facing at that time. I suspect that




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