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					                                                                                         OCTOBER 2007




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.




                                       BeasleyAllen.com
I.                                              irresponsibly and commit wrongful             ment of the other contenders for the
CAPITOL                                         acts, the only place Americans can go to      GOP nomination.
                                                hold them accountable is to our courts.         Rudy Giuliani - lots of folks – includ-
OBSERVATIONS                                    We have seen multiple-incidents where         ing me – believe that Rudy Giuliani is
                                                Insurers delayed or refused outright to       simply not fit to be president of the
WRONGDOERS MUST BE HELD ACCOUNTABLE             pay fair and just insurance claims – com-     United States.The fact that he just hap-
                                                panies produced defective and unsafe          pened to be Mayor of New York City on
   The battle to keep our civil justice         products – corporations polluting our         September 11th doesn’t qualify him to
system alive and well has been going on         environment – powerful corporations           lead our country, nor will it overcome
for the past several years and it’s one         cheating their own employees and              his many obvious shortcomings. The
that the American people can’t afford to        shareholders. This sort of thing can          very thought of this man being Presi-
lose. Those powerful corporate inter-           never be tolerated in our country.            dent is downright scary. Nevertheless, it
ests trying hard to shut down the                  Our civil justice system must be           appears that he is in the race for the
system are well-financed, well-organized        viable and strong so that deserving indi-     duration, and he will definitely be a
and are totally dedicated to their task.        viduals can get justice and wrongdoers        factor.All of the polls show Giluliani as
Unfortunately, many of our citizens who         can be held accountable. That is the          the leader at this point.
would be hurt the worst if this war is          commitment of the people who work at
lost don’t even know that the battle is         our firm and it should be for all citizens.           I N TH I S I S S U E
being waged. That’s because of the              We must oppose all efforts to weaken
                                                                                               I.     Capitol Observations . . . . . . . . . . . . 2
massive public relations campaign,              basic legal protections and further stack
designed to convince the public the             the deck against regular folks. Seeking        II.    Legislative Happenings . . . . . . . . . . 6
court system is broken, which has been          justice for all is a most worthy cause
                                                                                               III.   Court Watch . . . . . . . . . . . . . . . . . . 7
successfully used by these powerful             and one that I certainly believe is worth
interests. They are spending millions of        fighting for. All citizens benefit when        IV.    The National Scene . . . . . . . . . . . . 11
dollars each year to get their message          an individual who is hurt or damaged
                                                                                               V.     The Corporate World . . . . . . . . . . 14
out because they want the courthouse            by another’s wrongful conduct has a fair
doors closed to victims of corporate            chance to get justice through our civil        VI.    Congressional Update . . . . . . . . . . 17
wrongdoing. If that were ever to                justice system. That has always been the
                                                                                               VII. Product Liability Update . . . . . . . . 17
happen, it would be a national disaster.        American way, and it’s my hope and
As we all know, the court system in our         prayer that it will always be!                 VIII. Mass Torts Update. . . . . . . . . . . . . 21
country was designed to level the
                                                                                               IX.    Business Litigation . . . . . . . . . . . . 24
playing field between regular folks and
large powerful interests. This latest           THE WORST BUNCH EVER                           X.     Insurance and Finance Update . . . 26
threat to the civil justice system, and
                                                   I’m not sure the current crop of GOP        XI.    Predatory Lending. . . . . . . . . . . . . 28
specifically to the right to a trial by jury,
                                                presidential candidates is the worst
is federal preemption. That will be dis-                                                       XII. Premises Liability Update . . . . . . . 28
                                                ever, but if they aren’t, they will be a
cussed in greater detail in a separate
                                                very close second to the worst in recent       XIII. Workplace Hazards. . . . . . . . . . . . 29
section of this issue.
                                                memory.The only time that I can recall
   As lawyers, our obligation is to make                                                       XIV. Employment Litigation . . . . . . . . . 30
                                                when the candidates were worse would
sure any person who is injured by the
                                                have been in the Goldwater year of             XV.    Transportation . . . . . . . . . . . . . . . 31
misconduct of others can get justice in
                                                1964. Of course, Goldwater lost to
the courtroom when taking on the                                                               XVI. Healthcare Issues . . . . . . . . . . . . . 33
                                                Lyndon B. Johnson by a landslide in the
powerful interests. This obligation is
                                                general election that year.           Most     XVII. Environmental Concerns . . . . . . . 35
now more important than ever because
                                                observers believe the entry of former
the drug and oil industries, big insur-                                                        XVIII. The Consumer Corner. . . . . . . . . . 37
                                                Senator Fred Thompson will make this
ance companies, and other large corpo-
                                                group a little better than the field in        XIX. Recalls Update . . . . . . . . . . . . . . . 40
rations dominate and control the
                                                1964. It’s my belief that Thompson, who
political system in our country. Because                                                       XX.    Special Recognitions . . . . . . . . . . . 42
                                                was born in north Alabama, will wind
of the power and influence of these
                                                up being the Republican nominee. But,          XXI. Firm Activities . . . . . . . . . . . . . . . . 44
interests, regular folks can’t depend on
                                                if that happens, it will be a result of the
the political system to hold corpora-                                                          XXII. Some Closing Observations . . . . . . 46
                                                others being so bad.To put it mildly, the
tions accountable. That’s why the court
                                                rest are simply awful, and that makes          XXIII. My Closing Comments. . . . . . . . . . 47
system is so critically important. When
                                                the actor-politician from Tennessee look
large corporations and their bosses act
                                                pretty good. The following is my assess-



2                                                   BeasleyAllen.com
   John McCain – at one point Senator            Perhaps the most significant thing          event he makes the decision to run,
McCain appeared to be a very good can-        concerning the GOP hopefuls is that,           Billy’s knowledge of healthcare issues
didate, but his campaign has literally        with the exception of McCain, nobody           would be invaluable. He has served as
fallen apart. I believe that demise           wants to get very close to President           president of the Alabama Pharmaceuti-
resulted from McCain the candidate,           Bush, Vice-President Cheney, or Karl           cal Association and has served on the
trying to be all things, to all people and    Rove. That is most interesting and tells       advisory board for the Pharmacy School
when that strategy failed, he became a        me that the GOP is in trouble. Although        at Auburn University. I have always felt
clone of George W. Bush.That appeared         things don’t bode well for the Republi-        that the pharmacist in any small town,
to be a desperation move and it has just      can hopefuls as we approach 2008,              and even to a lesser extent in the larger
made matters worse. In my opinion,            things have a way of changing quickly          cities, would be the best political sup-
McCain is no longer a factor and that’s       in politics. I really believe, however, that   porter in his or her area for a candidate.
sort of sad.                                  the only way for the Republican                It’s been my observation over the years
   Mitt Romney – the former Massachu-         nominee – whoever winds up with the            that everybody likes and trusts their
setts Governor was probably the best          brass ring – to be respectable on Elec-        own pharmacist. That’s certainly the
all-around candidate that the GOP had         tion Day is for the Democrats to self-         case for Billy in Barbour County. Unfor-
to offer before Fred Thompson entered         destruct.As we all know, that happened         tunately, it’s also been my observation
the race. But I am not sure the hard-core     in 2004 when John Kerry wound up as            that in the past, most pharmacists really
Republicans will support Romney when          the Democratic Party’s nominee. I hope         haven’t gotten involved in political
it comes down to it. Still, because of the    a lesson was learned by the party bosses       races. That would most likely not be the
overall weakness of the field, he could       and a like mistake won’t be made this          case if Billy runs and gets the Democra-
wind up with the nomination, especially       time.                                          tic nomination. Even if he doesn’t make
if Fred Thompson’s past or track record                                                      the race, pharmacists should get actively
for not being a very hard worker come                                                        involved in state politics. Had they
back to haunt him. It’s clear Romney’s        DEMOCRATS WILL CHALLENGE SESSIONS              been actively involved, it’s my belief that
campaign is well-funded, and that’s very                                                     none of our Alabama Congressional del-
                                                 It appears that U.S. Senator Jeff Ses-
important in a primary race. For that                                                        egation would have voted for the pre-
                                              sions will definitely have a Democratic
reason he will be a contender, in my                                                         scription drug bill that President Bush
                                              opponent next year. The question at
opinion.                                                                                     and the big drug companies pushed
                                              this point is – who will that person be?
   Newt Gingrich – There is another                                                          through Congress.
                                              Currently, there are several potential
potential candidate lurking in the                                                              Earlier polls had shown that Ron
                                              candidates taking a serious look at this
wings. Newt Gingrich, the former                                                             Sparks would have run a very strong
                                              race. There is one person who has
Speaker of the House of Representative,                                                      race both in the Democratic primary
                                              already jumped into the Democratic
is a “wanna-be” who is actively testing                                                      and in the general election against Ses-
                                              primary race. Vivian Figures, a state
the waters. It’s interesting that the                                                        sions. His decision not to run – while
                                              senator from Mobile, announced her
Georgia native has gone to great lengths                                                     coming as a surprise – is most likely
                                              candidacy several weeks ago. It was no
to distance himself from the Bush                                                            final. Frankly, I never have figured out
                                              surprise to read that she will be a candi-
Administration. Most observers say                                                           why Ron decided not to make the race
                                              date, because the Mobile County native
Newt is really courting the right-wing of                                                    and so far he hasn’t told me. Given that
                                              has been saying for months that she
the party, and that may just work. When                                                      he definitely appeared to be a real
                                              would seek the Democratic nomination.
he was Speaker, Newt was their                                                               strong candidate, it must have some-
                                              At this point,Vivian is officially the only
“darling.” In fact, he might be a real con-                                                  thing to do with a race later on down
                                              announced candidate in the race.
tender if his “draft me” strategy pays off                                                   the road.
                                              Although I really like Vivian, I may not
and the rest of the field falters. Newt is                                                      Many political observers felt that Jim
                                              be able to support her. That’s because
best remembered in political circles for                                                     Folsom would likely run against Ses-
                                              one of the persons who is seriously con-
his “Contract with America” agenda.                                                          sions. But Jim let it be known very early
                                              sidering getting in the race is my
Although that was more fluff than sub-                                                       that he had no interest in going to Wash-
                                              brother, Billy Beasley.
stance, it was a masterfully carried out                                                     ington at this time. But, there has been
                                                 Billy, a pharmacist, who is currently
public relations ploy. I will reserve judg-                                                  speculation recently that the popular Lt.
                                              serving in the House of Representatives,
ment on Newt for now and see what                                                            Governor still might be talked into
                                              owns two retail drug stores in Barbour
develops as the primary season                                                               getting in the Senate race. I don’t
                                              County. Over the past several weeks,
approaches. When you really think                                                            believe he will change his mind because
                                              Billy has received a considerable
about it, Newt would be a perfect candi-                                                     the governor’s office is where Jim
                                              amount of encouragement to run. But,
date for Karl Rove, and that makes him                                                       would rather be. The strong showing he
                                              at this point I would have to say he is
even more dangerous!                                                                         made last year in his successful race
                                              still in the undecided category. In the


                                                  BeasleyAllen.com                                                                    3
against a well-financed GOP candidate          2010. Based on conversations with             tion budget in the next legislative
makes “the little man’s big friend” a          others after the meeting, that opinion is     session. We must continue to attract
leading contender in the 2010 gover-           shared by a good number of persons            new industries and take care of those
nor’s race.                                    who heard that speech. Seth will be a         that we already have in the state. This
   Finally, there will definitely be a         leading contender if he continues to          critically important area of governmen-
strong opponent for Sessions in the            shoot straight with Alabama citizens on       tal responsibilities can’t be taken for
general election next year. Although he        issues of concern and offers solutions to     granted and I don’t believe that it will
has raised a pile of money, the polls          the critical issues facing our state. He is   be.
don’t show the Mobile Republican as            extremely knowledgeable about the
being in the “unbeatable” category. In         inner workings of state government and
fact, a strong candidate who can raise an      knows how to get things done. That’s          AIDT IS RANKED HIGH AMONG STATE
                                                                                             PROGRAMS
adequate amount of campaign funds              most important for a governor.
would be extremely competitive with                                                             Alabama Industrial Development
Sessions. There is a world of difference                                                     Training (AIDT) continues its run as one
in our senior Senator Richard Shelby           THOUSANDS OF NEW JOBS CREATED IN
                                                                                             of the nation's highest-ranked work-
                                               ALABAMA THIS YEAR
and Sessions. On a scale of 1 to 10                                                          force training programs, according to a
Shelby would rank a 10 insofar as effec-          According to Governor Riley, there         recent survey of site selection experts
tiveness in the Senate and being fair to       have been nearly 100 new and expand-          by Expansion Management magazine.
all Alabama citizens.You can make your         ing industry announcements in Alabama         Alabama's agency ranked second
own conclusion as to how the junior            so far this year, creating more than          behind Georgia in the annual survey,
Senator would rank. In any event, we           10,000 jobs.The announcements, which          which was published in August.Among
will have a most interesting race next year!   took place in 37 counties, represent a        all training programs in this country,
                                               combined capital investment of nearly         AIDT ranked number one in 2004 and
                                               $5.7 billion. As we in Alabama all know,      2006 and number two in the 2005 and
SETH HAMMETT MAKES A GOOD IMPRESSION
                                               among the announcements were                  2007 surveys. Actually,AIDT has never
   Seth Hammett spoke to a breakfast           German steelmaker ThyssenKrupp’s              ranked lower than the top seven since
meeting sponsored by the Montgomery            plans to build a 2,700-worker plant near      the survey began in 1999. Ed Castile,
Area Chamber of Commerce recently.             Mobile, and Hyundai’s plans to expand         who is the AIDT Director, is doing a
The popular House Speaker received a           its Montgomery operations with a new,         tremendous job and he should be com-
tremendous response from the capacity          522-worker engine plant. The Governor         mended for his performance. Ed has
crowd in attendance. Seth outlined the         had this to say concerning what’s hap-        pointed out that all states are faced with
successes and shortcomings of the 2007         pening in our state:“With a low unem-         workforce issues, and that’s why
regular session and didn’t pull any            ployment rate, more jobs and the fastest      Alabama’s program is so important. If
punches. He also discussed some of the         growth in per capita income in the            we are going to continue bringing the
issues that the next regular session will      South,Alabama is booming.”                    good industries into Alabama – and con-
have to deal with. Seth warned the                Although Alabama’s economy is doing        tinue supporting those we already have
group that the state general fund budget       extremely well, in my opinion the best        – AIDT must keep up its good work.
would be very tight next year. One chal-       is yet to come. Governor Riley under-         Other states have recognized how
lenge will be how to come up with              stands there are still folks in Alabama       important this program has been to our
$160 million in state funds which will         who need to be brought into the overall       state’s industrial recruiting capacity and
have to be found for the Medicaid budget.      picture. Bringing them in will not only       have put in programs of their own.
The Department of Transportation will          allow them to share in our state’s good          I have kept up with the progress of
also need a great deal of state money in       economic fortune, but it will make our        AIDT since it was started in Alabama
order to meet the demands for new              state’s economy much stronger. That           back in 1971. On a personal note, I was
highway construction and maintenance           makes paying special attention to             involved in state government at that
of existing roads. I doubt that many of        Alabama’s Black Belt a real priority.         time and helped start the program. For
those in attendance realized how great         Until we upgrade the economic devel-          that reason, AIDT will always have a
the maintenance needs are in our state.        opment of the Black Belt countries, we        very special place in my memory book.
The possibility of a special session to        can’t say that all Alabamians are sharing     I remember very well how, at the time,
                                               in our state’s progress. Job training and     many leaders in education and a good
deal with campaign finance reform leg-
                                               vocational skills are areas where special     number of political leaders failed to
islation was also discussed.
                                               attention must be placed in our system        comprehend how important the cre-
   I left the meeting with the distinct
                                               of public education. Vocational educa-        ation of AIDT would be for our state. As
impression that the Speaker will defi-
                                               tion, with an emphasis on job training,       a result, there was tremendous opposi-
nitely be a candidate for Governor in
                                               must receive a top priority in the educa-     tion to the program at the time. Thanks



4                                                  BeasleyAllen.com
to the foresight of persons like Jimmy         company instead of crediting them to          companies rose because the pharma-
Faulkner, Dr. T.L. Faulkner, and Fred          the State Employee Benefit Plan. The          cists would choose the higher priced
Denton, the program was started on             case was pending in the Circuit Court         drug over a lower priced drug. At first
schedule and all of the opposition was         of Kanawha County,West Virginia.              blush it appears that the pharmacists
eventually overcome. George Howard,               I am happy to report that we have          were the beneficiaries of the false
who came in to take over the program,          agreed to a settlement of the case, the       reporting scheme, but the pharmacists’
was the man who really got AIDT off            terms of which are available for review.      surveys show that 76% of all gross pre-
the ground. George had a vision of             Attorney General Darrell V. McGraw, Jr.       scription drug income is reaped by the
what it would take to take the program         and lawyers in his office were                pharmaceutical companies.
to the heights it now enjoys. He also          extremely well-pleased with the settle-         This very sophisticated fraudulent
had the ability and work ethic required        ment of the case, which had been              scheme by the drug companies has only
to get the job done. Without George’s          pending since 2003. It was an honor           recently been revealed as a result of our
leadership, AIDT wouldn’t have made            for our firm to be selected by the Attor-     judicial system at work. Without our
the progress that it has enjoyed. In fact,     ney General to prosecute the case on          court system, the taxpayers of this
it might have died on the vine during          behalf of the State of West Virginia. We      nation would simply have no recourse
the first few years of the program’s           are pleased that we could achieve a set-      to unveil this type of fraudulent activity
existence.                                     tlement that will benefit the taxpayers       and the pharmaceutical companies
   Every major industry that has located       of that state.                                would continue to not only take funds
in Alabama has successfully used the              The PBM cases are very similar to the      from taxpayers, but deny the less fortu-
training program, and its availability was     Average Wholesale Price (AWP) cases           nate citizens of this country the right to
the key factor in each of the company’s        that our firm is pursuing on behalf of        medical care through the Medicaid
selecting Alabama as a site for a plant.       Attorneys General for the States of           programs.
As a result, thousands of Alabamians           Alabama, Mississippi, South Carolina,
have been able to obtain and keep good         Alaska, Hawaii, and Utah. In those cases,
paying jobs. Job-specific training is criti-   the States claim that the drug compa-         THE AWP LAWSUIT IN ALABAMA WILL BE
cally important to both new and exist-                                                       TRIED NEXT YEAR
                                               nies reported false and inflated prices
ing industry, and that’s what AIDT             that the companies knew the State Med-           The State of Alabama will soon have
provides at no cost to the industry            icaid programs were using to reimburse        its day in court in the AWP litigation
involved or to the trainees. AIDT is one       the pharmacists involved in the Medic-        against some of the pharmaceutical
of the greatest success stories in our         aid programs. The Attorneys General of        companies that engaged in fraudulent
state’s history. If you want to learn          23 states have now filed lawsuits against     conduct in their dealings with the
more about the program, go to AIDT’s           the pharmaceutical companies in an            State’s Medicaid program. Our case is
website, www.AIDT.edu.                         effort not only to recoup the overpay-        set for February 11, 2008, and will be
Source: Mobile Press-Register
                                               ments, but also to impose statutory           tried in Montgomery County Circuit
                                               penalties and/or punitive damages for         Court. This will be the first trial against
                                               the companies’ fraudulent conduct.            the initial set of the seventy-three defen-
THE WEST VIRGINIA PBM LITIGATION
SETTLES                                        This false reporting price scheme by the      dants sued in Alabama to take place.
                                               pharmaceutical companies resulted in          Dee Miles, Clint Carter, Scarlette Tuley,
   I have previously reported that our         billions of dollars in losses to the          Clay Barnett and I will be involved in
firm, in conjunction with two West Vir-        already-strapped Medicaid programs            this trial, along with Roger Bates, Caine
ginia law firms, Cook, Hall & Lampros          throughout the country. At the same           O'Rear, Clay Rankin, Windy Bitzer and
and the Law Offices of William Druck-          time, the pharmaceutical companies            Tracy Davis from the Mobile firm of
man, was representing the State of West        captured huge market share for their          Hand, Arendall. We all look forward to
Virginia in a Pharmacy Benefits Manager        drugs through this fraudulent scheme.         the challenge and hope to get a good
(PBM) claim against Merck-Medco                   In effect, this elaborate scheme –         result for Alabama taxpayers.
Managed Care, L.L.C. The Public                designed by the pharmaceutical compa-
Employees Insurance Agency (PEIA)              nies – of falsely inflating reported prices
alleged that Merck-Medco was guilty of         resulted in the federal and state govern-     AN ELECTROCUTION CASE IS FILED IN STATE
fraud and breach of contract relating to       ment Medicaid programs funding the            COURT
the integrated prescription drug               companies’ marketing plan to gain
                                                                                               Our firm filed a case recently that
program administered by Merck-Medco            market share for particular drugs. More
                                                                                             involved the death of a young wife and
for the State. The claims focused on           specifically, as the prices were continu-
                                                                                             mother, who was electrocuted while
drug pricing issues and rebates that           ally inflated and reported by the drug
                                                                                             working in a chicken house located on
were allegedly withheld by the                 companies, the usage for those drug



                                                   BeasleyAllen.com                                                                   5
her property in Barbour County,               II.                                            Albert Lipscomb, Baldwin County
Alabama. Her death was caused by a            LEGISLATIVE                                    Republican Party Chairman Don
defective electrical system, which had                                                       McGriff, and Baldwin County Commis-
been installed for the chicken feeder
                                              HAPPENINGS                                     sioner David Ed Bishop. His run-off
system.The system was badly designed                                                         opponent even had a very popular and
and, we believe, improperly installed.        TRIP PITTMAN WINS SENATE RACE                  widely-respected governor in his
Had the system utilized alternative                                                          corner. Randy McKinney, who was
designs that were readily available to           A political newcomer, Lee "Trip"            already well-known in Montgomery
the defendants, who designed and              Pittman, pulled off what is being viewed       political circles, picked up strong
installed the system, the death would         as a major upset in the Republican             support from the Business Council of
not have occurred.The decedent is sur-        runoff in state Senate District 32.            Alabama and many trade associations,
vived by her husband and two children.        Pittman defeated a better-financed             including realtors, retailers, and truck-
We will be able to prove that the design      opponent who was backed heavily by             ing.Their candidate led the primary, but
and installation of the electrical system     nearly all of the influential business         not by enough to avoid a runoff. Most
was bad and that it created an                groups. Pittman received 56% of the            observers felt when Governor Riley
extremely dangerous condition. Any            vote in the primary run-off to 44% for         endorsed McKinney in the run-off and
person working in the chicken house           state Board of Education member Randy          appeared in a TV commercial for him
was put at risk for serious injury or         McKinney. The impressive victory will          that a win was certain. But, as it turned
death. There are a number of defen-           put Pittman against Democrat A.J.              out, the governor’s endorsement had no
dants in the case and it’s likely others      Cooper in the special election to be           real effect.
will be added as discovery goes               held on October 16th. It appears that             Democratic nominee A.J. Cooper, who
forward. Greg Allen and I will handle         Pittman, a 47-year-old tractor dealer          is a Fairhope lawyer and former mayor
this case, along with Shane Seaborn,          from Daphne, has a pretty good read on         of Prichard, is running in a county that
Myron Penn, and Will Partin of the firm       why he did so well in his race. He says,       is considered to be firmly in the Repub-
of Penn and Seaborn from Clayton.             as a first-time candidate, the voters' “dis-   lican category. Most observers – and
                                              pleasure with politics” benefited him.         pollsters – believe that Pittman will win
                                              In addition, he also believes those feel-      rather easily. But, I imagine the GOP
A REAL FRIVOLOUS LAWSUIT                      ings were enhanced by the “endorse-            candidate learned a valuable lesson in
                                              ments” from outside the district. His          his primary race and won’t take any-
   I read about the lawsuit filed recently
                                              most astute observation was: “People           thing for granted. In any event, I believe
against God by a state senator from
                                              are frustrated with government and the         Trip Pittman is headed to the Senate.
Nebraska and at the time I wasn’t sure
                                              perception of who it works for. They           Source: Associated Press
whether he was making a bad joke or
                                              think it doesn't work for them.”
was trying to make some sort of a point.
                                                 As far as the endorsements go, I have
This politician may believe filing a                                                         DECISION ON SPECIAL SESSION WILL LIKELY
                                              never felt that voters pay much atten-
lawsuit against God is acceptable, even                                                      BE MADE THIS MONTH
                                              tion to that sort of thing. In fact, in our
if it was a rather “sick” joke. If he was
                                              state, a number of popular governors              Governor Riley has said he would
serious, however, it is more despicable.
                                              have tried to affect races by endorsing a      likely decide early this month whether
What the senator did was not only
                                              local candidate and it simply didn’t           he will call a special session of the Leg-
wrong, it’s just plain stupid.With all of
                                              work. Most folks don’t like to be told         islature to consider ethics reform and
the serious problems our country is
                                              who to vote for and instead tend to            other specific issues. The governor has
facing, we don’t have time for this sort
                                              make up their own mind in local elec-          been talking with legislative leaders to
of thing by an elected official. I believe
                                              tions. The race is a classic example of        determine if a special session would be
the judge who has this case should not
                                              local folks knowing best about local           productive. While, I’m not sure what
take the suit lightly and should deter-
                                              candidates. I have heard it said many          sort of response he has received, it’s
mine if it is as frivolous as it appears to
                                              times that “home folks know best!”             encouraging that the governor has
be. If it’s found to be frivolous, which it
                                                 The District 32 seat opened up in May       established a dialogue has been estab-
obviously is, then the most severe sanc-
                                              when Bradley Byrne left the Senate to          lished with legislators concerning the
tions possible should on the senator.
                                              become the state's Chancellor for two-         potential for success if he calls a
The courts have to deal with political
                                              year colleges. Few folks gave Pittman          session.
stupidity on occasion, but this lawsuit
                                              any chance to win when he entered the             Governor Riley wants lawmakers to
takes the cake. What the senator did is
                                              Republican primary. In fact, he was up         consider ethics legislation, including a
offensive and wrong by any standard!
                                              against a number of better-known can-          bill to ban campaign donations from
                                              didates, including former state Senator        being transferred from one political



6                                                 BeasleyAllen.com
action committee to another — a prac-        session. It’s my opinion that calling a       opt-ed piece that was carried by almost
tice called PAC-to-PAC transfers. The        special session that would in all proba-      every daily newspaper in Alabama. It
governor also wants lawmakers to con-        bility fail would be a mistake. It’s also     dealt with a story of injustice that has
sider a bill to require counties to          my belief that the Governor wouldn’t          put Alabama on the map, but in a very
reassess property values every four          waste taxpayer dollars by bringing the        bad light. Bob has allowed me to
years instead of every year. Both of         lawmakers to Montgomery if he                 include his writings in this issue.
those bills were endorsed by Republi-        believed the session would result in          Because this is a battle that must be
can and Democratic leaders before the        failure. It will be interesting to see what   won, I felt that it should be included as
start of the last session, but neither       happens.                                      written by Bob in its entirety. Jack Cline
passed.The bills passed the house, but       Source: Associated Press                      was a man whose courage and resolve
got caught up in the Republican-led fili-                                                  were unparalled. He fought a long fight
buster in the Senate.                                                                      and deserved to win his right to have a
   Another proposal the governor has         PLANNING FOR 2008 SHOULD BE TAKING            court and jury hear his case. Unfortu-
                                             PLACE NOW
mentioned would require lawmakers to                                                       nately, he wasn’t able to get that oppor-
deal with property insurance problems          There are a number of critical issues       tunity because of a rather strange
on the Alabama coast. Some residents         that must be addressed in the 2008            Supreme Court ruling. The Cline story
are still waiting for claims to be paid      regular session of the Alabama Legisla-       is one that must be told and understood
from Hurricane Katrina, which hit more       ture.The following are just a few of the      by the people of Alabama, so here it is:
than two years ago. This is extremely        more important issues that should be a          Jack Cline and his widow were
important to residents of south Mobile       priority for the session:                       denied justice. Last January, the
and south Baldwin counties, but if a
                                             • Campaign Finance Reform;                      Alabama Supreme Court denied
session is called, I doubt that it will be
                                                                                             Jack and his widow their day in
included.                                    • Adequate funding for highways con-            court, relying on a rule that the
   If Governor Riley does call a session       struction and maintenance projects;           court itself created. As an editorial
that includes campaign finance reform, I
                                             • Controls over lobbying activities;            in The New York Times described
would hope that the call includes more
                                                                                             the 5-4 decision made by then-
than just PAC-to-PAC transfers. Although
                                             • Finding the needed funds for the              Chief Justice Drayton Nabers and
a ban on transfers between political
                                               Medicaid program;                             Associate Justices Harold See, Lyn
action committees is needed, that’s not
                                                                                             Stuart, Patty Smith, and Mike
the only problem that needs to be            • Constitutional Reform;
                                                                                             Bolin, "The Alabama Supreme
addressed. Limitations on amounts that
                                             • Upgrading consumer protection laws;           Court, shamefully, refused to do
can be given to candidates are badly
                                                                                             anything about this bizarre situa-
needed. Also reasonable limits should        • Adequate funding for vocational edu-
                                                                                             tion: There is never a legally
be imposed on how much candidates              cation and job-training programs; and
                                                                                             acceptable time for people who are
can spend in state campaigns. The
                                             • Tax reform that will give relief to           exposed to slow-acting poisons to
spending by political parties, as well as
                                               middle and low income citizens.               file suit against the company or
by the shadow groups that are heavily
                                                                                             person who poisoned them."
involved in Alabama political races,           I am convinced that Governor Riley
should definitely be limited, if not         and the legislative leaders – both              In pronouncing this judgment, the
banned altogether. A voter should be         Democrats and Republicans – under-              Times noted that Alabama's court-
able to tell where a group is getting the    stand the need for a productive session         created rule makes Alabama the
money it spends in a political race. At      next year. That’s why planning and              only state in which workers
present, groups like the American Tax-       cooperation are so vitally important.           exposed to toxic substances are
payer’s Alliance can spend unlimited                                                         effectively precluded from suing
funds for a candidate and not have to                                                        the makers of those toxic sub-
disclose anything. Their money comes         III.                                            stances for the diseases they cause
from powerful interests that don’t want                                                      years later. The statute of limita-
to be identified. Perhaps, the pre-session
                                             COURT WATCH
                                                                                             tions enacted by the Alabama Leg-
planning involving the governor and                                                          islature gives toxic exposure
legislative leaders will pay off in the      THE CLINE STORY WON’T GO AWAY AND               victims two years within which to
event of a special session is called.        THAT’S GOOD NEWS                                file a lawsuit. But the Alabama
   By the time this issue is received,                                                       Supreme Court effectively elimi-
most likely the governor will have             Bob Palmer, the dedicated lawyer who          nated that entire two-year period
decided whether to call a special            represented Jack Cline has written an           for victims of exposure to hazardous



                                                  BeasleyAllen.com                                                                   7
    substances. The court accom-           and one in Georgia.Thus, her case        see to it that their survivors are
    plished this by ruling that the two-   is now on appeal in two different        granted their fair day in court.
    year limitations period begins         states. And if the highest courts of     Justice can, and will, be served.
    running when the victim is last        Alabama and Georgia cannot
                                                                                     Regardless of how they feel about the
    exposed to the hazardous sub-          agree on the constitutionality of
                                                                                  court system, especially as their feelings
    stance, but that the victim cannot     Alabama's court-created exposure
                                                                                  may be affected by the political climate
    bring a lawsuit until the cancer or    rule, then the case will be ripe for
                                                                                  surrounding the highest court in our
    other dread disease has mani-          review by the United States
                                                                                  state, the Jack Cline story is one that all
    fested itself, which usually occurs    Supreme Court. But no matter
                                                                                  Alabama citizens must hear. Justice was
    much more than two years after         what happens in Brenda Griffin's
                                                                                  clearly denied in the Cline case.
    exposure. With such absolution         case, there will be other widows
                                                                                  However, I am convinced that the jus-
    granted to polluters, is it any        and other orphans, for the unjust
                                                                                  tices on our court will eventually do the
    wonder that Alabama ranks              and unconstitutional exposure
                                                                                  right thing on the legal principle that
    fourth in the nation for the pro-      rule that the Alabama Supreme
                                                                                  Jack Cline fought so hard for. I have
    duction of toxic wastes even           Court spawned on its own author-
                                                                                  always believed that right would prevail
    though it ranks just 23rd in popu-     ity – a rule that directly contra-
                                                                                  over wrong, and good over evil, and that
    lation among the states?               dicts laws passed by the Alabama
                                                                                  belief is now stronger then ever. While
                                           Legislature – yields no shortage of
    But Jack Cline was never con-                                                 the rendering of justice sometimes
                                           victims. Because of that rule, the
    cerned solely with his own case.                                              takes a little longer than I would like,
                                           chemical industry has dumped
    Indeed, he routinely told his                                                 when it does come, the wait is well
                                           countless tons of toxic substances
    lawyers, reporters and anyone else                                            worth it. When it does finally happen in
                                           in our state, thereby poisoning
    who would listen to him that the                                              the fight started by Jack Cline, his fight
                                           Alabama citizens with impunity. Is
    reason he spent his dying days                                                will not have been in vain.
                                           it any wonder then that the very
    prosecuting a case against such
                                           same industry is now fighting to
    overwhelming odds is the very
                                           preserve the court-created expo-       LOTS OF INTEREST IN THE SEAT TO BE
    slight possibility that his efforts
                                           sure rule, a rule in which it has a    VACATED BY HAROLD SEE
    might eventually result in change
                                           vested financial interest?
    – change that would permit other                                                There is already a great deal of inter-
    Alabama workers exposed to toxic       The citizens of Alabama deserve        est in the one seat on the Alabama
    substances to obtain compensa-         better, and for so long as the Jack    Supreme Court that will come up for a
    tion for their resultant diseases.     Clines and Brenda Griffins of          vote next year. As you know, there
    Workers like David Wayne Griffin,      Alabama are willing to fight           won’t be an incumbent running since
    who was exposed to benzene, the        against this injustice, Alabama        Justice Harold See for some reason
    very same toxin as Jack, and who       lawyers will devote their time and     decided not to seek reelection.
    developed acute myelogenous            resources to that cause. During his    Although it’s real early, and lots can
    leukemia, the very same disease        earthly ministry, Jesus told a         happen between now and next year,
    that killed Jack. The baton that       parable about a judge "who             folks are lining up behind potential can-
    Jack Cline carried has now passed      neither feared God nor cared           didates. At this point, Jim Main and
    to David's widow, Brenda Griffin,      about men." Luke 18:2-8 (NIV).         Kelli Wise appear to be headed to a
    who is now asking the Alabama          And although a widow kept              showdown in the Republican primary
    Supreme Court once again to            coming to him with a plea for          for the See seat. As you know, Jim is cur-
    reconsider its unjust – and uncon-     justice, he refused that plea. But     rently serving as Finance Director in the
    stitutional – exposure rule. After     because she was persistent, he         Riley Administration and is doing an
    all, in Jack's case the court simply   finally relented and gave her the      excellent job. Kelli, who is in her
    refused to address the constitu-       justice she deserved "so that she      second term on the Criminal Court of
    tional issue, choosing instead to      won't eventually wear me out           Appeals, has received very high marks
    render its decision without any        with her coming!" We pledge to         for her performance on that court.
    opinion to explain it.                 seek justice for the state's widows    Many believe that Kelli is one of the
                                           and orphans, to take up their          best vote-getters around today.
    But anticipating that the Alabama
                                           cause, Jack Cline's cause, David         Other possible entrants into the
    Supreme Court might be inclined
                                           Griffin's cause, so their plea can     Republican primary are Scott Donald-
    to take the same approach in her
                                           he heard. We will never relent in      son, a well-respected Circuit Court
    case, Brenda Griffin has filed two
                                           prosecuting their claims and will      judge from Tuscaloosa, and Doug
    separate lawsuits, one in Alabama



8                                            BeasleyAllen.com
McElvy, a Montgomery lawyer. If Doug         designed by powerful interests to             Center for Progressive Reform exposes
runs, it would definitely change things      destroy the civil justice system.             the campaign by powerful corporate
in both primaries. Doug recently served      However, I find that most folks don’t         interests, aided and abetted by the Presi-
as President of the Alabama State Bar        have a clue what the term federal pre-        dent’s advisors, which if successful will
and did an outstanding job. If they both     emption means or what it’s all about. To      bar states from enforcing laws that
get in the race, a runoff would be a cer-    be candid, in past years, there really        punish corporate abuse and wrongdo-
tainty. Each of these potential candi-       wasn’t any reason for them to know            ing. It’s actually a stealth plan utilizing
dates would be a worthy opponent for         about it. Now it’s certainly something        federal regulatory agencies that should
the Democratic nominee in the General        that will affect the rights of all American   be protecting consumers and not
Election. There has also been talk           citizens and for that reason all of us        hurting them. But, it doesn’t come as a
around the Capital City in the last few      must become knowledgeable about               surprise because it’s typical of the Bush
days that former Chief Justice Roy           federal preemption of state laws. Basi-       Administration, and that’s most unfortu-
Moore might have an interest in return-      cally, federal preemption means that an       nate. Preempting state laws through the
ing to the Supreme Court. While that         act by a federal regulatory agency            regulatory rulemaking process is wrong
might just be wishful thinking on the        would override state law and keep valid       and can’t be justified. It must be
part of some of Judge Moore’s support-       claims from being pursued in state            stopped in its tracks without delay. The
ers, it would be a major development if      court.                                        report referred to above reveals some
that does happen.                               Currently, the Bush Administration is      significant happenings:
  On the Democratic side, Deborah Bell       conducting an unprecedented cam-              • The Food and Drug Administration
Paseur, a District Court judge from Laud-    paign to usurp state authority, weaken          declared that a rule regarding drug
erdale County, will definitely be a candi-   regulatory scrutiny and protect corpo-          labeling preempted state tort laws
date for the Democratic nomination.          rate wrongdoing through a coordinated           even though the agency had long
But, there have been several other           strategy of what is referred to as “pre-        held to the contrary – a drastic
potential candidates mentioned, such as      emption.” For the uninformed among              change in policy undertaken without
Judge Sharon Yates of Montgomery, and        us, which includes most lawyers, pre-           benefit of public comment.
Judge Pete Johnson of Jefferson County.      emption means that Americans are
If any of these potential candidates         denied the right to hold companies            • The National Highway and Traffic
decides to run, it will make for a most      accountable under the laws of their             Safety Administration adopted a rule
interesting primary season. Although         own states for the harm those corpora-          on roof-crush resistance with similar
most political observers believe that        tions cause. This harm to citizens in the       language seeking to preempt state
Judge Paseur – being from vote-heavy         states comes about because of the pro-          common law despite earlier determi-
north Alabama – would be difficult to        viding of dangerous drugs, cars, toys,          nations that adopted a diametrically
beat in a primary election, that remains     and food by corporations both domestic          opposed view.
to be seen. However, the other persons       and foreign.                                  • The Department of Homeland Secu-
who are being mentioned as possible             Preemption is being pushed on                rity adopted preemption provisions
entrants would be formidable candidates.     people as a result of federal regulation        even though the Senate Homeland
  Finally, it’s my observation that all of   and standards promulgated by federal            Security and Governmental Affairs
the early activity in political races that   regulatory agencies. Over the years,            Committee had specifically rejected
won’t take place until next year is          GOP office holders were generally advo-         the approach. The DHS language
rather unusual. In the “old days” most       cates of states rights and local control,       places states that want to take more
races were run in the year when the          and that applied to our system of               stringent actions regarding homeland
actual election was to be held. In those     courts. Now we see a complete turn-             security in a straight-tjacket and that’s
days, nobody started running as early as     about by the Bush Administration, and           wrong.
candidates do today. Now, we see folks       the Administration’s goal is clearly not
starting to actively campaign as early as    to protect people. Instead it is to pay         The issue of preemption will be
two years before they qualify. In any        back campaign debts to powerful inter-        decided in the courts and if established
event, the battle for the “See seat” will    ests by giving them a shield from liabil-     legal principles are followed, the Ameri-
be a most interesting one.                   ity in state lawsuits.                        can people will be the winners.
                                                The Bush Administration’s campaign         However, Congress should step in and
                                             to advance corporate irresponsibility         let the Bush Administration know that
THE PREEMPTION BATTLE WON’T GO AWAY          threatens the health and safety of Ameri-     the federal regulatory agencies must
                                             can citizens. Preemption must be              follow the law. I don’t believe the pow-
  We will be hearing lots about “federal     stopped because it affects millions of        erful interests will be successful
preemption” over the next several            Americans. A recent report by the             because the American people – once
months since it’s the latest strategy


                                                 BeasleyAllen.com                                                                   9
they realize how badly preemption               Federal preemption analysis has to        A GOOD RULING THAT PROTECTS THE CIVIL
hurts them – will demand that the state      revolve around one all-important ques-       JUSTICE SYSTEM
courts are protected and their rights        tion: what did Congress intend? Clearly,
                                                                                             In a recent lower federal court ruling,
preserved. That’s why its important for      Congress never intended to preempt
                                                                                          the Center for Constitutional Litigation
folks to contact their elected represen-     state law tort claims involving haz-
                                                                                          (CCL) won a major victory in the fight
tatives and let them know that preemp-       ardous medical devices. That's quite
                                                                                          to assure that folks who are hurt or
tion is wrong and won’t be tolerated.        apparent both from the history and the
                                                                                          damaged by corporate wrongdoing can
                                             language of the statute that regulates
                                                                                          hold wrongdoers accountable and get
                                             medical devices. The legislation was
THE FEDERAL PREEMPTION BATTLE IS                                                          justice in the civil justice system. In a
                                             passed in the wake of the Dalkon Shield
BEFORE THE U.S. SUPREME COURT                                                             ruling last month with wide implica-
                                             scandal and was enacted to protect con-
                                                                                          tions for federal preemption and vicari-
   The federal preemption fight is now       sumers from dangerous devices. It was
                                                                                          ous liability, the U.S. District Court for
before the United States Supreme Court       not to immunize manufacturers from
                                                                                          the Southern District of Florida declared
in two separate cases. In each of these      liability.The respective roles played by
                                                                                          legislation referred to as the Graves
cases, manufacturers are trying to           the tort system and federal regulation, in
                                                                                          Amendment unconstitutional. That
obtain a shield from any sort of liability   making the world a safer place for con-
                                                                                          amendment had given immunity to
for the often-horrific injuries caused by    sumers of medical devices and other
                                                                                          automobile rental agencies for harm
their defective and unsafe products.         potentially dangerous products, comple-
                                                                                          caused by their vehicles.
The issue in one of the cases, Riegel v.     ment each other.
                                                                                             In 2005, the Graves Amendment was
Medtronic, is whether manufacturers of          In the past, the United States govern-
                                                                                          hidden in a 900-page transportation
medical devices that have received pre-      ment always agreed that Congress never
                                                                                          appropriations bill without any review
market approval from the U.S. Food and       intended to preempt state law claims
                                                                                          from relevant congressional commit-
Drug Administration can avoid all liabil-    involving medical devices that had
                                                                                          tees.The amendment intentionally pre-
ity by invoking the defense of federal       received pre-market approval. But since
                                                                                          empted state laws that imposed
preemption.                                  the Bush Administration has now
                                                                                          vicarious liability on rental car compa-
   The Supreme Court will also decide a      reversed the government's position the
                                                                                          nies. It was the prized lobbying success
case that centers on whether federal         preemption issue presents a problem. If
                                                                                          of the politically active rental car indus-
regulation of pharmaceuticals preempts       the Supreme Court agrees, then millions
                                                                                          try, which invested a substantial sum in
state law. This case involves a product      of Americans will be left without any
                                                                                          campaign contributions in the effort,
liability lawsuit against Pfizer's Warner-   legal remedy at all. Such a reversal
                                                                                          and then called in their chips.
Lambert unit and its Rezulin diabetes        would allow manufacturers to put
                                                                                             The Florida ruling holding the Graves
drug. As you may know, Rezulin was           defective products on the market with
                                                                                          Amendment unconstitutional came in a
ordered off the market in March 2000         no fear of being held accountable for
                                                                                          declaratory judgment action brought by
by the FDA after it was linked to nearly     their actions.
                                                                                          a group of rental car companies against
400 deaths and hundreds of cases of             We have seen classic examples in past
                                                                                          a person who had been injured in a col-
liver failure. It should be noted that the   years of how the FDA has protected cor-
                                                                                          lision with a rental car. Interestingly, the
FDA had approved the drug.                   porate wrongdoers in the past. Drugs
                                                                                          United States government intervened to
   In past litigation, the federal govern-   have been put on the market after FDA
                                                                                          defend the statute's constitutionality.
ment and the FDA have always agreed          approval, which were subsequently
                                                                                          But, U.S. District Judge K. Michael Moore
that pre-market approval does not            proved to be very dangerous. Public
                                                                                          found the amendment to be "an uncon-
preempt state law actions seeking com-       Citizen was one of the groups that
                                                                                          stitutional overreaching of Congress'
pensation for damages arising from           warned the FDA about a number of
                                                                                          power under the Commerce Clause.” In
defective medical devices or drugs.          drugs, pointing out the risks and
                                                                                          the ruling it was stated: “Under the
Now the Bush Administration is paying        dangers, and later those drugs had to be
                                                                                          rationale set forth (by the rental car
off campaign donors by taking an             withdrawn from the market. It has
                                                                                          companies and the United States) this
entirely new position on the preemp-         become quite evident the drug industry
                                                                                          Court is hard pressed to think of any
tion issue. Clearly, the high court should   controls the FDA. For that reason, you
                                                                                          type of state legislation which could not
leave state law damage claims in place.      can imagine what would happen from a
                                                                                          be pre-empted by Congress, including
Because of what Congress intended, this      safety perspective if the preemption
                                                                                          state taxes."
well-established legal principle should      battle is lost. Federal preemption must
                                                                                             Simply put, the court’s ruling gives
continue to be followed as the law of        be defeated to preserve access to justice
                                                                                          rental car companies a powerful incen-
the land. To do otherwise would              for all citizens.
                                             Source: Public Justice News Release
                                                                                          tive to assure that their customers are
require a complete ignoring of estab-                                                     adequately insured. Striking down the
lished law.                                                                               Graves Amendment also helps ensure


10                                                BeasleyAllen.com
that victims of car accidents with          the Ninth Circuit – under general mar-           IV.
rented or leased vehicles will be ade-      itime law. Regardless of what body of            THE NATIONAL
quately compensated for their injuries.     law applies to this case, it’s past time for
However, the ruling could ultimately        the case to reach a final conclusion. It’s
                                                                                             SCENE
have wide repercussions regarding the       my considered and I believe well-
federal government's preemption             founded opinion that Exxon’s bosses              ALAN GREENSPAN SPEAKS ON IMPORTANT
powers. In recent years, Congress has       believe they are actually above the law          ISSUES FACING OUR COUNTRY
shown little reluctance to legislate in     and that the court system has no real
areas of traditional state concern.         authority over the politically powerful             When former Federal Reserve Chair-
Courts, led by the U.S. Supreme Court,      oil giant.                                       man Alan Greenspan speaks, the Ameri-
have found such overreaching legisla-          It’s been so long since all of this litiga-   can people really listen. Recently, Dr.
tion to violate the Constitution.The CCL    tion started that many Americans don’t           Greenspan, who enjoys tremendous
                                                                                             credibility, was extremely critical of
entered the case at the request of the      even know how it came about. For that
                                                                                             President Bush for not responsibly han-
lawyers for the victims, Patricia M.        reason, I will recap some of what has
                                                                                             dling the nation's spending and for
Kennedy and Thomas Scolaro of               transpired thus far. At Exxon's urging,
                                                                                             building up large budget deficits. The
Leesfield Leighton and Partners in          the U.S. District Court for the District of
                                                                                             president and Congress' former GOP
Miami, Florida, to address the constitu-    Alaska certified a multi-class action con-
                                                                                             leaders abandoned the GOP’s conserva-
tional issues and they were successful.     sisting of a compensatory damage class
                                                                                             tive principles favoring small govern-
John Vail, CCL Vice-President and Senior    and a mandatory punitive damages class
                                                                                             ment, according to Greenspan. The
Litigation Counsel, and Andre Mura, CCL     of 32,677 commercial fisherman, related
                                                                                             well-founded criticism was set out in Dr.
Litigation Counsel, handled the briefing    individuals and businesses, private
                                                                                             Greenspan’s book, "The Age of Turbu-
on the constitutional issues, with Mura     landowners and native Alaskans.After a           lence: Adventures in a New World,"
arguing the case.                           three-phase trial that lasted 83 court           which was released last month. As you
                                            days, involving the testimony of 155 wit-        know, Dr. Greenspan ran the Fed for
                                            nesses and introduction of 1,109                 over 182 years, serving under four pres-
EXXON VALDEZ CASE VERDICT FINALLY           exhibits, the jury's September 1994
HEADS TO THE U.S. SUPREME COURT                                                              idents, until early 2006. It is widely
                                            verdict assessed $5 billion in punitive          acknowledged that he did an excellent
   A significant percentage of Americans    damages against Exxon and $5,000                 job and remains well-respected by
weren’t even born when the Exxon            against the captain of the Valdez, who           people across the country and espe-
Valdez ran aground on a reef in the         was an individual defendant. In an               cially by economists. When a man like
Prince William Sound nearly 20 years        earlier phase, the jury awarded $287             Alan Greenspan criticizes the president
ago. But the complex legal fallout from     million in compensatory damages. After           on his fiscal polices and responsibilities,
the ensuing environmental disaster and      13 years of post-trial motions and               the American public will listen. What he
a record punitive damages award has         appeals in which the punitive award              had to say has to be disturbing and dis-
just reached the U.S. Supreme Court.        was twice sent back to the district court        concerting to GOP political leaders and
Exxon Mobil Corp. recently filed a peti-    to reconsider in light of intervening U.S.       to their candidates looking toward 2008
tion asking the High Court to review        Supreme Court decisions on punitive              elections.
and overturn a $2.5 billion punitive        damages, the 9th Circuit cut the jury
award. If the justices agree to hear        award in half.
                                               If the Supreme Court elects to take           TAKING A MONTH OFF MAKES NO SENSE
Exxon's challenge to the punitive
award, then they also should grant the      the case, I understand it will present
                                                                                                While our government was dumping
petition by the class members who           some complicated maritime law.
                                                                                             over $10 billion in August into the
contend that the $2.5 billion award is      Lawyers representing the class were
                                                                                             morass of Iraq, and American lives were
not excessive and that due process          actually surprised by the maritime law
                                                                                             still being lost, the Iraq Parliament took
allows reinstatement of the jury's origi-   focus of the appeal because it appar-
                                                                                             off the entire month for a paid vacation.
                                            ently received very little emphasis in
nal award of $5 billion.                                                                     To put it mildly, a vacation during a civil
                                            the lower appellate court briefing. It
   There is one different twist to this                                                      war doesn’t make sense – and that sort
                                            may be that Exxon’s lawyers realize
case. In the past 17 years, the Supreme                                                      of thing can’t be justified. The Bush
                                            their due process arguments simply
Court has decided eight cases on puni-                                                       White House tried to make light of the
                                            won’t work on this appeal. In any
tive damages, reviewing awards made                                                          vacating legislators saying that it was
                                            event, it will be most interesting to see
under state law. Exxon, however, is                                                          “real hot in August in Baghdad.” An
                                            what happens from this point forward.
asking the High Court to examine the                                                         Administration spokesman tried to
                                            Source: National Law Journal
$2.5 billion award – reduced from $5                                                         rationalize this need for “rest and recre-
billion by the U.S. Court of Appeals for                                                     ation” by the lawmakers. But I seriously


                                                 BeasleyAllen.com                                                                    11
doubt that our troops who are actively          • Violence has gone up in Iraq. This         in real trouble. We are so committed in
engaged in this civil war on a daily basis        summer is on track to be one of the        Iraq that our military capacity for
believe R & R is a great need for the             bloodiest summers for U.S. troops, as      further deployments elsewhere has
members of parliament.                            well as for Iraqi civilians, with nearly   been seriously weakened.
   There can be little doubt but that Iraq        twice as many U.S. troops killed              Even if an immediate troop with-
is in a civil war and is in chaos. If it’s        during this July than the previous July.   drawal isn’t possible, at least something
not a sectarian civil war, I would like to                                                   must be done now. A new study relating
                                                • The surge has not created p ol itical
know what it is. Regardless, we have a                                                       to Iraq's security forces concludes that
                                                  stability. The central premise of the
real mess in Iraq. Frankly, I don’t see                                                      U.S. forces in Iraq should be reduced
                                                  surge was that it would increase polit-
things getting better anytime soon. It’s                                                     significantly. The report, authored by a
                                                  ical stability. Two years after Sunnis
been apparent that the sectarian leaders                                                     20-member panel comprised mostly of
                                                  were brought into the political transi-
in Iraq haven’t been able to come to a                                                       retired senior military and police offi-
                                                  tion, a Sunni bloc withdrew from the
political consensus on any important                                                         cers, concluded that the massive deploy-
                                                  government. A recent Government
issue thus far. Why does anybody in                                                          ment of U.S. forces and sprawl of
                                                  Accountability Office (GAO) report
Washington believe they can put                                                              facilities run by American interests in
                                                  showed that 15 out of 18 of Bush's
together a security force, which can                                                         and around Baghdad has given Iraqis
                                                  own political benchmarks remain
take care of the needs of the country?                                                       the impression that Americans are an
                                                  unmet.
In any event, at least the Iraqi lawmak-                                                     occupying, permanent force. It was sig-
ers got a break from the heat in                • We ' ve po u red we ap ons i nto Iraq's    nificant that the panel said the Iraqis
Baghdad! It’s now time for our own                civil war. Another GAO report earlier      should assume more control of its secu-
political leaders to face reality and make        this summer showed that the Penta-         rity, and U.S. forces should step back.
decisions that will get our troops out of         gon lost track of nearly 200,000           The panel was led by retired General
Iraq as soon as possible. I will discuss          weapons given to Iraqis. Apparently,       James Jones, a former Marine Corps
this in more detail below.                        we distribute weapons and then they        commandant, who is well-respected by
                                                  disappear and nobody knows what            members of Congress and by military
                                                  happens to them. What we do know           experts.
CONGRESS NEEDS TO MAKE A DECISION ON                                                         Source: Associated Press
                                                  is that violence increases—both
OUR INVOLVEMENT IN IRAQ
                                                  among Iraqi sectarian groups and
   As we all know, this has been the              against American troops.
                                                                                             IRAQ EXPELS AMERICAN SECURITY FIRM
bloodiest summer ever for US troops in
                                                • Ethnic cleansing is happening in
Iraq, and unfortunately things don’t look                                                       The Iraqi government has ordered
                                                  Baghdad. The once Sunni dominated
good for improvement in the immediate                                                        Blackwater USA, the private security
                                                  city is now dominated by Shiites.The
future. It’s being reported that Iraqi                                                       firm that protects U.S. diplomats, to
                                                  Shiite militias' cleansing of Baghdad
casualties are running at twice the pace                                                     leave the country. This order comes
                                                  has been effective – they’ve essen-
of last year. It was reported recently                                                       because of the fatal shooting of eight
                                                  tially won. Apparently, the Sunnis are
that 15 of 18 of President Bush's bench-                                                     Iraqi civilians following a car bomb
                                                  either being killed or being run out of
marks haven’t been met, and the                                                              attack against a State Department
                                                  Baghdad.
attempts to convince Congress that the                                                       convoy.The order by the Interior Min-
troop surge is paying dividends simply             We have been engaged in the war in        istry, if actually carried out, would deal a
isn’t working. General David Petraeus, a        Iraq for longer than we were involved in     severe blow to U.S. government opera-
well-respected military man, was very           World War II. Is it time to start bringing   tions in Iraq by stripping diplomats,
candid in his comments before a Con-            our troops home? I frankly don’t know        engineers, reconstruction officials, and
gressional committee concerning the             enough to make that decision. But,           others of their security protection.The
so-called surge. Some 4,000 US troops           based on what I do know, I can’t under-      shooting was the latest in a series of
have died in Iraq, and we've spent half a       stand why the President continues to         incidents in which Blackwater and
trillion dollars in this out-of-control civil   keep putting more American troops in a       other foreign contractors have been
war. The Secretary of Defense is now            civil war where they are having to serve     accused of fatally shooting Iraqi citizens.
asking for $190 billion to fund the war.        both as an army of occupation and as a          Currently, there are about 160,000
Congress will have to decide whether it         police force for a broken and totally        private contactors working in a support
is going to continue funding a civil war        ineffective government in Iraq. I just       role in Iraq. Of these, over 6,000 are
in Iraq. Let’s see what the track record        hope and pray that our military forces       armed private security guards. The Sec-
thus far has been and consider whether          will not be needed either in some other      retary of Defense, Robert Gates, has sent
the cost in money spent and the loss of         foreign land or back at home any time        investigators to Iraq in an effort to find
American lives has been worth it:               soon. If either event occurs, we will be     out what is going on with the private



12                                                  BeasleyAllen.com
contractors. At press time, the Bush         American Dad was the worst series            A SHOCKING BIT OF INFORMATION
Administration was trying hard to            overall, based on the alarming 52
deflect this issue and keep Blackwater       instances of objectionable content that         According to research conducted in
in Iraq. Blackwater, a secretive North       were packed into each hour of program-       2005, slightly more than 4% of children
Carolina-based company, is among the         ming. Here is what PTC President Tim         who were surfing the Internet had been
biggest and best known security firms,       Winter had to say:                           asked to transmit a sexually oriented
with an estimated 1,000 employees in                                                      picture of themselves within a year's
                                               Our study clearly demonstrates             time. The study, co-authored by Kim-
Iraq and at least $800 million in govern-
                                               that corporate interests have              berly Mitchell, a psychology professor at
ment contracts. I’m not sure who actu-
                                               hijacked the Family Hour from              the University of New Hampshire's
ally owns Blackwater or who its
                                               families. This early prime time            Crimes Against Children Research
political friends might happen to be.
                                               block was once reserved for pro-           Center, was based on a nationally-repre-
Hopefully, it’s not a group of political
                                               grams the whole family could               sentative survey of 1,500 youngsters
cronies.
                                               enjoy but it is now flooded with           who were between 10 to 17 years of
                                               shows that contain adult program-          age. Of those, nearly 150 were asked by
A NEW AND IMPROVED ATTORNEY GENERAL            ming. The Family Hour was once             someone online to send pictures of
                                               lauded by the entertainment                themselves and 65 were asked for sexu-
  President Bush has selected Michael          industry and members of Con-               ally explicit images. Of the cases in the
B. Mukasey, a retired federal judge from       gress as a solution for parents who        latter category, only 12% were reported
New York, to be the next Attorney              do not want their children to be           to authorities. I suspect that the
General. Knowing little very about             exposed to graphic content for at          numbers would be much higher today.
Judge Mukasey, I can only say that             least one hour each night. Shock-          We must do everything in our power to
almost any person would be a vast              ingly, this data shows that parents        protect our children. Parents must
improvement over the man he is replac-         cannot trust what is on during the         become aware of what their children
ing. In his defense, Alberto Gonzales,         so-called Family Hour for even a           are being exposed to by way of the
whose tenure was a total disaster,             minute.                                    Internet. Unfortunately, most adults are
should never have been placed in that                                                     far behind children when it comes to
office, by all accounts.The new Attorney        During the Family Hour, viewers have
                                             been exposed to visual depictions and        understanding the Internet and what it
General is a person who reportedly will                                                   offers.
respect the law and especially respect       verbal references to sexual content
                                                                                          Source: Focus On The Family
the Constitution. Hopefully, he can          including partial nudity and pixilated
undo all of the harm that Gonzales has       nudity, adultery, oral sex, masturbation,
done in a relatively short period of time.   pornography, anal sex, incest, violence,     DIOCESE SETTLES ABUSE CLAIMS FOR $198
                                             and a plethora of curse words.All of us      MILLION
                                             have an obligation to see that the Family
PARENTS AND POLITICIANS HAD BETTER           Hour is restored.The broadcast industry         The Roman Catholic Diocese of San
WAKE UP                                      must be made to return to the time-          Diego, California, has agreed to pay
                                             honored principle of airing mature-          $198.1 million to settle 144 claims of
  A new Parents Television Council                                                        sexual abuse by clergy. This is the
                                             themed content only at later times of
(PTC) study of Family Hour program-                                                       second-largest payment in these cases
                                             the evening.        Broadcasters should
ming conclusively shows that children                                                     by a diocese. The agreement caps more
                                             provide parents with a consistent,
watching television during the first                                                      than four years of negotiations in state
                                             objective, and meaningful content
hour of prime time are assaulted by vio-                                                  and federal courts. Earlier this year, the
                                             ratings system. The advertising industry
lence, profanity, or sexual content once                                                  diocese abruptly filed for bankruptcy
                                             should underwrite only time-appropri-
every 3.5 minutes of non-commercial                                                       protection just hours before trial was
                                             ate content with their media dollars.
airtime. During the 2006-2007 study                                                       scheduled to begin on 42 lawsuits alleg-
                                             Parents across the country – and the
period, almost 90% of the 208 television                                                  ing sexual abuse. Bankruptcy could
                                             politicians – must get involved and
shows reviewed contained objection-                                                       shield the diocese's assets, but a judge
                                             speak out in defense of the Family Hour.
able content. The PTC found that Fox is                                                   recently threatened to throw out the
                                             If we don’t wake up to what’s happen-
the worst broadcast network overall,                                                      bankruptcy case if church officials
                                             ing to TV broadcasting, and the effect it
noting its 20.78 instances of violent,                                                    didn't reach an agreement with the
                                             is having on our children, it will soon be
profane, and sexual content each hour –                                                   plaintiffs. The San Diego diocese ini-
                                             too late. It’s time to stand up – without
nearly double the amount of similar                                                       tially offered about $95 million to settle
                                             further delay – for good and against evil!
content shown on any of the five other                                                    the claims. The victims were seeking
                                             Source: Parents Television Council
major broadcast networks. Fox’s                                                           about $200 million.



                                                  BeasleyAllen.com                                                               13
   Sex abuse by Roman Catholic priests       approved a law requiring the state's           recognize the problem and fortunately
has cost the U.S. church at least $2.3       industries to reduce greenhouse gases          many are taking steps to address it.
billion since 1950. I hope and pray that     by an estimated 25% by 2020. Other             However, it’s being treated by the Bush
all of the remaining claims will be          U.S. states, in various ways, are moving       Administration as just another environ-
resolved and the U.S. church will get        to follow California's lead. While the         mental problem that is either just a
this ugly and shocking scandal behind        federal government should be taking            minor annoyance or one that is serious
them. Our prayers must be with both          the lead, it’s good for the states to recog-   but not so urgent as to require prompt
the victims and the church leaders.          nize the problem and take action.              governmental planning and action.
Clearly, no child should ever have to be        The summit was organized to build              There are some concrete examples in
subjected to any type of abuse – espe-       political momentum toward launching            the United States of how our world is
cially abuse of a sexual nature – and cer-   negotiations later this year for deep cut-     changing. For example, it is being pro-
tainly never in any church-related           backs in emissions of carbon dioxide           jected that sea-level rise due to global
setting. A few bad apples in a basket        and other manmade gases blamed for             warming will create tremendous chal-
can cause the good apples to be ruined       global warming. As you may already             lenges for our coastal areas. We are
in any situation. That’s why churches        know, the 1997 Kyoto pact, which the           facing an ecological crisis that could see
and other entities must take all neces-      U.S. rejects, requires 36 industrial           wholesale loss of wildlife populations
sary steps to keep the sexual predators      nations to reduce heat-trapping gases          and profound changes in our outdoor
out!                                         emitted by power plants and other              way of life. Recent studies show that the
Source: Associated Press                     industrial, agricultural and transporta-       global average sea level will rise as
                                             tion sources by an average 5% below            much as 2 to 56 inches by 2100. When
                                             1990 levels by 2012. Advocates say a           you consider that even a relatively mod-
U.N. CHIEF URGES IMMEDIATE CLIMATE           breakthrough at the annual climate             erate scenario of sea level rise of just 2
ACTION
                                             treaty conference in Bali, Indonesia, is       feet by 2100 will have a significant
  Global warming is one of the most          needed — almost certainly requiring a          impact on coastal habitats, this is a most
profound threats of our time. From dan-      change in the U.S. position — to ensure        serious issue.
gerous heat waves, extreme storms, and       an uninterrupted transition from Kyoto            The impact on the United States will
shrinking snowpacks to extreme               to a new, deeper-cutting regime.To try         be tremendous and the effects of global
drought and increased wildfires, the         to spur global negotiations, the Euro-         warming will cause us great problems
dangers of global warming are cause for      pean Union has committed to reduce             in the not too distant future. How Presi-
immediate action. In an unprecedented        emissions by at least an additional 20%        dent Bush can allow the Exxons of the
summit on climate change, the United         by 2020.                                       world to dictate policy on this crisis is
Nations Secretary-General says that "the        The U.N. summit follows a series of         beyond me. The effects of global
time for doubt has passed" and a break-      reports by a U.N. scientific network that      warming reach much further than just
through is needed in global talks to         warned of temperatures rising by               how our coastal areas will be affected as
sharply reduce emissions of global-          several degrees Fahrenheit by 2100 and         the result of sea-level rise. In this
warming gases. It’s felt by many that        of a drastically changed planet from           country, we are already witnessing sig-
the U.N. climate process is the appropri-    rising seas, drought and other factors,        nificant-changes in our weather pat-
ate forum for negotiating global action.     unless nations rein in greenhouse gases.       terns and that is cause for great
Presidents and premiers from around          The U.N.-sponsored scientists reported         concern. We owe it to future genera-
the world met last month on this criti-      global average temperatures over the           tions to force our political leaders to
cally important issue. The U.N. chief        past 100 years rose 1.3 degrees, and the       recognize the problem of global
also addressed a chief objection by the      planet's sea levels rose 6.6 inches, as        warming and do something about it.
United States to negotiated limits on        oceans expanded from warmth and                Source: Associated Press

greenhouse-gas emissions. It’s believed      from the runoff of melting land ice. U.S.
that failure to address this matter will     scientists have reported recently that
result in tremendous damage to the U.S.      warmer temperatures this summer had            V.
economy over time.                           shrunk the Arctic Ocean's ice cap to a         THE CORPORATE
  California Governor Arnold Schwarzen-      record-low size.
                                                I am convinced that global warming
                                                                                            WORLD
egger appeared at the conference and
told the international delegates states in   is a most serious problem affecting the
the U.S. are taking action. While the        world we live in and how President             EXXONMOBIL HAS BEEN BUSY LOBBYING
Bush administration has resisted emis-       Bush can support the large corporations
sions caps, California's Republican gov-     that are contributing to the problem is          ExxonMobil is one of the most pow-
ernor and Democrat-led legislature have      beyond me. Most governments at least           erful and influential corporations in the



14                                               BeasleyAllen.com
world when it comes to political clout.      some of the nation’s biggest industries      the settlement, qualified business and
The oil giant spent $6.4 million to lobby    are now pushing for new federal regula-      residential customers will receive
the federal government in the first half     tions, something they have long resis-       prepaid telephone calling cards with a
of 2007, according to a disclosure form.     ted. Industry groups and major               face value of $25 million.The five-year-
The powerful oil company lobbied Con-        manufacturers are now calling for            old antitrust case comprises dozens of
gress on legislation related to energy,      federal health, safety, and environmental    class action lawsuits that were filed
climate change, labor laws, corporate        mandates in the form of standards or         nationwide and eventually consolidated
taxation, pension reform, fuel efficiency    regulations. Some of those industries are    in federal court in Kansas City, Kansas.
standards, and international relations,      abandoning years of efforts to block         The suits alleged that Sprint and AT&T
according to the disclosure form posted      such measures, working recently with         conspired with each other and their
online August 10th by the Senate's public    the Bush Administration to accomplish        chief competitor at the time, MCI, to
records office.                              their goal. The consequences for con-        overcharge customers by passing on
   The House in early August approved        sumers – if the industries’ efforts are      more than 100% of the Universal
$16 billion in taxes on oil companies        successful – will be disastrous. The tac-    Service Fund (USF) fee to business and
and billions of dollars in tax breaks and    tical shift by industry groups is moti-      residential customers.The USF was set
incentives for renewable energy and          vated by powerful interests trying to        up by Congress through legislation to
conservation efforts. But, lawmakers         head off liability lawsuits and preempt      help cover the cost of getting service to
have yet to merge the House's energy         state laws as mentioned above in this        high-cost rural areas, low-income cus-
legislation with a sweeping energy bill      issue. Products like cars, farm equip-       tomers, schools, libraries, and rural
passed by the Senate in June. The oil        ment, toy cars, popcorn, produce, ciga-      medical facilities. Carriers that provide
industry has been battling price             rettes, light bulbs, and the list goes on,   interstate or international service are
gouging provisions that would make it        will be affected by the effort.              required to contribute to the fund.The
illegal to charge an "unconscionably            Rick Melberth, director of regulatory     “contribution factor” — a percentage of
excessive" price for oil products, includ-   policy at OMB Watch, a Washington            gross revenue from interstate or interna-
ing gasoline. Opponents say the lan-         group that tracks federal regulatory         tional calls — is set by the Federal Com-
guage is too vague and would be              actions, observed:“I have never before       munications Commission.
difficult to enforce. If anybody should      seen so many industries joining a push          Although carriers aren’t required to
recognize price-gouging, it would be a       for regulation.” He added: “What we          pass the assessment along to customers,
giant oil company like ExxonMobil.           need to watch closely is if this will        most do. Sprint described the surcharge
   In addition to lobbying federal law-      achieve a real increase in standards and     on bills as a “Federal Universal Service
makers, ExxonMobil lobbied the White         public protections or simply serve cor-      Fee” or “Carrier Universal Service
House, the Federal Energy Regulatory         porate interests.”There can be no doubt      Charge.”AT&T described it as a “Univer-
Commission, the National Security            that the ultimate goal of this movement      sal Connectivity Charge.”The settlement
Council, and the National Oceanic and        is to protect corporate wrongdoers           ends the litigation against Sprint only.
Atmospheric Administration. It also          with no regard on the adverse effect it      The litigation is continuing against
lobbied the departments of Commerce,         will have on public health and safety.       AT&T, which, because of its larger
Energy, Interior, State, and Transporta-     The American people should be out-           market share, faces greater exposure
tion. It appears that the lobbying efforts   raged when they learn how preemption         than Sprint. Those eligible to receive
by ExxonMobil have paid off. I suspect       of state laws really works and how it        benefits under the Sprint settlement
the campaign dollars given to political      will affect them.                            include long-distance customers who
candidates also played a major role in       Source: New York Times                       paid Universal Service Fund charges
their successes.                                                                          from and after August 1, 2001.The settle-
Source: Associated Press                                                                  ment affects all Sprint long-distance resi-
                                             CLASS ACTION SETTLEMENT WITH SPRINT IS       dential and business customers, all MCI
                                             APPROVED
                                                                                          long-distance business customers, all
INDUSTRIES NOW WANT REGULATION BY THE                                                     AT&T long-distance business cus-
FEDERAL GOVERNMENT                             Sprint Nextel Corp. will pay $30
                                             million to settle a class action lawsuit     tomers, and AT&T long-distance residen-
   I mentioned the federal preemption        accusing it and AT&T Corp. of over-          tial customers in California only.
issue in the section on courts. It has       charging customers for assessments that         AT&T and MCI customers are
become very obvious as to who is             help pay for subsidized phone services.      included because liability in antitrust
behind this movement. After years of         A U.S. district judge has given prelimi-     actions is “joint and several,” meaning
favoring the hands-off doctrine of most      nary approval to the settlement and has      that any one company can be held liable
Republican Administrations, including        scheduled a March 3rd hearing on             for the damages owed by all the compa-
that of the current President up to now,     whether to give it final approval. Under     nies in a case and vice versa. Sprint and



                                                  BeasleyAllen.com                                                                15
MCI customers will be eligible to partic-        According to Christopher Cox, the         invested on behalf of the participating
ipate in any settlement reached by            Chairman of the SEC, U.S. regulators are     workers.The company is now bankrupt
AT&T with the plaintiffs. Eligible cus-       stepping up efforts to protect retirees      and its owner in jail on dozens of fraud-
tomers who paid the USF overcharges           because their share of the nation’s          related counts.The lawsuit was filed in
at any time between August 1, 2001, and       wealth makes them prime targets for          U.S. bankruptcy court in Nashville by
March 31, 2003, will get prepaid phone        securities swindlers and scam artists.       the court-appointed trustee overseeing
cards with nominal face values of $50.        According to the chairman, the SEC’s         the bankruptcy of the outside company
Eligible customers who paid the over-         effort has generated more than 40            that collected the retirement money.
charges after March 31, 2003, will get        enforcement actions in the past two             Barry Stokes, a resident of Tennessee,
cards with nominal face values of $20.        years. The current SEC lawsuit centers       whose 1Point Solutions billed itself to
The cards are to be priced at per-minute      on Michael E. Kelly, a former Indiana res-   employers around the country as an
rates no higher than Sprint’s best com-       ident, who was arrested in December          administrator of 401(k) and other retire-
mercial rates for those denominations.        and charged by federal prosecutors           ment plans, set up the scheme. Stokes'
   The settlement was reached just days       with engaging in a scheme to defraud.        company agreed to keep records, open
before the same federal judge approved        According to the SEC, Kelly allegedly        accounts into which employee money
a $57 million settlement in another class     orchestrated the scam from 1999 until        was deposited, and handle early with-
action lawsuit against Sprint alleging the    2005, assisted by a national sales           drawals for hardships or termination. It’s
company engaged in age discrimination         network. The scam started when opera-        alleged in the lawsuit that Stokes had
when, during a round of layoffs a few         tors sold investors timeshares in several    dozens of such accounts at a branch in
years ago, it targeted workers 40 years       hotels, which were supposed to be            Dickson,Tennessee and that as much as
of age and older. The settlement also         leased out through an agent, generating      $47 million passed through the
comes after Sprint disclosed in a regula-     fixed returns. And then when investors       accounts over the years. In 2006, Stokes
tory filing a few weeks earlier that it had   wanted out, the leasing agent would          was arrested by federal agents and
agreed to settle yet another class action     buy back their timeshares for the full       charged with embezzling the retirement
lawsuit. That one was over the recombi-       amount. According to the SEC, the            money, money laundering and a slate of
nation of its tracking stocks in 2004.        leasing agent, touted as a large inde-       related counts. It’s alleged in the lawsuit
Source: Kansas City Star                      pendent company, was actually a small        that Stokes regularly transferred money
                                              Panamanian travel agency controlled by       collected from employees into his busi-
                                              Kelly. Brokers in charge of pushing the      ness and personal accounts. Regions is
SEC SUES PARTIES INVOLVED IN FRAUD            investments are believed to have             alleged to have collected $500,000 in
RING FOR CHEATING RETIREES
                                              received $72 million in commissions.         fees over the years for transferring
  The U.S. Securities and Exchange            Kelly has pleaded not guilty in the crimi-   money between the accounts.
Commission (SEC) recently filed a             nal case.                                       Interestingly, it’s alleged that Stokes
lawsuit against 26 people and compa-          Source: Bloomberg News                       moved the accounts to Cincinnati-based
nies for their roles in an alleged $428                                                    Fifth Third Bank in 2006 and that bank
million fraud involving Mexican time-                                                      closed them out a few months later for
                                              FRAUD LAWSUIT FILED AGAINST REGIONS          "improper activity." Stokes then moved
share rentals. This comes in the wake of
the SEC’s recent attempts to crack               A lawsuit has been filed against          the accounts back to Regions, according
down on scams that target retirees. In        Regions Financial Corp. arising out of an    to allegations in the complaint. If
the lawsuit filed in a federal court in       alleged fraud that cost people $18           Regions was responsible for the stew-
Chicago, the SEC has alleged that the         million of their retirement money. Birm-     ardship of the funds then the bank may
ring duped thousands of people by             ingham-based Regions was accused of          well have had a legal duty to protect the
promising stable incomes from time-           faulty oversight of bank accounts in the     plaintiffs’ funds. Investment accounts
shares in Cancun.The operators would          suit filed in Tennessee. Thousands of        and trust funds usually carry fiduciary
instead use money from new clients to         people allegedly lost money in the           responsibility for the bank, but ordinary
make purported rental payments to             scheme. While Regions wasn't directly        corporate accounts in most cases don't.
earlier investors, which would leave          responsible for managing or investing        The trustee suing Regions alleged in the
victims with more than $310 million in        the money, it is contended that Regions      lawsuit the bank should have known
losses when the system collapsed.             should have detected the fraud that was      Stokes had no right to withdraw
Merri Jo Gillette, the SEC’s regional         being committed by an outside                employee money. It’s stated in the com-
director in Chicago, says the lawsuit         company that controlled the accounts.        plaint:“Regions/AmSouth knew that the
“shows that the SEC will vigilantly           That firm purported to collect payroll       funds deposited in such accounts came
pursue those who target older Ameri-          deductions from various employers,           from customers of 1Point, and that the
cans, no matter what the obstacles.”          pool the money and send it off to be         funds did not belong to 1Point, but



16                                                 BeasleyAllen.com
were held in trust to be used solely for     Hill. The “Honest Leadership and Open       both on contributions and spending is
the participants and beneficiaries.” It’s    Government Act of 2007,” which imposes      more likely to occur and that would
noteworthy that AmSouth paid $50             the most far-reaching ethics reforms on     accomplish a desired goal to curb the
million in penalties for failing to detect   lobbyists and lawmakers in decades and      power of special interests.
fraud and money laundering in a Missis-      opens the books on lobbyist fundraising,    Source: Public Citizen
sippi branch. AmSouth and Regions            finally became law on September 14th.
merged last year. This case will be an       The following are just a few of the
interesting one to watch as it develops      reforms ushered in:                         U.S. REP.TERRY EVERETT WILL RETIRE
through discovery and pre-trial                                                             In a surprise move, U.S. Rep. Terry
                                               Lobbyists and campaign money to
motions.                                                                                 Everett, the eight-term Republican from
                                               be an open book. The single most
Source: Birmingham News
                                               powerful tool for lobbyists to buy        the wiregrass, will retire at the end of his
                                               influence is fundraising for law-         current term. Rep. Everett, a former
GIANT DRUG COMPANIES SETTLES LAWSUIT           makers, most of which has been            newspaper publisher and farmer, cited
                                               undisclosed to the public. Under the      health reasons.While most observers felt
   The French pharmaceutical company           new law, lobbyist fundraising for         that Everett needed to retire, his
Sanofi-Aventis has agreed to pay $190          lawmakers, including the dollar           announcement came as a shock. He had
million to settle allegations of fraud in      amount of direct and bundled cam-         been actively engaged in fund-raising in
the pricing and marketing of Anzement,         paign contributions, and the              recent weeks. Everett represents
a drug used for cancer treatment side          names of lobbyists who host               Alabama's 2nd Congressional District,
effects. A suit against Sanofi-Aventis         fundraising events and the                which covers much of southeast and
alleged that by inflating the price of         amounts they raise, must be posted        central Alabama from Dothan to Mont-
Anzement, the giant drug company               on the Internet.                          gomery. His district includes the Wire-
increased the cost of federal reimburse-                                                 grass area of southeast Alabama, an
ments and resulted in false claims to          Travel junkets grounded. Travel           important agricultural region.The district
federal health programs. The case arose        junkets were another popular tactic       is also home to two major military instal-
from a lawsuit filed under the false           lobbyists deployed to gain access.        lations — the Army's flight training base
claims act by Ven-A-Care of the Florida        Now, lobbying organizations may           at Fort Rucker near Ozark and Maxwell-
Keys, Inc. The U.S.Attorney in Miami, R.       sponsor only one-day trips, just long     Gunter Air Force Base in Montgomery.
Alexander Acosta, observed: “Corpora-          enough to fly a member to a confer-       While lots of names have been men-
tions can not continue to mislead the          ence to give a speech. Corporate jets     tioned as potential candidates to replace
government into paying vastly exagger-         for this travel are effectively prohib-   Everett, State Senator Harri Ann Smith, R-
ated prices by exhorting a health-care         ited, and lobbyists, skilled at high-     Slocumb, is believed by come “political
system based on trust and fair play.” We       altitude schmoozing, can no longer        experts” to be the early favorite. The
constantly see where corporations              tag along.                                Democrats will likely put up a strong can-
doing business with the federal govern-        “Bridges to Nowhere” no more. The         didate and several names are being tossed
ment commit fraud and cheat the Amer-          names of the sponsors and recipi-         about as possibilities.
ican taxpayers. I still believe that we        ents of earmarks – special spending
need to get much tougher on the                measures often secretly inserted
cheaters and especially those who are          into bills by members of Congress –       VII.
repeaters.                                     now must be posted on the Internet        PRODUCT
Source: Lawyers USA
                                               48 hours before final approval of         LIABILITY UPDATE
                                               appropriations and tax bills.

VI.                                             While the 110th Congress should be       SOMEBODY IS PUTTING OUT SOME BAD
CONGRESSIONAL                                commended for delivering substantial        INFORMATION
                                             lobbying and ethics reforms, their job
UPDATE                                       isn’t finished. Members of Congress must      It appears that the verdict one of our
                                             make sure these reforms continue to be      clients obtained against Wal-Mart has
                                             monitored and enforced. They must also      caused the lobbyists for tire dealers to
CONGRESS DELIVERS ON LOBBYING AND
ETHICS REFORMS                               see that special-interest money is          start a campaign of “letters to the
                                             removed from elections to the extent        editor.” It’s obvious that the persons
  The 110th Congress has taken a huge        possible. One possible solution would be    writing the letters either don’t know
step toward delivering on their promise      to go to public financing of federal cam-   why Wal-Mart was found to be at fault in
to help “clean up the swamp” on Capitol      paigns. But, being able to place limits     the case or they have been grossly



                                                 BeasleyAllen.com                                                                 17
misled on the facts of the case by some-      for the tire manufacturers, the tire           to provide protection for side-impact
body. The letters contend that a dealer       dealers, and for the consumers who             collisions with stationary objects. The
has no duty to notify a customer about a      have the recalled tires.                       old standard simply required car-to-car
recall of a tire they didn’t sell. Although      But getting back to the outrage about       crashes. The new standard requires a
I would generally agree with that view,       the Wal-Mart jury verdict in our recent        dynamic pole test to recreate crashes
that wasn’t the situation involving our       tire failure-related lawsuit, let me say       with stationary objects such as trees
client and her defective tires. In our        that this outrage is totally unwarranted.      and telephone poles. Additionally, the
case, Wal-Mart had a duty to notify the       First,Wal-Mart had been notified by the        new standard will require manufactur-
customer and to inspect her tires. I will     manufacturer about the recall of our           ers to test vehicles with crash test
explain that in more detail below.            client’s tires. Also, Wal-Mart had a life-     dummies that reflect the overall general
  I will concede one thing – there are        time service contract with our client          population. Previously, the standard
no “magic databases” where tire dealers       that required her tires to be inspected        only required testing with crash test
can enter a tire’s Department of Trans-       by the giant retailer on a regular basis.      dummies that approximate the size of
portation (DOT) number to find out            Our client took her vehicle in to Wal-         an average male. The new standard will
whether a subject tire is recalled. The       Mart for inspections on more than one          require testing with smaller, female-size
system to identify and notify consumers       occasion. At no time did Wal-Mart              crash test dummies. That is something
about a tire recall is based on the Tire      detect the obvious defect nor did they         which has been badly needed for years
Identification Number (TIN) and con-          tell our client her tires were under a         and the automobile industry knew it.
sumer registration cards. This decades-       recall. Later, after the last so-called           While the new standard does increase
old, ineffective, and outdated system         inspection, a tread separation resulted        the safety requirements, safety groups,
was actually designed by the tire indus-      in a roll-over. Had Wal-Mart inspected         such as Public Citizen, believe the stan-
try, which fought attempts to make it         the tires – as it had a duty to do – any       dard could have been further enhanced.
more consumer-friendly. Tire recalls          person doing the inspection would              The car-to-car crash testing uses a
really got little attention before to the     have seen the obvious evidence of a            deformable barrier that is representative
Firestone/Ford Explorer tire recalls.         defect. Our client wound up paralyzed          of a mid-size car. With the number of
Before that scandalous series of events,      as a result of Wal-Mart’s wrongdoing.          light trucks and SUVs on the highway,
recalls of tires were relatively rare and     Rather than putting out false informa-         the testing could have been greatly
most of the time, were small.                 tion – if they are responsible for the         improved by the use of higher barriers
  But nobody can dispute that the             letter writing campaign – the tire manu-       that represent these larger vehicles.
number of tire recalls has increased in       facturers and tire dealers should work         Additionally, these standards should
recent years. The issuance of a recall        for a better system of recalls. It is outra-   include testing with crash test dummies
doesn’t guarantee everybody who has           geous that the tire industry has failed to     that represent small children. Certainly
the recalled tires gets the word. After       take responsibility to develop a recall        children will be riding in all kinds of
the initial media coverage dies down          system that really works. It’s equally         motor vehicles as passengers.
and the scant number of owners who            outrageous for somebody to put out                In any event, the changes made are an
have registered their tires are notified,     false and misleading statements about a        important enhancement of this safety
the system currently in place breaks          very strong case of liability in a case        standard. Side-impact crashes account
down. Many owners never even learn            involving Wal-Mart.                            for 28% of all automobile fatalities in the
about a tire recall. In fact, lots of folks                                                  United States and that is most signifi-
with new vehicles don’t even know                                                            cant. The NHTSA estimate indicates that
what kind of tires they have. Even with       NEW SIDE-IMPACT RULE ANNOUNCED BY              the new standard will save over 300
                                              NHTSA
vastly improved tire registration, the tire                                                  lives and prevent almost 400 serious
recall messages don’t get to the right          The National Highway Traffic Safety          injuries per year. Hopefully, their projec-
person. Some safety experts believe the       Administration (NHTSA) has recently            tions will be accurate. The standard will
remedy lies not in the continued use of       released a new side-impact standard for        be phased in, starting in 2009. It took
the TIN and tire registration, but in a       automobiles. The new standard will             NHTSA a long time to act, but at least
technological fix such as radio fre-          increase the side-impact safety require-       the regulatory agency finally did.
quency identification (RFID). They say        ments for all passenger vehicles.
that, among their many benefits, RFID         NHTSA predicts that the increase in the
tags would allow any professional                                                            FEDERAL TIRE SAFETY RULE IS NOT GOOD
                                              standard will save hundreds of lives           FOR SAFETY
service shop to quickly determine             each year. For your information, there
whether a tire is part of a recall simply     are two important changes to the new             Consumer advocates contend that the
by using an inexpensive scan tool. That       side-impact crash standard. The new            new rules relating to tires contain lan-
would appear to be a very good thing          rule requires automobile manufacturers         guage that protects tire manufacturers



18                                                BeasleyAllen.com
from lawsuits – language that wasn’t            drowning related accidents. These             without a lifeguard. That is what should
included in the original proposal. The          tragedies would be prevented by the           be required to assure that pools are safe
National Highway Traffic Safety Adminis-        owners and operators of public pools if       for swimmers and especially for children.
tration defends the rule as a way to            the pools were safe and free from                Additionally, tenants, renters and
encourage tire companies to increase            hazards.                                      owners must be fully informed about
safety features. The regulatory agency             Recently, Cole Portis of our firm, along   the proper use of the pool. Comprehen-
has been working on the tire safety rule        with attorney Michael Slocumb of              sive rules should be provided when one
for two years. However, consumer advo-          Opelika, resolved a case on behalf of a       initially rents an apartment and at the
cates and safety experts are now                mother who lost her son after he died         beginning of the pool season. One of
working hard to alert the public to the         from drowning in an apartment pool            the specific rules that is rarely enforced
efforts by NHTSA to protect wrongdo-            located in Phenix City, Alabama. The          are the pool’s operating hours. Apart-
ers and put consumers at risk for injury        pool was not equipped with a lock on          ments, condominiums and hotels must
or death.                                       the entry gate, a personal floatation         ensure that everyone is out of the pool
   I agree that the new federal rules gov-      device (life preserver), or a rope that       area when it is time for the pool to
erning tire safety will most likely cause       divided the shallow end from the deep         close. While the pool is closed, there
serious safety risks for motorists and          end. The pool was not marked to note          should be a means of providing surveil-
their passengers. These new rules could         the various depths of the pool, was not       lance of the pool. Either a television
result in denying victims access to the         properly lighted and was not properly         monitor or a security guard will help
courts when they are injured or when a          maintained, which resulted in cloudy          keep people out of the pool area when
family member is killed due to a defec-         water that hindered the ability to locate     it is closed.
tive tire failing. The Firestone tire recall,   and rescue the swimmer.                          I hope and pray that the number of
and the over 200 deaths nationwide                 Safety violations by this apartment        swimming pool cases that our firm
associated with defective tires, made           complex are troubling. Sadly, such viola-     handles will decrease. That will depend
American citizens aware of a most               tions are occurring every day in public       on whether swimming pool safety is
serious problem a few years ago relating        pools across our state. In spite of the       given a higher priority. Unfortunately,
to defective tires. Had the courts been         numerous drownings occurring in our           pool owners continue to fail to protect
closed at that time, the manufacturers          state, there is not a comprehensive state     the health and safety of the people who
would have been able to avoid their             statute that outlines the responsibilities    use their pools. Sadly, the trend we are
legal responsibility. It’s extremely            of an apartment or hotel owner that           seeing is a laissez faire attitude toward
important to keep our state courts open         provides a pool as an amenity for its         pool safety. In fact, since we resolved
and available to handle product liability       guests and visitors.                          the case in Phenix City, two other
lawsuits including those involving                 In spite of the lack of a comprehen-       drowning incidents have been investi-
defective tires. Over our nation’s              sive state law, there are established         gated and lawsuits filed by our firm. We
history, accountability in our state            safety principles and guidelines for          will continue to fight for safer pools by
courts has been available to make Cor-          pools. One of these guidelines is that        educating the public and by litigating
porate America responsible when they            non-residential pools should always           against those entities that choose to
put defective and unsafe products on            provide lifeguards. A lifeguard’s primary     have an unsafe pool that causes
the market. The new tire rules are just         function is to prevent accidents. They        someone’s death or brain injury.
one example of the Bush Administration          do this by enforcing the pool rules,
acting to protect big businesses at the         supervising those who are using the
expense of consumers. Their actions             pool, and ensuring the pool is safe for       JURY VERDICT IN DROWNING AT COUNTRY
                                                                                              CLUB
are the result of a campaign both that          swimming. However, instead of spend-
works both against both safety and              ing the nominal amount of money                 A case involving the drowning death
consumers.                                      needed to employ lifeguards, manage-          of a 5-year-old boy at a country club in
                                                ment will post a sign which says:             Maryland is an example of what can
                                                • NO LIFEGUARD ON DUTY                        happen when safety rules aren’t fol-
SWIMMING POOL SAFETY
                                                                                              lowed. A jury awarded his parents more
  Summer in Alabama seems incom-                • SWIM AT YOUR OWN RISK                       than $4 million in damages in the
plete without splashing water and the                                                         lawsuit filed against Hunt Valley-based
                                                  It should be noted that putting up
laughter of children around swimming                                                          DRD Pool Service Inc., the club's pool
                                                such a sign does not relieve the owner
pools. Unfortunately, laughter far too                                                        management company. The jury found
                                                of the pool of any responsibility. I am
often turns to grief stricken tears when                                                      the company negligent for failing to ade-
                                                convinced that no apartment, condo-
a drowning occurs. Currently, there are                                                       quately train its lifeguards and properly
                                                minium or hotel pool should be operated
too many deaths and injuries because of                                                       staff the pool. The company was



                                                    BeasleyAllen.com                                                                 19
ordered to pay the parents $2,000,076        failing to bring help when Morrison           County, Illinois. Trish McCloud was
each – the $76 serving as a symbol of        became incapacitated.Tragically, Derek        riding back to her home in Michigan
the child’s birthday, which was July 6th.    Martin died trying to save his friend and     from a bike rally in St. Louis when the
   A 16-year-old lifeguard, who had been     co-worker. Before a jury decided the          tire deflated. The driver lost control of
on the job for three weeks, was on duty      Morrison case, Survivair reached a confi-     the motorcycle and crashed.
when the child was found floating in         dential settlement with his widow.               When the bike flipped, Ms. McCloud
the country club's outdoor pool about           Derek Martin died after removing his       struck her head on the pavement.
4:30 p.m. June 22, 2006. He had been         mask and gloves while trying to clear         Although she was wearing a helmet, the
swimming at the pool with an adult           the valve on his air mask.That valve was      impact was so great that it caused
family friend and two other children. It’s   stuck when federal investigators exam-        severe brain damage. As a result of her
significant that the parents have set up a   ined it 10 days after the fire. He never      injuries, Ms. McCloud is partially para-
foundation to honor their son. They are      would have needed to go after his co-         lyzed and requires around-the-clock
also working with lawmakers to create        worker if that firefighter’s personal         care. The driver was hurt, but his
uniformity in safety requirements at         alarm had worked.                             injuries weren’t as severe as those suf-
public pools.They would also like to see        California-based Survivair, a subsidiary   fered by Ms. McCloud. The jury verdict
more stringent rules because, for            of a French company, knew about               was broken down as follows: $1.5
example, in Anne Arundel County,             design flaws when it sold the masks to        million for disfigurement; $4.89 million
where the club was located, only one         the Fire Department in the late 1990s.        for pain and suffering; $4.89 million for
lifeguard is required for every 50 swim-     Survivair claimed that the deaths were        loss of enjoyment of life; and about $3.8
mers.They are calling for legislation that   based on procedural breakdowns: fire-         million for past and future medical
would decrease that ratio to one life-       fighters working inside individually,         expenses.
guard per 25 swimmers.                       failing to vent heat and smoke from the       Source: Journal Star
Source: Baltimore Sun Reporter               building and missing a distress message
                                             over the radio. The manufacturer said
                                             Martin should have known to check the         APPEALS COURT ORDERS NEW TRIAL IN
JURY VERDICT FOR FIREFIGHTER’S FAMILY                                                      FORD ROLLOVER CASE
                                             valve before trusting it and insisted a
   A Missouri jury has awarded a total of    firefighter can still breathe with the          A panel of the Court of Appeals for
$27 million to a St. Louis firefighter's     valve stuck.                                  the Ninth Circuit has granted a new trial
family against the maker of breathing           The manufacturer, Survivair, of Santa      in a previously reported case against
equipment. The suit contended that the       Ana, California, must pay $14 million of      Ford Motor Co. The appeals court
equipment used by the fire department        the punitive damages, and its parent          threw out a decision that would have
was defective, resulting in the death of     company in France, Bacou-Dalloz, will         awarded $52 million to the parents of a
the decedent while he was fighting a         have to pay $1 million. At least half of      small child who was killed by a rolling
blaze in 2002. The panel held the            the punitive award will go to a state         pickup truck. The court ordered a new
company, Survivair, 100% at fault in the     fund, with the rest going to Derek            jury to set punitive damages in the case.
death of Derek Martin, finding a faulty      Martin's family. While the Fire Depart-       This will be the second retrial in this
product and negligence on the part of        ment still uses the Survivair gear, the       case, which arose from an incident
the manufacturer. Survivair was ordered      city recently asked for a refund so it can    resulting in the death of three-year-old
to pay $12 million in compensatory           buy replacements.                             Walter White in October of 1994.
                                             Source: St. Louis Post Dispatch               Walter's father had parked his Ford
damages and another $15 million as
punitive damages because of aggravat-                                                      pickup on a sloped driveway and gone
ing circumstances — conscious disre-                                                       into his home. The child was playing in
                                             JURY AWARDS $15 MILLION IN PERSONAL
gard for the safety of others.               INJURY CASE                                   the front yard, and his mother was
   The trial turned on whether a faulty                                                    checking on him from time-to-time. A
valve on an air mask was to blame for          A federal jury in Illinois awarded a        unanimous decision by a three-judge
the death, or whether department pro-        South Carolina woman $15 million              panel of the Ninth Circuit entered the
cedures were at fault, as claimed by the     recently after finding that a tire on the     order.
manufacturer. Martin and fellow fire-        motorcycle she was riding on had a              At some point, the child climbed into
fighter Robert Morrison died in a fire in    defect and caused an accident that left       the truck's cab and shifted the gears
2002. What at first seemed to be a           her with severe brain damage. The             into neutral. The parking brake didn't
routine blaze, turned into a disaster. The   jurors found that Goodyear Dunlop             hold the pickup in place and it started
                                             Tires North America Ltd. was responsi-        rolling back. The child fell or climbed
Morrison family had filed suit against
                                             ble for the 2002 accident that occurred       out and was crushed by the truck. The
Survivair. It blamed the personal dis-
                                             on an interstate highway in Livingston        parents sued Ford Motor Co. and the
tress alarm, also made by Survivair, for



20                                                BeasleyAllen.com
Orscheln Company, maker of the                 burden on the drug companies to warn          MERCK SPENT MILLIONS LOBBYING THE
brakes, alleging the companies were            of a drug’s hazards. That duty remains        FEDERAL GOVERNMENT
aware the brakes would allow the truck         squarely where it belongs---on the drug
to roll, but had not warned consumers.         company, which is in the best position           Merck & Co. spent $2.3 million to
Two months after the child’s death, Ford       to warn about problems associated with        lobby the federal government in the
issued a recall in connection to the           the drug. The Rule of Construction,           first half of 2007, according to a recent
brakes. Orscheln settled with the              which is included in Section 901, makes       disclosure form. The company’s lobby-
parents before trial, and the first trial      clear that Congress is not altering the       ing activities were on legislation that
went forward against Ford. In the 1998         responsibility of the manufacturer to         would increase funding for the Centers
trial, Ford was found negligent for not        promptly update its drug label when           for Disease Control and Prevention and
warning customers about the brakes.            the manufacturer becomes aware of             the Food and Drug Administration, and
The parents also were found partly             safety information that should be added       on patent reform issues. At least that’s
responsible for the accident. The jury         to the label. But it still gives the FDA      what the drug maker put in a disclosure
awarded the parents $2.3 million in            the authority to require label changes        that was required to be filed. A form
compensatory damages and $150.8                and even if the FDA does not act, the         posted online August 13th by the
million in punitive damages.                   burden still remains on the drug
                                                                                             Senate's public records office contained
   The trial judge found the punitive          company to update its warning label.
                                                                                             this information. Interestingly, Merck
damages excessive and reduced the                 Under FDA’s current regulations, a
                                                                                             also lobbied against legislation that
amount to $69.2 million. Both parties          drug company is required to revise its
                                               label to include warnings about risks         would impose government price con-
appealed. The case was sent back for a
                                               that may be associated with the drug as       trols on prescription drugs in the
new trial. In the 2004 retrial, which
                                               soon as there is reasonable evidence of       Medicare program, and on trade issues
only considered the amount of punitive
damages, another jury awarded the              that risk. Although the company must          with various countries, according to the
parents $52 million. Ford again                notify FDA of the change, it is not           form.
appealed, asking the Ninth Circuit to          required to wait for FDA’s approval              Besides Congress, the company
reverse the case, primarily because of         before making such a labeling change.         lobbied the departments of Commerce
mistakes made instructing jurors on            The theory is that consumers should be        and State, and the U.S.Trade Representa-
damages. The appeals court held that           made aware of a drug’s risk at the earli-     tive's office. Under a federal law
because the lawyer for the plaintiffs told     est possible moment.The provision also        enacted in 1995, lobbyists are required
jurors that Ford knew that 54 people           makes clear that the burden of updating       to disclose activities that could influ-
had been injured by "rollaways,” the           the warning label falls squarely on the       ence members of the executive and leg-
case had to be reversed. Another retrial       drug companies. This is the first time        islative branches. They must register
was ordered, again limited to setting          that Congress has said anything about         with Congress within 45 days of being
punitive damages, and that’s the current       labeling. Previously, all labeling require-
                                                                                             hired or engaging in lobbying. Merck is
status of the case. The new jury should        ments were governed by FDA regula-
                                                                                             not the only drug company that spends
be told that the parents already received      tions only.
                                                                                             big bucks trying to buy influence with
$2.3 million in compensatory damages,             The drug companies fought and
                                               lobbied hard to include language that         members of Congress and with the
and that they were found to be partly                                                        FDA.
responsible for the accident, according        the Congress specifically left out of the
                                                                                             Source: Associated Press
to the appellate court. It will be inter-      final bill. That language, referred to as
esting to see how the third trial turns out.   the Burr amendment and included in
Source: Insurance Journal                      the Senate version of the bill (S.1082),
                                                                                             THE STATE OF NEW YORK AND NEW YORK
                                               would have shifted the burden of              CITY FILE LAWSUIT AGAINST MERCK
                                               making labeling changes from the drug
                                               manufacturers to the FDA. Escaping the           The New York State Attorney General,
VIII.                                          drug companies’ intense lobbying              Andrew Cuomo, along with Mayor
MASS TORTS                                     efforts to put amendments on the bill,        Michael Bloomberg, have filed a lawsuit
UPDATE                                         which would have allowed them to              on behalf of the State of New York and
                                               avoid accountability and limit their legal
                                                                                             New York City in a New York state court
                                               responsibilities, was very important. It is
                                                                                             seeking damages, penalties, and restitu-
ACT SIGNED INTO LAW                            an example of what can happen when
                                                                                             tion for “tens of millions of taxpayer
                                               folks back home find out what is hap-
  President Bush has signed into law The       pening to them in Washington and let          dollars wrongfully spent on Vioxx pre-
Prescription Drug User Fee Reauthorization     their elected representatives know how        scriptions”. The suit, filed last month,
Act (PDUFA), H.R. 3580.          This act      they feel on important issues. It’s signif-   alleges that Merck concealed the risks
creates new federal safety requirements        icant that Congress didn’t cave in to the     of Vioxx and that many Vioxx prescrip-
for drug companies. Congress was very          lobbying and political pressures from         tions would have never been written if
clear that the bill does not change the        the drug industry and that’s good news.       doctors had been properly informed of



                                                   BeasleyAllen.com                                                                21
the risks associated with the drug.          August 27th online edition of The             mediate that risk is still specula-
Attorney General Cuomo, stated when          Journal of Experimental Medicine.             tive. The problem is that there are
filing the suit:                             Lead researcher Mallika Ghosh, a post         no approved TF-blockers, so it's not
                                             doctorate fellow at the university's          even feasible to consider this. In
  Merck’s irresponsible and duplici-
                                             Center for Vascular Biology in the            addition, it still isn't definite that
  tous conduct endangered the
                                             department of cell biology at the Uni-        TF is an important mechanism in
  health of New Yorkers and wasted
                                             versity of Connecticut Health Center,         humans linking cox-2 inhibitors
  tax dollars even as evidence was
                                             observed:“We provide a mechanism to           with cardiovascular risk. This
  piling up showing just how dan-
                                             understand the side effects caused by         study is very speculative, very pre-
  gerous this drug was, Merck put
                                             cox-2 inhibitors.” Previously, the            liminary. The finding needs to be
  profits above all else and put thou-
                                             increased cardiovascular risk associated      confirmed in clinical trials.
  sands at risk by continuing to
                                             with cox-2 inhibitors was linked to
  push Vioxx inappropriately on                                                            I agree with Dr. Nissen. Before
                                             prostacyclin, another protein important
  doctors and patients.                                                                  jumping to hasty conclusions, the
                                             for preventing clotting. It's been shown
                                                                                         medical community should demand
   The suit was brought under New            that cox-2 inhibitors do lower prostacy-
                                                                                         further studies. On second thought,
York’s recently-enacted False Claims Act,    clin levels.
                                                                                         maybe the Federal Food and Drug
which allows the state to seek damages          However, Dr. Ghosh's team now pro-
                                                                                         Administration (FDA) should be the one
for the amount spent in Medicaid and         poses an alternate explanation for the
                                                                                         doing the demanding. After all, the
the Elderly Pharmaceutical Insurance         added risk. They found increased levels
                                                                                         agency is supposed to be regulating the
Coverage (EPIC) healthcare programs to       of TF in the blood, heart and lungs in
                                                                                         drug industry. It has the responsibility of
pay for drugs prescribed under false         mice treated with a cox-2 inhibitor.
                                                                                         protecting the public interest as it
pretenses. This is the first case brought    With this mechanism, the researchers
                                                                                         relates to safety and health issues. There
under the new law. The State of New          can understand why cox-2 inhibitors
                                                                                         is one thing for certain, however,
York spent over $100 million on Vioxx        “contribute to the development of car-
                                                                                         coming from this study – Vioxx and the
prescriptions through Medicaid and           diovascular events." The researchers
                                                                                         other cox-2 drugs should never have
EPIC between 1999 and 2004. This             found they could reduce the high levels
                                                                                         been put on the market without further
lawsuit, which will have huge ramifica-      of TF in cox-2-treated mice by using TF-
                                                                                         studies.
tions, will be watched closely.              reducing agents. Based on the research,
                                                                                         Source: Forbes
Source: Reuters                              it may be possible to make cox-2
                                             inhibitors safer by giving TF-blocking
                                             drugs along with these pain killers. By     NEW JERSEY SUPREME COURT RULES FOR
RECENT STUDY RESULTS AS TO THE CAUSE         measuring levels of TF, people who are      MERCK IN CLASS ACTION CASE
OF VIOXX HEART RISK                          at high risk for cardiovascular side
                                             effects from cox-2 inhibitors can be           New Jersey's Supreme Court has
   Researchers believe they have found
                                             identified. Dr. Ghosh believes the TF-      rejected the Vioxx class action lawsuit
what actually caused Vioxx to boost
                                             linked risk applies to all cox-2            against Merck & Co., reversing two pre-
heart risks for persons taking the drug.
                                             inhibitors, not just Vioxx or Bextra,       vious lower-court decisions. As we
As we all know, the pain reliever was
                                             which was also taken off the market in      reported earlier, the suit was brought by
taken off the market in 2004 because it
                                             2005. Interestingly, a third cox-2, Cele-   a union health plan on behalf of all
was linked to a high risk of heart attack
                                             brex, remains on pharmacy shelves.          insurance plans that paid for Vioxx pre-
and stroke. In experiments with mice,
                                                Although this research holds promise,    scriptions. As all America now knows,
researchers have found that when cox-2
                                             at least one expert believes that more      Merck pulled Vioxx from the market
inhibitors like Vioxx block the cox-2
                                             study is needed. Dr. Steven E. Nissen,      three years ago after research showed it
enzyme, it does in fact reduce pain. But
                                             chairman of the department of cardio-       doubled risk of heart attacks and
it also increases the production of a
                                             vascular medicine at the Cleveland          strokes. Had Merck disclosed those
protein called tissue factor (TF), which
                                             Clinic and a noted expert on the cox-2      risks earlier, prescription plans would
can initiate unwanted clotting, and
                                             drugs, made this observation:               have favored other painkillers. A state
therein lies the problem. Because heart
                                                                                         judge and then an appeals court
attacks and strokes are triggered by           We have always assumed that the           approved the class action, but Merck
blood clots, it is possible that the over-     problem with cox-2 inhibitors was         appealed to the state Supreme Court.
production of TF is, in part, responsible      linked to prostacyclin.These [data]       The opinion rejects a national class and
for cox-2 inhibitors' dangerous side           are suggesting that there may be          favors individual cases based on the
effects.                                       more to the cardiovascular risk of        alleged fraudulent conduct. In a nut-
   The University of Connecticut-led           cox-2 inhibitors, and it may relate       shell the court ruled that the nation-
team reported on this connection in the        to TF. However, blocking TF to            wide class was not appropriate for the



22                                               BeasleyAllen.com
lawsuit.                                     and in for patients who already have ele-     how to respond to doctors' concerns.
  Although some might see this ruling        vated liver enzymes. New advice               According to the testimony, sales per-
as being good for individuals who have       regarding liver function tests was also       sonnel were directed to tell doctors that
their own personal lawsuits, it is regret-   provided.                                     “most studies did not show an increase
table in the sense that a class action          There appeared to have been eleven         of breast cancer.”When Prempro came
would be the most efficient manner of        cases of severe hepatic toxicity world-       on the market in 1995, Wyeth encour-
holding Merck accountable for the            wide, including nine cases of liver           aged its sales force to push the product
massive economic havoc it has caused.        failure, with a suspected causal relation-    as hard as they could and provided
The allegations of fraud against Merck       ship with the medication, mostly involv-      money and support for that effort.
certainly appear to be well founded.The      ing doses higher than the 100 mg daily        Company officials said the sales repre-
drug maker sold billions of dollars of a     dose authorized in the EU. Lumiracoxib        sentatives were to promote the drugs to
very dangerous drug that it knew put         was considered to be the most potent          woman entering menopause and get
persons taking it at great risk for heart    of the cox–2 drugs in terms of Cox-I          them to use it "for the rest of their
attacks and strokes.The plaintiffs in the    compared to cox-2 selectivity. The            lives." The drug now is sold in small
lawsuit were certainly damaged by            selectivity ratio is the highest for any of   doses, and doctors are advised to limit
Merck’s conduct.                             the Cox inhibiting drugs, at 400 mg.          the time women spend on the medica-
Source: Associated Press and Forbes          However, Lumiracoxib has a unique             tion.
                                             chemical makeup that hypothetically              It certainly appears that the big drug
                                             allows it to focus on inflammatory sites      companies have lost sight of what their
ANOTHER COX-2 MEDICATION HAS PROBLEMS        within the body, and not have the car-        primary purpose should be. What used
   On September 16, 2003 the Medicines       diovascular side effects similar to other     to be an industry driven by science and
and Healthcare Products Regulatory           cox-2 inhibiting drugs such as Vioxx          research has become a marketing-driven
Agency (MHRA), an agency of Great            and Celebrex. This hypothesis was             industry and that’s most unfortunate.
Britain’s Department of Health,              never proven. Could this signal the end       The company bosses no longer seem to
approved Novartis cox-2 drug Lumira-         for this class of drugs?                      be concerned that doctors are first and
coxib (Prexige) for the symptomatic                                                        foremost prescribing their products to
relief of osteoarthritis in Europe. It was                                                 help heal patients, but instead are only
                                             WYETH PHARMACEUTICAL TRIAL IS                 concerned that they prescribe their
later approved for sale in 16 other coun-    UNDERWAY
tries. However, the Australian Regulatory                                                  products. That’s a far cry from the days
Agency for medicines required with-             A trial involving Prempro, the             when drug companies were run by
drawal of Lumiracoxib because of the         hormone replacement drug (HRT), is in         medical doctors.
serious liver side effects on August 13,     progress against Wyeth in a Utah state           As I’ve reported in the past, our firm
2007. This cox-2 has never been              court. Three northern Nevada women            represents a number of women who
approved for sale in the United States       sued Wyeth and Pfizer claiming                have been diagnosed with hormone-
by the FDA. In August, Novartis sent a       hormone replacement drugs caused              positive breast cancer as a result of
“Dear Healthcare Professional letter”        their breast cancer. The women also           hormone replacement therapy, includ-
regarding its cox-2 medication Lumira-       contend that Wyeth failed to test the         ing Prempro. Our HRT team continues
coxib (Prexige) to medical doctors in        drugs or warn of their risks. Pfizer, did     to prepare for a trial in Minnesota,
Europe. It should be noted that Prexige      the responsible thing and settled all         which has now been rescheduled to
is indicated only for treatment of           claims the women made against the             take place in January 2008. Ted
osteoarthritis of the hip and knee. The      company.                                      Meadows, Russ Abney, and Melissa Prick-
daily dose is 100 mg.                           Early in the trial a former Wyeth sales-   ett are the primary lawyers handling the
   Following a European Union (EU)           man testified that the company coached        HRT cases for our firm. They will try
interim assessment led by MHRA of the        him to downplay studies showing               the Minnesota case with lawyers from
latest safety evidence, new warnings         Prempro increased a woman's risk for          the firms of Pearson, Randall, Schu-
had to be issued regarding reports of        breast cancer. He testified that was how      macher, P.A., located in Minneapolis,
serious hepatotoxicity, including cases      the sales representatives were trained.       Minnesota and Littlepage, Booth in
resulting in death or liver transplanta-     Over the years, when reports came out         Houston,Texas. Our lawyers are also in
tion in the EU. Lumiracoxib is now con-      suggesting there was an increased risk        the process of preparing other HRT
traindicated in patients with any            of breast cancer for women using the          cases for trial.We will keep you advised
hepatic disease; with prior drug             estrogen drug Premarin or the combina-        as to the progress of this litigation.
                                                                                           Source: Reno Gazette-Journal
induced elevations of liver enzymes; for     tion estrogen and progestin pill Prem-
persons taking any other medicines           pro, the company would call emergency
with significant hepatic toxicity risk;      meetings to teach sales representatives



                                                 BeasleyAllen.com                                                                23
WARNING FOR NURSING MOTHERS USING            plaintiffs who will agree to participate      have the highest potential for abuse and
CERTAIN PAIN MEDICATIONS                     in this settlement to make it work.           an associated risk of fatal overdose. As
                                                Apparently, Boston Scientific has now      you may know, doctors are allowed to
   The death of a nursing infant in 2006
                                             agreed to another settlement involving        prescribe drugs as they see fit, including
has prompted the issuance of a signifi-
                                             these same devices. It was announced          for off-label uses. But off-label marketing
cant warning from the FDA. The
                                             on September 4th that the company             by drug companies is clearly illegal. The
nursing infant’s mother was given
                                             and thirty-five state Attorney Generals       FDA is monitoring this matter.
codeine for episiotomy pain. Genetic
                                             have agreed to a $16.75 million settle-          According to Cephalon, 78,000 pre-
testing showed the mother’s body con-
                                             ment for claims that Guidant continued        scriptions were written for Fentora
verted the codeine to morphine more
                                             to market these devices even after the        between its launch in October 2006 and
rapidly and completely than in other
                                             company learned that the products con-        September 2007. Fentora is a faster-
people and that led to higher than
                                             tained a defect. It appears that Boston       acting and more discrete version of
expected morphine levels in her breast
                                             Scientific desires to put all of the prob-    Actiq. It has been reported that Actiq
milk. Although this is a rare side effect,
                                             lems they inherited when they pur-            has been associated with more than 120
it can result in unsafe levels of mor-
                                             chased Guidant behind them. However,          deaths, including two involving children
phine in the blood and breast milk.
                                             it’s yet to be seen whether these settle-     who confused the drug, which is a
Codeine, which is among the most
                                             ments will actually close the book on         lozenge on a stick that looks like a lol-
common drugs taken by new mothers,
                                             these recalled devices. We will continue      lipop, for candy. Doctors attributed
is also included in several prescription
                                             to monitor this situation.                    some of the deaths to patients' cancer.
pain drugs and in some over-the-             Source: Mealeys                               More than two-thirds of the deaths
counter cough syrups.
                                                                                           occurred during clinical trials before
   Given the risk, doctors are being
                                                                                           Actiq hit the market in 1999.
warned to prescribe nursing mothers          CEPHALON DRUG IS TIED TO SEVERAL                 Connecticut        Attorney      General
the smallest dose of codeine for the         DEATHS
                                                                                           Richard Blumenthal's investigation,
shortest period of time. Doctors were
                                               Drug maker Cephalon Inc. sent letters       which began in 2004 and is ongoing, is
also told that they should closely
                                             to doctors last month warning them            said to have found that Cephalon pro-
monitor both mother and child. In chil-
                                             that several deaths have been linked to       moted Actiq off-label to neurologists to
dren, signs of morphine overdose,
                                             Fentora, a powerful narcotic used to          treat headaches, set unrealistically high
beyond increased sleepiness, include
                                             treat acute cancer pain. Fentora and its      sales quotas for its drug representatives,
difficulty breast feeding or breathing
                                             predecessor, Actiq, were approved by          and pushed larger prescriptions at
and limpness. Nursing mothers may
                                             the Food and Drug Administration              higher doses. The Wall Street Journal
experience sleepiness, confusion,
                                             (FDA) only for use in cancer patients,        reported that settlement negotiations
shallow breathing, or severe constipa-
                                             but they are often prescribed "off-label"     are presently underway. Apparently,
tion. The risk of having the genetic
                                             by doctors for such ailments as               based on the report, any settlement
mutation ranges from about 1% in His-
                                             headaches and back pain. Although the         would involve a large fine and require
panics, Chinese and Japanese, to 3% in
                                             company denies marketing Fentora and          that Cephalon take remedial measures
African-Americans, 1 – 10% in Cau-
                                             Actiq for other than their approved use,      to reform its aggressive marketing practices.
casians, and as high as 16 – 28% in north                                                  Source: Wall Street Journal
Africans, Ethiopians, and Saudis.            the company’s practices are under
Source: Associated Press
                                             scrutiny in three separate probes:
                                             • Investigations by the U.S.Attorney in       IX.
                                               Philadelphia;
ANOTHER BOSTON SCIENTIFIC/GUIDANT                                                          BUSINESS
SETTLEMENT                                   • An investigation by the Connecticut         LITIGATION
                                               Attorney General; and
  You may recall the announcement of
a tentative settlement in July 2007          • a congressional probe into off-label        OHIO FILES SUIT FOR ANTI-TRUST
involving Guidant Pacemakers and               treatments.                                 VIOLATIONS
Defibrillators. Purportedly, Boston Sci-
entific, which purchased Guidant in             Fentora and Actiq contain fentanyl, a         Following a three year long investiga-
2006, agreed to pay $195 million to          highly addictive substance 80 times as        tion by his office and the Ohio Depart-
resolve several thousand claims involv-      potent as morphine. Fentanyl is classi-       ment of Insurance, Ohio Attorney
ing recalled pacemakers and heart            fied as a Schedule II substance by the        General Marc Dann has filed suit against
defibrillators that were manufactured        Drug Enforcement Administration, which        the world's largest insurance broker,
by Guidant. At press time, it wasn’t         puts it in the same category as cocaine and   Marsh & McLennan, and four of the
known whether there will be enough           methamphetamine. Schedule II drugs            nation's largest insurance companies



24                                                BeasleyAllen.com
and their subsidiaries for alleged viola-     The plaintiffs, including about 40,000           J.T. Battenberg, and other former execu-
tions of the state's anti-trust laws. The     current and former employees and                 tives as defendants.
complaint, filed in state court, alleges      several large pension funds, contended           Source: Insurance Journal
that Marsh administered a well-orches-        the former Delphi managers fraudu-
trated conspiracy among insurers Ameri-       lently inflated the company's financial
can International Group, Inc. (AIG),ACE       results to make the auto parts maker             JUDGE APPROVES FINAL SETTLEMENT IN
                                                                                               IOWA MICROSOFT LAWSUIT
Ltd., The Chubb Corporation, and the          look more attractive to investors. Under
Hartford Financial Services Group, Inc.,      the settlement agreements, participants             A federal district court judge has
to eliminate competition in the com-          in Delphi's employee retirement plans            approved the $179.95 million settle-
mercial insurance industry.                   will receive $24.5 million in allowed            ment in the Iowa class action lawsuit
   Specifically, the lawsuit alleges numer-   interest in Delphi's Chapter 11 bank-            against Microsoft Corp. The judge
ous instances in which the insurers           ruptcy case and $22.5 million in cash            found that the settlement was fair and
allegedly agreed to offer customers ficti-    from the company's insurance carriers.           reasonable and would be approved. The
tious quotes, often referred to as "B            Purchasers of Delphi's debt and               suit was filed against Redmond, Wash-
quotes," in order to create the false         equity securities will receive $204              ington-based Microsoft, claiming the
impression that competitive bidding           million in combined allowed interest             company engaged in anticompetitive
had produced the best possible price          and about $90 million in cash from               conduct that caused customers to pay
when, in fact, no competitive process         other defendants and insurance carri-            more for software than they would have
had taken place.           As previously      ers. The lead plaintiffs in that class           if there had been competition. The
reported, a fifth company that had been       include the Teachers Retirement System           lawsuit initially sought more than $330
under investigation, Zurich American          of Oklahoma and the Public Employees             million on behalf of Iowans who bought
Insurance Co., entered into a $7 million      Retirement System of Mississippi. The            Microsoft computer software between
settlement with the state in October of       terms of the settlements will have to be         1994 and 2006.
2006. Attorney General Dann observed          approved by a federal district court                Microsoft has faced 206 class action
when suit was filed:                          judge in Detroit and a federal bank-             lawsuits across the United States. The
                                              ruptcy judge in New York.                        company said 108 were consolidated in
  Our investigation has produced                 Last year, Delphi settled with the            a federal antitrust case and 96 remained
  evidence of blatant violations of           Securities and Exchange Commission.              in state courts. Most were dismissed or
  the antitrust laws that have cost           Now that the company has reached set-            settled before trial. The Iowa case was
  Ohio businesses millions of                 tlement agreements in the cases,                 one of last cases against the company to
  dollars. That is why I am deter-            perhaps the new management will be               make it to court. There is currently
  mined to use every resource at my           able to move forward. The U.S. Securi-           another pending case in Mississippi.
  disposal to both hold the conspira-         ties and Exchange Commission settled             Source: Associated Press
  tors accountable and to send a              charges of accounting fraud in October
  strong message that this type of            against Delphi and six people, not
  illegal and unethical activity will         including Battenberg. Delphi will not            ANTITRUST SUIT INVOLVING UNDERWRITER
  not be tolerated in Ohio.                                                                    FEES IS BACK ON TRACK
                                              face penalties because it cooperated
  The Attorney General asks the court         with federal investigators. Delphi,                 A federal appeals court has ordered a
in the lawsuit to enjoin the parties from     which recently finalized an agreement            lower court to reconsider whether a
engaging in this type of activity in the      for investors to pump up to $2.55                lawsuit against underwriters, including
future, to order them to disgorge all         billion into the company, plans to               Citigroup and Morgan Stanley, can
monies generated by the overcharges,          emerge from bankruptcy protection by             proceed as a class action. The antitrust
and to assess monetary damages. It’s          the end of the year.                             lawsuit accused the investment banks of
good to see Attorneys General in a               The lawsuits against Troy, Michigan-          fixing fees at 7% on certain initial public
number of states standing up to those in      based Delphi and its former managers             offerings for a period in the 1990s. Last
Corporate America who violate the law.        contended that Delphi, which filed for           year, a district court judge ruled that the
Source: Insurance Journal
                                              Chapter 11 protection in 2005, made              named plaintiffs in the case were not
                                              fictitious asset sales to inflate its results.   qualified to represent the class
                                              It was alleged that the company bought           described in the suit. Apparently, one
DELPHI SETTLES FRAUD LAWSUITS FILED BY        the assets back after money from the             named plaintiff bought the right to
INVESTORS                                     sales boosted results. Delphi was the            bring the claim from a bankrupt
                                              parts-making arm of General Motors               company. Another plaintiff was a group
   Delphi Corp. has settled the lawsuits      Corp. before being spun off as a sepa-           of creditors of a bankrupt company.
filed by investors who accused the            rate company in 1999. The lawsuit                   The lawsuit, filed in 2000, accused 32
company's former managers of fraud.           named Delphi's former chief executive,           underwriters of fixing fees at 7% from


                                                  BeasleyAllen.com                                                                     25
1994 to 1998 for offerings in the $20       that Sprint's patents were flawed and          X.
million to $80 million range.The defen-     shouldn't have been approved. Six of
                                                                                           INSURANCE AND
dants also include Goldman Sachs and        the patents eventually went to trial.The
Bear Stearns. The plaintiffs estimated      jury found that the company violated           FINANCE UPDATE
damages at $1.2 billion, which could be     the patents and did so intentionally.
tripled under antitrust law. Now that       This means the judge could triple the          LARGE CORPORATION WINS BATTLE OVER
the case has been sent back to the trial    damages if he agrees with the jury’s           SURGE CLAIM
court, that court will again determine      decision.
whether the case will proceed as a class    Source: USA Today                                 Although the litigation along the Gulf
action.                                                                                    Coast and in New Orleans has had sort
Source: Bloomberg News                                                                     of a checkered existence thus far, there
                                            ELI LILLY SETTLES LAWSUIT FOR $18              is a rather significant federal court deci-
                                            MILLION
                                                                                           sion in another jurisdiction that is note-
JUDGE APPROVES TRAVELERS’ ASBESTOS                                                         worthy. A federal court in Los Angeles
SETTLEMENT                                     Eli Lilly and Co. has settled the lawsuit
                                            filed by a former research partner for         has ruled that wind-driven storm surge
   A U.S. bankruptcy judge has approved     $18 million. Emisphere Technologies of         losses caused by Hurricane Katrina are
a $449 million settlement agreement         Tarrytown, New York, agreed to the set-        covered under an excess property
between Travelers Cos. Inc. and AcandS      tlement after a four year battle. The first    policy that Factory Mutual Insurance
Inc. in connection with the insulation      trial, a breach-of-contract case, went in      Co. sold to Northrop Grumman Corp. A
contractor’s asbestos-related claims        Emisphere's favor last year. The two           ruling on summary judgment in
against the insurer. Under terms of the     companies had worked together from             Northrop Grumman’s lawsuit against
settlement, St. Paul, Minnesota-based       1997 to 2003 using Emisphere's tech-           Factory Mutual Insurance Co. appears to
Travelers will pay the $449 million into    nology to try to develop a pill form of        be the first time that a court has ruled in
an escrow account, which will be paid       Lilly's injectible osteoporosis medica-        a case involving a large, commercial pol-
out along with any investment income        tion Forteo.                                   icyholder over whether wind-driven
at the conclusion of the bankruptcy.           Lilly sued Emisphere for breach of          storm surge is covered under a property
The settlement paves the way for the        contract after the smaller company             policy that excludes flood coverage.
Lancaster, Pennsylvania-based company       accused Lilly of breach of contract and           It appears that most Katrina-related
to emerge from bankruptcy reorganiza-       threatened to take its technology to a         lawsuits involving “large policyholders”
tion. In July when the settlement was       Lilly rival, Novartis.A federal judge ruled    are being settled out of court. The deci-
announced,Travelers said it believes it     in favor of Emisphere in January 2006,         sion could be significant if it stands,
will get $84 million from its reinsurers.   after evidence showed Lilly had set up a       because other policyholders that suf-
According to Travelers, the remaining       secret research team that did its own          fered Hurricane Katrina damage pur-
$365 million of the settlement amount       work using Emisphere technology. This          chased policies with similar language.
will be funded from existing reserves.      wasn’t known by Emisphere. Lilly also          Policyholders who lost their homes
Source: Insurance Journal                   filed for an international patent that was     shouldn’t receive rulings on exclusion
                                            based on Emisphere technology. The             that would vary from rulings dealing
                                            judge last year ordered Lilly to hand          with large corporations such as
JURY RULES FOR SPRINT IN PATENT                                                            Northrop Grumman. The court in the
                                            over that patent to Emisphere. A trial
INFRINGEMENT CASE                                                                          Northrop Grumman case found that FM
                                            scheduled for 2008 was pending to hear
                                            a patent-infringement charge against           Global couldn’t prove its interpretation
  A federal jury has ordered Internet
                                            Lilly and to set damages that Lilly would      of the language to be the only reason-
telephone company Vonage Holdings to
                                            have to pay for the breach of contract.        able conclusion. According to the
pay $69.5 million in damages for infring-
                                            Source: The Indianapolis Star                  court, it was reasonable for Northrop to
ing on six telecommunications patents
                                                                                           expect coverage, and FM’s “excess
owned by competitor Sprint Nextel. In
                                                                                           policy failed to clearly exclude loss
addition to the damages, jurors ordered
                                                                                           caused by `storm surge’ or `wind-driven
Vonage to pay a 5% royalty on future
                                                                                           water.”
revenues. Sprint, based in Reston, Vir-
                                                                                              The case involves hurricane damage
ginia, with operational headquarters in
                                                                                           to Northrop Grumman Ship Systems’
Overland Park, Kansas, sued Vonage in a
                                                                                           ship-building facility in Pascagoula, Mis-
federal court in 2005, claiming the new
                                                                                           sissippi. Damage at the facility totaled
company had infringed on seven
                                                                                           more than $1 billion, including business
patents for connecting Internet phone
                                                                                           interruption losses. The insurer sold Los
calls.Vonage denied the claims, arguing



26                                               BeasleyAllen.com
Angeles-based Northrop an all-risk            by wind or not,” the excess policy’s          two years since Katrina, the nation’s
excess policy for 2005-2006 coverage          flood exclusion is ambiguous. There-          worst natural disaster, insurance compa-
with $19.8 billion in blanket limits          fore, the court said it was required to       nies have made more $100 billion in
above $500 million. FM Global’s policy        rule against the party that caused the        profits. At the end of two years,
form included boiler and machinery            ambiguity and entered a summary judg-         however, many residents along the Gulf
coverage but excluded losses from             ment in favor of Northrop. The court          Coast are still waiting for their claims to
earthquake and flood damage.                  will still have to decide on monetary         be paid and are living in FEMA trailers.
   FM Global was the only insurer on the      damages and Northrop allegations of           The insurance industry defends their
excess layer. The company, with about         bad faith. Of course, an appeal is likely     claims-paying record and contends that
30 other insurers, also participated in       before the case reaches that stage.           the report isn’t valid.
Northrop’s primary all-risk property          Source: Insurance Journal                     Source: Insurance Journal

insurance.The primary layer – including
boiler and machinery, earthquake and
                                              STATE FARM SETTLES 103 KATRINA CASES          SETTLEMENT WITH UNITED HEALTHCARE
flood coverage – was written on a form                                                      REPORTED
                                              IN MISSISSIPPI
Aon drafted. Interestingly, FM Global
paid Northrop $15 million for its share          State Farm Insurance Cos. has settled        A settlement has been reached
of the first $100 million of primary cov-     with 103 policyholders in Mississippi         between United Healthcare Insurance
erage for Katrina damage. Northrop’s          who challenged the company’s refusal          and 36 states and the District of Colum-
primary coverage had a $400 million           to cover damage to their homes caused         bia over alleged violations of state law
flood sublimit.Aon was broker for both        by Hurricane Katrina.Terms of the set-        involving claims-payment services.
the primary and excess coverage of the        tlement are confidential. State Farm          Arkansas, Connecticut, Florida, Iowa,
Northrop Grumman facility. Total pre-         still faces 1,949 lawsuits over Katrina       and New York led the negotiations that
miums paid were about $13.5 million.          damage in Louisiana, Mississippi, and         resulted in the settlement. Claims han-
The dispute between Northrop and FM           Alabama. State Farm previously settled        dling and other state administrative
Global pertains only to the excess            with homeowners, agreeing in January          practices of United Healthcare were
policy. But the U.S. District Court for the   to pay about $80 million to settle with       reviewed through a series of state-led
Central District of California weighed        up to 640 policyholders in Mississippi.       market conduct examinations. This is a
the interdependency of primary and            In April, State Farm also agreed to pay at    good example of what can happen
excess policy language as well as state-      least $50 million after re-evaluating         when the states work together in a col-
ments by Aon brokers and Northrop             claims for up to 35,000 policyholders in      laborative effort to protect consumers
risk managers.                                south Mississippi who hadn’t sued the         and maintain a strong regulatory
   FM Global argued that the ordinary         company.As of August 13th, it’s reported      system.
meaning of flood or storm surge is an         that the company had paid $29.8 million         United Healthcare has agreed to pay
inundation of water on normally dry           to hundreds of these policyholders.           an assessment of up to $20 million to
                                              Source: Associated Press
land. It also argued that terms such as                                                     the states that are included in the settle-
“rising water” and “the rising, overflow-                                                   ment. In addition, the company has
ing or breaking of boundaries of natural      IT’S BEEN TWO YEARS AND INSURERS ARE          agreed to implement a detailed three-
or manmade bodies of water,” which            STILL DENYING KATRINA CLAIMS                  year process-improvement plan con-
were contained in its excess policy’s                                                       cerning their claims-payment system,
definition of flood, describe storm             Even with the settlements that have         including quarterly reviews and yearly
surge. Additionally, the insurer argued       been reached included those by State          benchmarks. In the event United Health-
its excess policy should be interpreted       Farm, two years after Hurricane Katrina       care fails to meet the yearly process-
without considering language in its           destroyed the homes of thousands of           improvement benchmarks, an additional
primary policy, which the court found         Gulf Coast residents, insurance compa-        assessment of up to $20 million could
“illogical.”    Northrop argued that          nies are still systematically denying poli-   be levied against the company. Individ-
primary policy definitions should             cyholders fair and just claims payments.      ual states will maintain the authority to
control excess policy coverage. It also       Unfortunately, that appears to be the         investigate consumer and provider com-
noted that the excess policy, unlike the      way some insurance companies operate          plaints, but will forego traditional
primary policy, omitted the phrase,           after a natural disaster. A report,“Pattern   market examinations.
“whether driven by wind or not.”              of Greed 2007: How Insurance Compa-           Source: Insurance Journal
   The court found that neither side was      nies Put Profits over Policyholders,” con-
clear about the breadth of the flood          cludes that insurers collected billions in
exclusion contained in the excess             premiums from policyholders and then
policy.The court said that without clari-     refused to pay claims in their time of
fying wording such as “whether driven         greatest need.The report maintains that



                                                   BeasleyAllen.com                                                                 27
XI.                                            and equity stripping.These terms mean       nation’s largest subway systems – the
PREDATORY                                      little to most of us, but ultimately, the   Washington Metro – has posted ads
                                               schemes are scams, extracting high          warning riders about wearing Crocs on
LENDING                                        monthly payments from borrowers with        its moving stairways.The ads feature a
                                               very high interest rates. Any equity the    photo of a crocodile, though they don’t
LOAN SHARKS PROSPER AND THEIR VICTIMS          borrowers might have built up in their      mention Crocs by name.
SUFFER                                         homes is taken up quickly, with the end        In one case, a four-year-old wearing
                                               result being the taking of their homes.     Crocs caught his foot in an escalator at a
    We have had unscrupulous lenders           The built-in traps of the subprime mort-    mall in northern Virginia. His mother
who have been taking advantage of              gage market have already taken the          managed to yank him free, but the nail
ordinary folks for hundreds of years. In       homes of more than a million people in      on his big toe was almost completely
fact, one of the most dramatic stories         just the past year. Unfortunately, the      ripped off, causing heavy bleeding. At
from the New Testament concerns the            dangers are quickly rising for millions     first, the child’s mother had no idea
time Jesus encountered money chang-            more.                                       what caused the boy’s foot to get
ers in the Temple. Enraged by their               This abuse of vulnerable families and    caught. It was only later, when someone
usury and sacrilege, Jesus physically          the resulting economic mess would not       at the hospital remarked on his shoes,
drove the money changers out and               have happened without the hands-off         that she began to suspect the Crocs and
chastised them for converting the              regulatory ideology that has infected       did an Internet search. When she went
Temple into a “den of robbers.” Over           our government. While there are no less     to the Internet, she typed in ‘Croc’ and
two thousand years later, we are now           than five financial agencies at the         ‘escalator,’ and numerous stories came
witnessing another example of preda-           federal level that could have protected     up about the risks.
tory lending that is causing great diffi-      the victims of the lenders, the subprime       According to reports appearing
culty. Homeowner financing involving           surge was allowed to proceed on the         across the United States, and as far away
what is known as the “subprime mort-           fantasy that the financial institutions     as Singapore and Japan, entrapments
gage market” has turned out to be a real       would police themselves. The Federal        occur because of two of the biggest
nightmare for the homeowners. Putting          Reserve Board, for example, has direct      selling points of shoes like Crocs: their
it in its simplest form, this is a classic     authority under the Home Ownership          flexibility and grip. Some report the
example of banker greed and outright           and Equity Protection Act and could         shoes get caught in the “teeth” at the
lender sleaze at its very worse.               have protected the subprime borrow-         bottom or top of the escalator, or in the
    The money changers involved in “sub-       ers. The Fed simply ignored this law,       crack between the steps and the side of
prime” lending have devised clever             and I have to wonder – why? I doubt         the escalator. The reports of serious
schemes to entice “subprime” borrow-           that we know presently how bad and          injuries have all involved young chil-
ers into taking out high-interest, high-fee    widespread the subprime lending mess        dren. I understand that Crocs are com-
loans that will ultimately result in a dis-    really is, but we will soon find out.       monly worn by children as young as 2
aster. In many cases, the amounts                                                          years of age. Niwot, Colorado-based
loaned exceed the market value of the                                                      Crocs Inc. does not keep records of the
collateral. In most cases, if not all, these   XII.                                        reasons for customer-service calls, but
were loans the families really could not                                                   the company says it’s aware of “very
afford.The level of debt being piled on
                                               PREMISES
                                                                                           few” problems relating to accidents
their backs was literally obscene in           LIABILITY UPDATE                            involving the shoes.
most cases. Raking in profits from the                                                        In Japan, the government warned con-
poor and even middle class families by                                                     sumers recently that it has received 39
                                               ESCALATORS CAN BE VERY DANGEROUS FOR
these lenders is about as bad as it gets.      CHILDREN                                    reports of sandals – mostly Crocs or
If it’s not fraud, it surely does smell like                                               similar products – getting stuck in esca-
it!                                              At rail stations and shopping malls       lators from late August through early
    The subprime schemes are run               around the world, there have been           September. Most of the reports appear
through an intricate, intertwined system       reports of people, particularly young       to have involved small children, some as
of loan brokers, mortgage lenders,Wall         children, getting their toes caught in      young as two years old. In Singapore, a
Street trusts, hedge funds, offshore tax       escalators. The one common theme            2-year-old girl wearing rubber clogs –
havens, and other predators.To entrap          seems to be the clunky soft-soled clogs     it’s unclear what brand – had her big
borrowers, the industry created an             known by the name of the most               toe completely ripped off in an escala-
arsenal of arcane financial devices and        popular brand, Crocs. Most adults,          tor accident last year. And in this
maneuvers known by such exotic                 including parents of small children, are    country, at the Atlanta airport, a 3-year-
names as “exploding ARMs,”YSPs, teaser         unaware of the risks that escalators        old boy wearing Crocs suffered a deep
rates, low-doc mortgages, loan flipping,       pose for small children. One of the



28                                                 BeasleyAllen.com
gash across the top of his toes in June.    SHOPLIFTING IS A MAJOR PROBLEM                 manhole. The air in the area was also
That was one of seven shoe entrap-                                                         tested to make sure it wasn’t contami-
ments at that airport since May 1st, and       In the June issue I wrote about a set-      nated. It has been pointed out that
all but two of them involved Crocs.         tlement of a civil lawsuit arising out of a    there is a need for regulatory oversight
   It was reported that one U.S. retailer   shoplifting incident that, because of          of steam utilities. Apparently, there is
that caters to children, American Girl,     security lapses, ended with a death. It        little government oversight in a number
which is a Mattel subsidiary has posted     was a classic example of how not to            of large cities of the networks of pipes
signs in three locations directing cus-     carry out the apprehension of a sus-           that heat and cool buildings.
tomers wearing Crocs or flip-flop           pected wrongdoer. I understand that
sandals to use elevators instead of esca-   shoplifting is a major problem for retail-
lators. During the past two years,“shoe     ers and that about $225 million is spent       XIII.
entrapments” in the Washington subway       each year on security measures. My
                                            longtime friend Brad Bishop, who is a
                                                                                           WORKPLACE
have gone from being relatively rare to
happening four or five times a week in      professor at Cumberland School of Law,         HAZARDS
the summer, although apparently none        has written an excellent book on the
has caused serious injuries.                subject. His book, a single volume of
                                                                                           BP SETTLES FIRST CIVIL SUIT TO GO TO
   According to the U.S. Consumer           405 pages, is entitled The Law of              TRIAL
Product Safety Commission, escalator        Shoplifting. Among other features, the
accidents caused more than 10,000           book is a good source of information on           BP has settled the claims of four plain-
injuries last year. But the agency has      potential liability for retail merchants.      tiffs arising out of the March 2005 blast
few records of specific shoe problems.         Brad’s book has a detailed analysis of      at BP’s Texas City,Texas, refinery in the
Only two shoe entrapments have been         civil tort liability that may arise from the   first civil trial to go to trial.The terms of
reported to the Commission by con-          mishandling of suspected shoplifting           the settlements are confidential. While
sumers since the beginning of 2006.         incidents. Such topics as false imprison-      the company has settled hundreds of
Agency spokesman Ed Kang urged              ment, assault and battery, libel and           the more than 3,000 blast-related law-
people who have had problems to             slander, and malicious prosecution are         suits — including all of the cases involv-
report them on the commission’s Web         covered in the book If you want more           ing deaths — there are about 1,200 still
site. Although Crocs officials claimed      information on how to obtain a copy of         pending in court. Mediation has now
they were working with the Elevator         this excellent work, feel free to contact      been ordered by the court for the
Escalator Safety Foundation on public       Janice James at Cumberland School of           remaining cases. BP says it wants to
education initiatives, the group’s execu-   Law, 800 Lakeshore Drive, Birmingham,          settle all blast-related litigation and they
tive director, Barbara Allen, says that’s   Al. 35229. Incidentally, all proceeds from     definitely should do so. Before the set-
not true. Ms. Allen said a Crocs official   book sales go to the T. Brad Bishop            tlement was reached a great deal of tes-
called her in September 2006 about          Scholarships in Law, a project started by      timony and related documents were put
possible cooperation, even suggesting       Cecil and Bettye Cheves.                       before the jury.
the company might put a tag in its                                                            There is still an ongoing criminal
shoes with the foundation’s Web                                                            investigation concerning this matter.
                                            BOSTON TESTS FOR ASBESTOS AFTER PIPE           The federal Occupational Safety and
address. But since that first contact,      BLAST
apparently Crocs has not called, and,                                                      Health Administration (OSHA) issued
according to Ms.Allen, nobody from the        It was reported recently that a pipe         citations alleging 300 violations of
company will return her calls. Escalator    under a downtown Boston street appar-          OSHA standards, imposed a $21.3
safety experts say the best way to          ently ruptured, releasing asbestos.Tests       million fine, and ordered safety improve-
prevent shoe entrapments is to face the     confirmed that asbestos had been               ments at the plant. The U.S. Attorney’s
direction the stairs are moving, keep       released along with the steam, but city        Office in Houston and the Justice
feet away from the sides and step over      officials report that the contamination        Department’s environmental crimes
the teeth at the end. My recommenda-        appeared to be limited. The steam was          section are handling the probe. As you
tion is for parents either not to buy       released from a 14-inch pipe owned by          will recall from previous reports, the
Crocs and other soft-soled shoes for        Trigen Boston Energy Corp.As is the sit-       explosion happened when a tower in a
their children or not to allow them to      uations in a number of cities, some of         unit that boosts octane in gasoline over-
use escalators while wearing such           the older steam pipes in Boston are            filled with flammable hydrocarbons,
shoes. I suspect the latter is the best     insulated with asbestos. Tests indicated       causing a vapor cloud to be released
course of action.                           that asbestos was in a brown material          from a blowdown stack. The cloud
Source: CNN                                 that was deposited on cars and build-          ignited, killing those in a trailer located
                                            ings when the steam rushed out of the          121 feet away. Many more employees
                                                                                           were injured.


                                                BeasleyAllen.com                                                                     29
   The U.S. Chemical Safety and Hazard          for the trailers would have been only        Rouge plant that killed an employee.
Investigation Board concluded after a           $33 a day per trailer with a 10-year           According to the Justice Department,
two-year investigation that cost-cutting,       lease, or only $72 per day on a month-       the employee opened a one-ton cylin-
a lack of vigilance, and a lack of invest-      to-month basis. But, to save money, BP       der that had been incorrectly labeled as
ment in training and mechanical                 didn’t buy blast-proof trailers. Company     a harmless refrigerant. Instead, the
integrity at the plant paved the way for        policy, dating back to 1995, said trailers   employee was exposed to a highly toxic
disaster. Also, a panel led by former Sec-      couldn’t be closer than 300 feet to pro-     and corrosive material and died the
retary of State James A. Baker III con-         cessing units, according to a company        next day. Honeywell was sentenced to
cluded that even though BP increased            document. The necessary managers             two years probation and ordered to pay
funding for its U.S. refineries from 2002       hadn’t signed off on it before they were     $750,000 to the state’s department of
on, after budgets had been slashed in           placed and used by workers. The 15           environmental quality, $750,000 to the
prior years, it wasn’t enough. Clearly, BP      workers were in a trailer 121 feet from      state’s police hazardous materials unit
was guilty of putting its profits over the      the processing unit that exploded.           and $500,000 to the state’s police emer-
safety of its own employees.                      Cuts at the Texas facility included        gency operations center besides the $8
   Until this trial, BP had settled all cases   reductions in training, maintenance          million fine and $2 million to the
before trial. For some reason, BP               supervisors, safety programs, and            employee’s three children. Warren
elected to try this case and it was tried       project engineers, according to other        Amburn, the special agent in charge of
for 10 days before BP decided on a set-         company documents put in evidence            the Environmental Protection Agency’s
tlement. Throughout the trial, the plain-       and presented to the jury.The plaintiffs     criminal investigation office in Dallas,
tiffs contended that BP valued profits          contended that BP valued profits over        observed:“This case illustrates the terri-
over safety by cutting budgets for main-        safety by cutting budgets for mainte-        ble consequences that can result from
tenance, repairs, upgrades and training         nance, repairs, replacements, and train-     environmental crimes. Honeywell needs
in the years leading up to the explosion.       ing in the years leading up to the           to make sure this never happens again.”
During the trial, several BP executives         explosion. It’s obvious that safety was      Source: Associated Press
testified, including former plant               compromised at the facility, which puts
manager Don Parus; Pat Gower, regional          workers at great risk for death or
vice president of BP North America;             serious injury. Hopefully, all of the        XIV.
and, by videotaped deposition, Mike             pending cases will be settled during         EMPLOYMENT
Hoffman, former group vice president            mediation, sparing the plaintiffs from
of refining and marketing. Parus testified      having to go through trials. BP should
                                                                                             LITIGATION
that he looked into the refinery’s deadly       have learned its lesson from this matter
history after three deaths occurred             and hopefully they did!                      COUNTRYWIDE SUED BY WORKERS OVER
there in 2004, and found 22 deaths in           Source: Houston Chronicle                    RETIREMENT LOSSES
the previous 30 years. A 23rd death
came later.The then plant manager com-                                                          We mentioned the fallout from the
missioned a survey of more than a thou-         HONEYWELL TO PAY $12 MILLION IN              subprime mortgage loans scandal in the
                                                WORKER’S DEATH                               Predatory Lending section of this issue.
sand refinery workers that elicited
harsh assessments about the safety                                                           The following is an indication of what is
                                                   A federal judge in Louisiana has
culture, with many workers saying they                                                       happening with Countrywide Financial
                                                ordered Honeywell International Inc. to
thought each day at the facility might be                                                    Corp. The mortgage lender recently
                                                pay $12 million for its negligence in
their last. But in their testimony Gower                                                     announced that it will cut its workforce
                                                handling hazardous materials that
and Hoffman claimed to be largely igno-                                                      by 20%, and it has now been sued by
                                                resulted in the death of an employee.
rant of that history until after the blast. I                                                employees claiming the company with-
                                                The U.S. Justice Department said the
find that almost impossible to believe                                                       held information about its financial
                                                diversified manufacturer will pay an $8
considering their respective positions at                                                    health, causing the value of their retire-
                                                million criminal fine after pleading
BP.                                                                                          ment plan to drop. Countrywide, which
                                                guilty to violating the Federal Clean Air
   Interestingly, BP admitted during trial                                                   is the largest U.S. mortgage lender, will
                                                Act. The New Jersey-based company
that the company could have replaced                                                         eliminate as many as 12,000 jobs. The
                                                also agreed to pay the victim’s children
flimsy wood-frame trailers, like the one                                                     job loss is the result of investors getting
                                                $2 million and another $2 million to
in which the 15 contractors died, with                                                       out of the market (not buying loans)
                                                state funds that handle hazardous mate-
blast-proof trailers years before the                                                        and bankers, alarmed by rising sub-
                                                rials. The company’s guilty plea and
March 2005 explosion. Jurors saw a                                                           prime defaults, refusing to provide
                                                fines handed down by U.S. District
letter a BP vice-president received from                                                     capital to mortgage companies. It’s sig-
                                                Court Judge resulted from the Justice
a company in September 1999 promot-                                                          nificant that Countrywide’s stock has
                                                Department’s investigation into a July
ing blast-proof trailers. The cost to BP                                                     declined more than 60% this year.
                                                2003 incident at Honeywell’s Baton


30                                                   BeasleyAllen.com
   The workers’ lawsuit, filed in a Califor-   it is documented that a major cause of       riers on the public in a “demonstration
nia federal court, is asking for class         these crashes is driver fatigue, you         project.” Under the ill-advised program,
action status. The plaintiffs also sued        would think that Congress would do           trucks will be permitted to start cross-
the company’s Chief Executive Officer          something about it. Well, they did, by       ing the border immediately. Even those
and Chief Administrative Officer. It was       directing the FMCSA, the federal agency      who try hard to justify some of the
alleged that the defendants “failed to         that regulates trucking, to make safety      efforts by the Bush Administration to
conduct an appropriate investigation           the number-one priority. Congress man-       dupe the public should have great diffi-
into whether Countrywide stock was a           dated a revision of the rules to decrease    culty with the method used to
prudent investment for the plan” and           crashes caused by fatigue. In 2003, the      announce something of this impor-
“failed to provide the plan’s participants     agency – under direction from the Bush       tance. It’s quite obvious that a late night
with information regarding Country-            White House – issued the new rules.          announcement wasn’t intended to let
wide’s improper activities.” About one-        You may be shocked to learn that the         folks know about what was coming.
third of the retirement plan’s holdings        rules actually increased the length of          Interestingly, the agency is barreling
were company stock, according to the           time a trucking company could make its       ahead with the pilot program before the
complaint. It’s alleged that the employ-       drivers stay behind the wheel.The limit      public has had a chance to review the
ees suffered “hundreds of millions” in         was raised from 60 hours per week to         Department of Transportation inspector
losses when Countrywide’s stock took a         77 hours per week – an increase of 11        general’s report. Opening U.S. borders,
nosedive. If it can be proved that the         hours.                                       despite insufficient inspection facilities
company’s officers knew the financial             A federal appeals court, in a lawsuit     and carrier safety performance data,
condition of the company was not               filed by Public Citizen, struck down the     showcases the Bush Administration’s
good, the company was engaging in              rule. But in 2005, as the result of lobby-   persistent disregard for public safety
risky behavior, and the investment in          ing efforts by the trucking industry,        and federal law requirements. Congress
company stock was no longer a prudent          FMCSA did a complete turnaround. It          approved provisions in May, designed to
investment, the plaintiffs will have a         said that seven consecutive 11-hour          ensure that the pilot program would not
pretty good lawsuit. I understand that         days on the road was the rule. The           circumvent safety standards or congres-
about 50,000 people are invested in            change was again challenged in court         sional oversight. The obvious intent of
Countrywide’s retirement plan.                 and the rule was overturned again. The       the lawmakers was to require greater
Source: Bloomberg News                         federal government should protect            public disclosure of program details and
                                               motorists on the highways, across the        give more opportunity for public
                                               country.When 5,000 lives are lost annu-      comment. Congress required Mexico-
XV.                                            ally on our highways that’s a heavy          based trucking companies to comply
TRANSPORTATION                                 price to pay. The Bush Administration        with all applicable U.S. laws and safety
                                               should have to account for why it has        standards. Despite the congressional
                                               put corporate profits over highway           mandate, FMCSA has failed to meet
ACTIONS BY THE BUSH ADMINISTRATION             safety. If you want more information on      these requirements.
MAKE OUR HIGHWAYS MORE UNSAFE                  this subject, go to www.citizen.org.            For years the Bush Administration has
   The trucking industry gave large sums                                                    been pushing to give Mexico-domiciled
of money in the form of campaign con-                                                       carriers access to all U.S. highways,
                                               ANOTHER EXAMPLE OF IGNORING HIGHWAY
tributions in the last federal election        SAFETY                                       despite safety and environmental con-
cycle, and now they are reaping the                                                         cerns expressed by the safety commu-
benefits. The Bush Administration has             The following is another example of       nity and members of Congress. The
taken steps to weaken the rules of the         how the Bush Administration is ignoring      safety of American motorists is compro-
road as promulgated by the Federal             safety. We have written on the North         mised under the pilot program. The
Motor Carrier Safety Administration            American Free Trade Agreement                FMCSA and the Bush Administration
(FMCSA).As a result, trucking company          (NAFTA) trucks pilot program in previ-       have once again put its love for the
profits will increase, and motorists on        ous issues. Now the Bush Administra-         failed NAFTA trade model over the inter-
the nation’s highways will be in greater       tion has totally ignored the safety of the   ests of the American people, and this
danger.Truck drivers will be worn out          American public by abruptly starting up      time it harms public safety.
because of long hours on the road.             the program. The public learned of the       Source: Public Citizen

Driver fatigue is a major cause of             Administration’s decision in a hastily
highway crashes involving 18-Wheelers.         scheduled teleconference held at 9 p.m.
                                               on September 6th. Officials from FMCSA       A JOINT PROGRAM TO PATROL ALABAMA’S
   More than 100 people die and more                                                        DEADLIEST ROADS WILL HELP
than 2,000 are injured every week in           announced at that late hour that it
crashes involving heavy trucks. Because        would turn loose Mexico-domiciled car-         Alabama State Troopers, the Alabama



                                                   BeasleyAllen.com                                                                 31
Department of Transportation, and the          on Alabama 22 in Chilton County, and          prohibits under-18 drivers in California
University of Alabama are now working          the Tennessee River on U.S. 43 in North       from using hands-free cell phone
together on a new program to boost             Alabama in the Shoals area. It appears        devices. Violators will face a possible
trooper patrols on the state’s deadliest       that the Alabama Department of Trans-         $20 fine for a first offense, and $50 for
roads.The CARE Research and Develop-           portation has taken extra precautions to      later offenses. Starting next July, adult
ment Laboratory at the University of           make sure that the bridges are safe. The      drivers will be required to use hands-
Alabama will use statistical data to help      State of Alabama should take all steps        free equipment if talking on the phone
troopers and the DOT determine what            necessary to assure that the three deck       while driving.While this type legislation
areas have had the greatest number of          truss bridges are completely safe.            is probably unpopular with some
crashes involving excessive speed and             Governor Riley ordered the inspec-         teenage drivers, it’s a good thing. Saving
impaired driving. The DOT will use             tion of the three bridges after the deadly    lives is more important than worrying
$5.6 million from the federal Highway          collapse in Minneapolis prompted wide-        about “hurt feelings.”
Safety Improvement Program to pay for          spread reviews of bridge safety. After        Source: Los Angeles Times
the program, which will provide over-          the first review, DOT Director Joe
time pay for state troopers to patrol the      McInnes said the agency didn’t plan
routes after their normal duty hours or        further action until officials could deter-   VERDICT IN CASE ARISING OUT OF VEHICLE
                                                                                             CRASH IN FLORIDA
on an off-day. Some money will also go         mine what caused the Minneapolis col-
toward radar equipment.                        lapse. That issue is still under                 A jury in Jacksonville, Florida, has
  This program appears to be a good            investigation, but National Transporta-       awarded $3.4 million to a woman who
use of taxpayer dollars. I hope it will        tion Safety Board officials have said they    suffered permanent neck injuries when
pay off in making for safer roadways in        are trying to determine if the beam-          a moving truck rear-ended her car in
Alabama. But, it was pointed out in a          tying gusset plates were a factor.            2004. The 37-year-old will need treat-
recent Birmingham News editorial               Alabama was among several states that         ment every six months for the rest of
that, while this is a good program, it’s       decided to conduct a second set of            her life to deaden nerves in her neck
just a temporary fix making our high-          inspections with different teams. That        and reduce the pain. It was reported
ways safer. The News editorial writer          appears to be a sound approach to             that the woman, a dance teacher, has
believes that state government should          dealing with a potentially serious safety     constant pain from her injuries that
properly fund the DPS so that enough           issue.                                        include a herniated disc, but can still
troopers can be hired to patrol state          Source: Associated Press                      teach. However, she can’t dance or
highways on a regular basis. I have to                                                       demonstrate poses to her ballet and
agree with that view. Putting more                                                           gymnastic dance students, which has
troopers on the highways should be a           GOVERNOR SIGNS BILL BARRING CELL
                                               PHONE USE BY TEEN DRIVERS                     restricted her ability to teach. The plain-
top priority for the next legislative                                                        tiff was stopped at a traffic light when
session.                                         The Governor of California has signed       she was hit in November of 2004, by a
Source: Huntsville Times and Birmingham News   legislation that will prohibit Californians   truck owned by Reads Moving Systems
                                               under age 18 from using cell phones,          of Florida. This was an unusually good
                                               text message devices, and laptop com-         result for a person suffering from a neck
THREE ALABAMA BRIDGES ARE SIMILAR IN
DESIGN TO THE MINNESOTA BRIDGE                 puters while driving a motor vehicle.         injury. The medical testimony by treat-
                                               The new law, which takes effect July 1,       ing doctors was helpful in getting a mer-
  Three Alabama bridges similar in             2008, addresses a leading cause of traffic    itorious case settled. This is an
design to the span that collapsed in Min-      accidents resulting in deaths and             indication that developing medical testi-
nesota recently have gotten a second           injuries. Governor Arnold Schwarzeneg-        mony is the key to obtaining adequate
review by a different team of inspec-          ger says that the legislation would “elim-    compensation for a deserving client
tors. No serious problems were found,          inate a major distraction for our young,      who has suffered neck and back
and the inspectors reported that “there        inexperienced drivers and to make our         injuries.
were no findings that differed from the        roadways safer for everybody.”The Gov-        Source: The Florida Times Union
last inspections.” The three Alabama           ernor volunteered that he has barred his
bridges, known as deck truss bridges,          two teenage daughters from using cell
with steel plates that reinforce truss         phones while driving.                         LAWSUIT FILED OVER IMPROPER GRATE USE
connections, are similar to the I-35             Motor vehicle crashes are the leading         The family of a man severely injured
Bridge in Minneapolis that killed at least     cause of death among 16- to 20-year-          when a 250-pound storm grate
13 people when it collapsed. The three         olds, and it’s documented that a              slammed through his windshield on a
bridges span the Tallapoosa River on           person’s first year of driving is the most    Massachusetts state highway has filed a
Alabama 14 in Tallassee, the Coosa River       dangerous of their life.The new law also



32                                                  BeasleyAllen.com
lawsuit against five defendants. The           FAA ORDERS INSPECTIONS OF NEWER 737           actually coming from China, Eastern
design firm, the grate manufacturer, SPS       AIRLINERS                                     Europe or some other country. U.S.
New England, the firm that installed                                                         processors and grocery chains can get
                                                  The Federal Aviation Administration
storm grates in Westwood as part of the                                                      food products from those countries at
                                               (FAA) has ordered inspections of the
SPS project, and Aggregate Industries of                                                     very cheap prices.While they are cheap,
                                               wing slats on all newer Boeing 737 jet-
Saugus were among the defendants                                                             imports from foreign countries carry a
                                               liners based on findings about the fire
sued by the plaintiff. It was alleged that                                                   health and safety risk, especially when it
                                               that destroyed a 737-800 in August on
the grate was a type barred from use on                                                      comes to food products. Most of the
                                               Okinawa. While the order applies to
expressways where high-speed traffic                                                         countries don’t have the capacity or the
                                               783 jetliners operated by U.S. airlines, it
could dislodge them. The grate, and 23                                                       will to make sure their products are safe
                                               most likely will be imposed by other
others along a stretch of the highway in                                                     for consumption. We need a national
                                               countries on the entire worldwide fleet
Westwood, Massachusetts, should never                                                        law that requires meats and produce to
                                               of 2,287 newer 737s, according to the
have been installed because state con-                                                       be labeled as to origin. Shouldn’t a
                                               FAA. Slats, which extend out from the
struction standards specified that they                                                      woman shopping in a supermarket
                                               front of the wings, and flaps, which
were not to be used on “expressways”                                                         know where the food she is buying
                                               extend out from the wings’ trailing
and “freeways.”The grates, which have                                                        comes from? The recent scare caused by
                                               edges, are deployed by pilots during
openings in the pattern of a waffle iron,                                                    the contaminated food being imported
                                               takeoffs and landings to increase an air-
are designed so that bicycle wheels                                                          from China should cause members of
                                               craft’s lift and stability.
won’t get stuck in them and should be                                                        Congress to wonder what happened to
                                                  Investigators in Naha, Okinawa, found
used “only . . . where bicycle travel is                                                     the Country-of-Origin Labeling Act
                                               that a bolt from a slat on the right wing
legally allowed,” according to excerpts                                                      passed by Congress 5 years ago. This
                                               had pierced the fuel tank of a China Air-
from the construction rules that apply                                                       act, known as “COOL,” should have
                                               lines 737 that caught fire after landing
to the case.                                                                                 helped consumers make decisions
                                               on the Japanese island. All 165 people
   The man, a 39-year-old father of two,                                                     when buying food products.
                                               aboard were able to evacuate the plane
remains hospitalized with brain and                                                             But lobbying groups and the Bush
                                               moments before it exploded. The FAA
spinal injuries from the crash, which                                                        White House have prevented imple-
                                               ordered a detailed inspection within 24
occurred on July 27th. A tractor-trailer                                                     mentation of COOL. It’s been reported
                                               days to be sure that the downstop
drove over a loose grate, causing it to                                                      that campaign money has been effec-
                                               assembly, which limits how far the slats
become dislodged and fly through the                                                         tively used to stall COOL. For example, I
                                               can emerge from the wing, is installed
air, striking the windshield of the plain-                                                   am told that Rep. Henry Bonilla (R-TX)
                                               properly and repaired if needed. It also
tiff’s car. The crash was at least the third                                                 received more than $368,000 from the
                                               ordered that the nut and bolt that hold
significant accident that week involving                                                     meat industry alone, and that he was
                                               the assembly in place be tightened to
grates on the same stretch of highway                                                        instrumental in sidetracking COOL.The
                                               specifications. The FAA’s emergency air-
where this incident occurred. The                                                            American people have no way of
                                               worthiness directive, issued in late
drivers in the other accidents were not                                                      knowing how powerful the lobbyists of
                                               August, applies to all 737-600, -700, -800,
hurt, but their vehicles were badly                                                          Corporate America really are. In any
                                               -900 and -900ER series planes, the first
damaged. The accident, occurring on                                                          event, COOL must be implemented
                                               of which entered service in January
one of Massachusetts’ most-traveled                                                          immediately for the good of the con-
                                               1998.
roadways, has resulted in inspections of                                                     suming public. The federal government
                                               Source: Los Angeles Times
all 86,000 storm grates and manholes                                                         and especially the Department of Agri-
statewide by the state. Inspectors from                                                      culture and Consumer Product Safety
the state found that the grate involved                                                      Commission must be given the tools
in the accident was different from the         XVI.                                          necessary to deal with the foreign
others in the Westwood stretch because         healthcare issues                             import problem. But, the country-of-
it had been elevated on an extra piece                                                       origin labeling act referred to above, can
of iron so that the grate surface would                                                      be enforced now.
                                               AMERICAN CONSUMERS SHOULD KNOW
be even with the road. After the acci-         WHERE THEIR FOOD COMES FROM
dent the piece of iron, called a riser, was
removed and the grate was recon-                 Most Americans, like me, probably           DRUG-COATED STENTS ARE QUESTIONED
structed.                                      thought most, if not all, of the food we        New research has revealed that
Source: Boston Globe                           buy in supermarkets comes from this           patients given drug-coated stents after
                                               country. But the problems arising from        an acute heart attack are nearly five
                                               imports from China have awakened us           times as likely to die six months to two
                                               up to a most serious problem. Chances         years later as those with bare metal
                                               are pretty good that lots of our food is


                                                    BeasleyAllen.com                                                                33
forms of the arterial scaffolding. The        POPCORN CO. DROPS CHEMICAL TIED TO            sent from a doctor at a leading lung
finding, from a two-year analysis of          ILLNESS                                       research hospital. A pulmonary special-
2,300 patients in 14 countries, fuels the                                                   ist at Denver’s National Jewish Medical
                                                 Weaver Popcorn Co., one of the
debate over the safety of so-called drug-                                                   and Research Center has written to
                                              nation’s top microwave popcorn
eluting stents, made by companies such                                                      federal agencies to say doctors at the
                                              makers, has switched to a new butter
as Boston Scientific and Johnson &                                                          Center believe they have the first case
                                              flavoring, replacing diacetyl, which is a
Johnson. Doctors at a meeting of the                                                        of a consumer who developed lung
                                              chemical linked to a lung ailment in
European Society of Cardiology said the                                                     disease from the fumes of microwaving
                                              popcorn plant workers. The Indianapo-
finding showed the need to be very                                                          popcorn several times a day for years.
                                              lis-based company began shipping new
selective to ensure drug-coated stents                                                      Dr. Cecile Rose cautioned:“We cannot
                                              butter-flavored microwave popcorn in
are given only to the right patients.                                                       be sure that this patient’s exposure to
                                              August that contains no diacetyl. As we
Although this recent revelation will                                                        butter flavored microwave popcorn
                                              have reported, diacetyl is a chemical
likely cause both doctors and patients                                                      from daily heavy preparation has caused
                                              undergoing national scrutiny because of
to take notice of the findings, it won’t                                                    his lung disease. However, we have no
                                              cases of bronchiolitis obliterans, a rare
be the final word on the safety of drug-                                                    other plausible explanation.”
                                              life-threatening disease often called
coated stents for heart-attack patients.                                                       The July letter, made public last
                                              “popcorn lung.” The family-owned busi-
The debate will continue.                                                                   month by a public health policy blog,
                                              ness says it wanted to lead the popcorn
Source: Wall Street Journal                                                                 refers to “popcorn lung.” In response to
                                              industry and allay consumer fears by
                                                                                            Dr. Rose’s finding, the Flavor and Extract
                                              eliminating the chemical for its product
                                                                                            Manufacturers Association issued a
BOSTON FIRM TO PAY $10.5 MILLION OVER         line. There’s a growing awareness and
                                                                                            statement recommending that its
                                              concern among consumers about
   A company that distributed human                                                         members reduce “to the extent possi-
                                              diacetyl and its health-related risks.
growth hormone to “well known ath-                                                          ble” the amount of diacetyl in butter fla-
                                                 The company, which sells about 600
letes and entertainers” has agreed to pay                                                   vorings they make. It noted that diacetyl
                                              million bags of microwave popcorn a
a $10.5 million penalty and cooperate                                                       is approved for use in flavors by the
                                              year, giving it about a 20% share of the
with law enforcement in ongoing inves-                                                      federal Food and Drug Administration.
                                              U.S. market, did the prudent thing. Con-
tigations. Under the terms of the agree-                                                    The FDA says it’s evaluating Dr. Rose’s
                                              cerns about diacetyl have been growing
ment, Specialty Distribution Services                                                       letter and is “carefully considering the
                                              for years, as have the number of lawsuits
Inc., a subsidiary of Express Scripts Inc.,                                                 safety and regulatory issues it raises.”
                                              filed by workers suffering from the pro-
will not face prosecution for three years                                                   The occupational safety arm of the
                                              gressive lung disease, which can force
if it fully complies with terms of the                                                      Centers for Disease Control and Preven-
                                              sufferers to undergo lung transplants.
agreement. St. Louis-based Express                                                          tion is also working on a response to
                                              Several flavor manufacturers are either
Scripts has implemented procedures to                                                       the letter.
                                              researching alternatives to diacetyl or       Source: Associated Press
prevent the illegal distribution of           are already marketing butter flavors free
human growth hormone. The U.S.Attor-          of the chemical, according to the Flavor
ney’s office says Specialty Distribution      and Extract Manufacturers Association,        BAYER HEALTHCARE LOBBIED ON MEDICARE
Services “knowingly distributed human         which is based in Washington, D.C.
growth hormone to certain well-known          Thus far, the concern has focused on            Bayer HealthCare, a subsidiary of
athletes and entertainers, including a        workers inhaling diacetyl in manufac-         German drug maker Bayer AG, lobbied
well-known athlete in Massachusetts,          turing settings - either in making the fla-   the federal government in the first half
knowing that their intended use was           voring or adding it to food products          of 2007, according to a recent disclo-
athletic performance enhancement, cos-        ranging from popcorn to pound cakes.          sure form. The firm hired by Bayer
metic or anti-aging,” in violation of         However, I will mention other concerns        lobbied Congress and the Centers for
federal law. The drug in question was         below that could expand the risk.             Medicare and Medicaid Services on
approved by the Food and Drug Admin-          Source: Associated Press                      Medicare reimbursement issues and
istration for specific purposes only,                                                       other matters.     Interestingly, Dean
including treatment of children with                                                        Clancy, a former program associate
growth failure resulting from inade-          DOCTOR WARNS CONSUMERS ABOUT                  director at the White House’s Office of
quate levels of growth hormones.              POPCORN FUMES                                 Management and Budget, is among
Source: Associated Press                                                                    those registered to lobby on behalf of
                                                 It is now being reported that con-
                                                                                            Bayer HealthCare.
                                              sumers, not just factory workers, may be
                                                                                            Source: Associated Press
                                              in danger from fumes from the buttery
                                              flavoring in microwave popcorn. A
                                              warning letter to federal regulators was


34                                                 BeasleyAllen.com
XVII.                                        report to the state every six-minute         their hazardous waste permits only half
ENVIRONMENTAL                                period in which its emissions are more       as often as EPA recommends. And,
                                             than 20% opaque. It doesn’t have to          according to the report, ADEM’s “most
CONCERNS                                     explain why it might emit opaque pollu-      significant” shortcoming is that it does
                                             tion during emergencies, or during           not properly document whether pol-
FEDERAL JUDGE RULES TVA VIOLATED AIR         startup, shutdown, load changes, and         luters are ever actually fined or have a
POLLUTION RULES                              other exemptions. At those times, it is      policy explaining how those fines are
                                             allowed to put out smoke that is 100%        calculated. According to ADEM, it plans
   A federal judge has ruled that the Ten-   opaque. In my opinion,ADEM needs to          to begin including written explanations
nessee Valley Authority violated air pol-    do a better job of protecting the envi-      of the penalties it issues in all of its case
lution rules more than 3,000 times in        ronment in our state. Hopefully, they        files,as a way of addressing EPA’s criticism.
less than two years at its power plant in    will get the message.                           My hope is that the EPA report will
northwest Alabama. U.S. District Judge       Source: Associated Press                     bring about long-term changes in the
Virginia Hopkins ruled against TVA’s                                                      way ADEM enforces its permits and
coal-fired Colbert Plant, which is located                                                punishes companies that repeatedly
on the Tennessee River near Tuscumbia.       EPA REPORT QUESTIONS ADEM’S                  violate those permits. While ADEM has
TVA had been sued by two environmen-         ENFORCEMENT EFFORTS
                                                                                          done a good job of developing effective
tal groups, the Alabama Environmental           In August, the federal EPA issued a       compliance and enforcement programs,
Council and the Sierra Club. Concern-        report admonishing the Alabama               those programs do little good if pol-
ing the court order, Michael Church-         Department of Environmental Manage-          luters in this state know they can
man, executive director of the Alabama       ment for failing to properly penalize        repeatedly violate the law and get away
Environmental Council, had this to say:      polluters who do not meet federal            with it.
“This is a great win for the citizens of     guidelines. The report also criticized       Source: Mobile Press-Register
Alabama who have been forced to              ADEM for issuing repeated letters of vio-
breathe the waste from TVA’s plants for      lation to polluters who exceeded dis-
far too many years.”                                                                      ADEM GETS EQUAL TIME TO TELL ITS SIDE
                                             charge standards, but not setting firm       OF THE STORY
   According to a TVA spokesman, the         dates for compliance or spelling out
utility will decide what to do within the    specific penalties for continued viola-        My friend John Hagood, who cur-
60 day time limitation allowed by Judge      tions. While the EPA report noted that       rently works as a lawyer at ADEM, called
Hopkins for submitting a remediation         ADEM had “effective compliance and           me a few weeks back and asked that the
plan.The utility can file a plan or it can   enforcement programs,” it chided ADEM        agency be allowed to furnish a piece to
appeal to the U.S. Court of Appeals for      for not having a formal written system       be included in this issue of the Report.
the Eleventh Circuit in Atlanta. If TVA      for issuing penalties and for not aggres-    John said that ADEM’s performance
elects to file a remediation plan, and not   sively following through with repeated       wasn’t always treated fairly by the
appeal, the environmental groups will        offenders.                                   media and wanted to give the agency’s
have to respond to it. The court will           In a Mobile Press-Register article that   performance story.As this seemed to be
then hold a hearing to determine its suf-    followed the EPA report, an ADEM             a legitimate request, I am printing
ficiency. The suit involved opacity stan-    spokesman contended that the agency          ADEM’s “side of the story,” without
dards, which measure the density of          was “working on those issues,” and that      change or modification. However, I
smoke emitted by the plant. In 2003,         they were “incorporating changes into        must point out that I am not putting my
after the suit was filed, the Alabama        our enforcement strategy.” For many          stamp of approval on the content at this
Department of Environmental Manage-          years, ADEM’s enforcement strategy, in       time. I have been critical of ADEM in
ment adopted a rule stating utilities        most instances, has been limited to the      the past and am convinced the criticism
were allowed a certain number of mis-        repeated issuance of informal letters of     was justified. The following is from
takes each quarter.The U.S. Environmen-      violation. However, only in rare occa-       ADEM:
tal Protection Agency has not accepted       sions, to our knowledge, has ADEM esca-
those rules, leaving the state out of com-                                                  During the past 25 years, the
                                             lated its enforcement activities by
pliance with the U.S. Clean Air Act.                                                        number of environmental pro-
                                             pursuing more formal consent orders,
ADEM Air Director Ron Gore told The                                                         grams administered by the
                                             which place a legal burden on a
Birmingham News that ADEM is                                                                Alabama Department of Environ-
                                             company to actually comply with its
working with EPA to develop a new                                                           mental Management (ADEM) has
                                             permits.
rule. Emissions at TVA’s Colbert Plant                                                      increased significantly and the
                                                Most telling is a finding in the EPA
include particles, sulfur dioxide, and                                                      regulated community has grown
                                             report that ADEM checked to see
nitrogen oxide, according to the ruling.                                                    to include small business owners
                                             whether companies complied with
   TVA and other coal-fired plants must                                                     such as dentists, doctors, home


                                                  BeasleyAllen.com                                                                  35
 builders, and farmers. In an effort     on the results EPA’s review. During      recently, the City of Montgomery
 to insure its resources are utilized    the two and a half years of Trey         agreed to borrow $700,000
 in an efficient/effective manner        Glenn’s directorship, numerous           through this program in order
 while maintaining a clear focus         advances have been made to               clean up the old Western Railway
 on the departmental objective of        streamline the Department’s              yard as part of Montgomery’s
 protecting human health and the         enforcement process. The mone-           downtown redevelopment. This
 environment, ADEM Director Trey         tary amounts attached to penalty         loan will prove invaluable to
 Glenn recently unveiled a number        factors in administrative orders         Alabama as the state enjoys these
 of initiatives that will empower        are now more clearly explained           dynamic economic times, and
 the Department and its staff to         and notices of violation more            contaminated properties will be
 function as a focused, single-          explicitly outline ADEM’s expecta-       made useful once again.
 minded team.                            tions of the violating facility and
                                                                                  Finally, a Quality Management
                                         that facility’s expected return to
 Director Glenn highlighted an                                                    System will be implemented
                                         compliance. This new enforce-
 Environmental Justice Action Plan                                                within ADEM to insure the appro-
                                         ment policy and its mindset
 that includes an 11 step process                                                 priate controls are in place to
                                         toward a more streamlined com-
 that will build upon the existing                                                secure a quality output or
                                         pliance and enforcement strategy
 achievements in the Environmen-                                                  product. The quality requirements
                                         will be pervasive of ADEM, as the
 tal Justice Program. As part of the                                              of the Department’s work are very
                                         new policy and the supporting
 existing efforts of the Environmen-                                              complex and require scientific
                                         protocols give more definite own-
 tal Justice Program, the Depart-                                                 accuracy that is defensible under
                                         ership of and accountability for
 ment has already removed over                                                    appeal situations.
                                         the process to the program man-
 1,500 pounds of out-dated lab
                                         agers within ADEM.                       Director Glenn noted that these
 chemicals at 11 Title I high schools
                                                                                  initiatives are the result of the past
 and has provided environmental          The Director also emphasized an
                                                                                  two and a half years he has spent
 justice training to over 150 ADEM       enhanced external affairs effort to
                                                                                  listening to ADEM staff, along with
 employees. Director Glenn also          assist business owners in comply-
                                                                                  external stakeholders, and now is
 noted that during fiscal year 2007      ing with various environmental
                                                                                  the time to act upon the imple-
 approximately 74% of the Depart-        rules/regulations. The need to
                                                                                  mentation of these new initiatives.
 ment’s air-related audits were per-     enhance the Department’s exter-
                                                                                  While the initiatives outlined
 formed in low income/minority           nal affairs efforts was a key com-
                                                                                  above will allow the Department
 areas.                                  ponent in the 2004 Strategic Plan
                                                                                  to     operate      in    a     more
                                         developed by the Alabama Envi-
 An updated compliance and                                                        efficient/effective manner, they are
                                         ronmental Management Commis-
 enforcement strategy was also                                                    also designed to enhance the
                                         sion.    These enhanced efforts
 identified as an initiative that will                                            Department’s ability to achieve its
                                         include an environmental round-
 allow the Department to consis-                                                  goal of protecting human health
                                         table for business associations and
 tently administer enforcement                                                    and the environment. It is note-
                                         environmental groups along with
 actions for noncompliance issues.                                                worthy that these are not things
                                         the establishment of a partnership
 The goal of the new strategy is to                                               ADEM plans to do; these are thing
                                         with the Small Business Develop-
 provide clarity, transparency, con-                                              we are doing right now.
                                         ment Consortium to assist small
 sistency, and deterrence in the
                                         business owners in their compli-         Admittedly, as stated previously, I have
 Department’s enforcement system.
                                         ance efforts.                          been critical of ADEM’s performance in
 Director Glenn noted that the new
                                                                                the past, especially when it comes to
 strategy is designed to reduce the      Additionally, ADEM is overseeing
                                                                                the enforcement responsibilities of the
 repeat issuance of Warning              the cleanup of numerous aban-
                                                                                agency. Our experience with ADEM
 Letters/Notices of Violation for        doned contaminated plants and
                                                                                over the years has been that it protected
 noncompliance issues.                   factories through its Brownfields
                                                                                polluters and was not a real protector of
                                         program.Within the past year and
 A review of ADEM’s operations for                                              our environment or of the public’s
                                         a half, a revolving loan authority
 fiscal year 2005 has been con-                                                 health and well-being. I recall several
                                         was organized and incorporated
 ducted by EPA. The final results of                                            years ago when we put 50 companies
                                         that will execute low interest loans
 this review were provided to                                                   on notice that they were violating
                                         to cities and other governmental
 ADEM in early 2006 and the                                                     certain ADEM standards. Notice to pol-
                                         entities to enable them to assess
 media has only recently reported                                               luters was required before suits could
                                         and clean up these sites. Most



36                                         BeasleyAllen.com
be filed. All that happened as a result of   public nuisance, with tens of thousands        monetary compensation only to those
our notice was ADEM lowered the then-        of children being poisoned by lead             who live within a half-mile of the facil-
existing standards so that all the compa-    since the early 1990s. It was the first        ity. Ultimately, one-thousand of Zeon
nies’ emissions could meet the ADEM          state to sue, and its victory last year was    Chemical’s closest neighbors will be
standards without making any needed          the first time anyone had successfully         paid between $1,200 and $1,800 for the
changes. That not only kept us from          sued former lead paint manufacturers.          alleged nuisance and property damage.
filing suits, it also hurt the environment   The companies are trying to shift              Although the Rubbertown residents
as a result of ADEM’s actions. Protecting    responsibility for cleanup to property         living outside the half-mile radius will
our environment and bringing polluters       owners and landlords, saying they              not receive payment, it is hoped that
to task is critically important in my        should be responsible for cleaning up          they will benefit from the additional
opinion and should be a top priority for     lead paint in their homes. The compa-          pollution controls. Specifically, the set-
any state. Hopefully,ADEM is now right-      nies also contend the state has over-          tlement requires Zeon to install a
ing its ship and doing much better. If       stated the extent of the problem.              thermal oxidizer to decrease its emis-
so, that’s real good news. If not, we will      Superior Court Judge Michael Silver-        sions of the carcinogenic (cancer-
continue to be critical of ADEM’s per-       stein doesn’t believe the companies            causing)      chemical     1,3-butadiene.
formance.                                    have a good chance of getting the              Additionally, Zeon promises to reduce
                                             verdict overturned. As a result, he asked      its release of the potentially carcino-
                                             the state to come up with a plan for           genic substances styrene and acrylonitrile.
RHODE ISLAND ORDERS PAINT MAKERS TO
                                             how the companies would clean up the              Rubbertown is a neighborhood in
PAY $2.4 BILLION TO CLEAN UP LEAD
                                             problem. The three companies will              Louisville, Kentucky, located along the
   Three former makers of lead paint         have to respond to the state’s proposal        Ohio River. During World War II the
that lost a landmark Rhode Island            by November 15th. As we all know, lead         neighborhood became Louisville’s
lawsuit, including Cleveland, Ohio-based     paint was banned in the United States          industrial center, which led to the “Rub-
Sherwin-Williams Co., will have to pay       for use in homes in 1978. But most             bertown” label. The lawyers who filed
an estimated $2.4 billion to clean up        homes in Rhode Island were built               the Zeon Chemical suit also have also
hundreds of thousands of homes con-          before that time and still contain the         initiated suits against other Rubbertown
taminated with lead under a state pro-       toxic substance. Exposure to lead is par-      industries such as American Synthetic
posal released last month. The cleanup       ticularly dangerous for young children         Rubber, Co., OxyVinyls, Hexion, and
plan provides the most detailed              and that’s why this case is so important.      Rohm and Haas.
roadmap to date for the mammoth              Source: Insurance Journal                      Source: The Courier-Journal

undertaking of ridding Rhode Island
homes of lead paint contamination. It
                                             ZEON CHEMICALS OFFERS SETTLEMENT TO
will involve 10,000 workers and is pro-      RUBBERTOWN NEIGHBORS
                                                                                            XVIII.
jected to take four years. The State’s                                                      THE CONSUMER
lawyers filed the plan, which is subject       Zeon Chemicals agreed to settle a            CORNER
to approval by the court, in a Rhode         class action lawsuit recently in Rubber-
Island state court. The companies,           town, Kentucky for $5.3 million dollars.
Sherwin-Williams Co., NL Industries,         The suit involved several thousand Rub-        SOME SMALL-TOWN PHARMACISTS ARE
Inc. and Millennium Holdings, have           bertown residents who complained that          CLOSING THEIR DOORS
appealed the February 2006 jury              Zeon’s hazardous air emissions denied
                                                                                              I know that independent drug stores
verdict. One of the lawyers for the state    them “full use and enjoyment of their
                                                                                            have been adversely affected by the pre-
observed that this is “a big problem         properties.”Although the settlement is
                                                                                            scription drug bill that was passed by
that’s gone on for a long time that          for several million dollars, the majority
                                                                                            Congress. Many of them are facing great
requires a permanent solution.’’             of the payout will fund new pollution
                                                                                            difficulties in dealing with the new law.
   The proposal estimates it will cost an    controls at the facility. Plaintiffs’ attor-
                                                                                            A recent Associated Press article told
average of $11,250 to clean a home,          ney Matthew L.White deems the settle-
                                                                                            about the owner of a drug store in a
although a report issued this year said it   ment a success, considering that the
                                                                                            small town actually going out of busi-
could cost as much as $18,500.The plan       residents’ main goal was to protect the
                                                                                            ness. The store – after 25 years of
covers the roughly 240,000 homes in          neighborhood from dangerous air emis-
                                                                                            service to the community – closed
Rhode Island believed to contain lead        sions.
                                                                                            down this summer, joining a growing
paint, as well as thousands of additional      The class action complaint included
                                                                                            trend among a number of small-town
seasonal homes, elementary schools,          several thousand residents who live
                                                                                            drug stores. While competition from
and child care centers. Rhode Island’s       within two miles of the chemical plant.
                                                                                            mail-order pharmacies and larger retailers
lawsuit claimed the industry created a       The settlement, however, will provide



                                                  BeasleyAllen.com                                                                  37
played a role in his decision, another      the Medicare drug plans don’t pay             Unfortunately, there is also a most
factor, the Medicare drug benefit was       promptly. The university’s researchers     serious deficiency concerning the
the primary reason for the store owner      studied about 3 million prescription       CPSC’s capacity to test foreign imports.
having to shut down. That’s what the        drug claims submitted last year by inde-   At the agency’s cramped laboratory, a
owners told the Associated Press.           pendent and chain pharmacies. They         lone employee is charged with testing
  Before the drug benefit started on        found that less than 1% of claims were     suspected defective toys from across
January 1, 2006, many of the store’s cus-   paid within two weeks, while 44.1%         the nation. At the nearby Commission
tomers paid cash. Under the new             were paid after more than 30 days.         headquarters, safety initiatives have
system, however, private insurance          Insurers have an economic incentive to     been stalled or dropped after dozens of
plans pick up much of the tab and that’s    delay payment. They get millions of        jobs were eliminated in budget cut-
where the problem lies. The insurance       dollars from the federal government and    backs. The Times story reported that
companies use their considerable clout      from Medicare beneficiaries for adminis-   other workers quit in frustration. For
to demand bigger discounts from the         tering the drug benefit.The longer they    example, the head of the poison preven-
drug stores, and they hold their pay-       hold on to that money, the more interest   tion unit resigned when efforts to
ments to the stores for a considerable      that money can generate. The losers are    require inexpensive child-resistant caps
length of time. The pharmacist in this      the retail pharmacists and their cus-      on hair care products that had burned
case says he would wait for months for      tomers. The more the American people       toddlers were delayed so industry costs
insurance plans to reimburse him. Inci-     learn about the prescription drug plan,    could be weighed against the potential
dentally, the co-pays required to be paid   the worse it appears to be. The            benefit to children. Like a number of
by individuals covered under the insur-     problem described above is just part of    longtime former and current officials at
ance plans were also increased by the       the problem. We can’t afford to have       the agency, Suzanne Barone, the poison
drug companies and pharmaceutical           small town pharmacists run out of busi-    prevention expert, who left in 2005,
benefit managers (PBMs) working for         ness by the drug and insurance compa-      says she believes that the CPSC is failing
the insurers.                               nies and the PBMs.                         to fulfill its mission.
  This case highlights a serious decline    Source: Associated Press                      If all of the recent problems and
in the ranks of independent pharma-                                                    recalls of Chinese imports haven’t
cists.About 5% of independent pharma-                                                  gotten the public’s attention, I am not
cies, or 1,152, went out of business last   SAFETY AGENCY FACES SCRUTINY CHANGES       sure what it will take. The CPSC must
year, according to the National Commu-         The Consumer Product Safety Com-        be promptly funded and adequately
nity Pharmacists Association. The asso-     mission (CPSC) must be given the           staffed if the consuming public is to be
ciation says the Medicare drug benefit,     authority it needs to protect American     protected. But the agency hasn’t been
known as Medicare Part D, led to lower      consumers, and it must be adequately       a priority of the Bush Administration.
and slower payments to pharmacists.         funded. Although the Commission has        The Commission’s shrinking budget is
There really is no excuse for the drug      enhanced protections for the American      just $62 million this year, even though
plans to be used to hurt the drug stores    public in a number of instances, they      the agency regulates an industry that
and their customer’s.                       have also blocked enforcement actions,     sells $1.4 trillion annually.The CPSC has
  Congress should pass legislation that     weakened industry oversight rules, and     a duty to ensure the safety of products
would require Medicare’s drug plans to      promoted voluntary compliance over         used every day by millions of Ameri-
reimburse pharmacists within 14 days        safety mandates. The New York Times,       cans. Presently, the agency investigates
of an electronic submission of a claim      in an excellent story on September 2nd,    only 10% to 15% of the reported injuries
and within 30 days of all other submis-     gave a good account of problems at the     or deaths linked to consumer goods.
sions. A bill has been introduced with      CPSC. At a time when imports from          This is true even though the number of
200 co-sponsors in the U.S. House of        China and other Asian countries put in     such reports has grown in recent years.
Representatives and about a dozen co-       focus a most serious problem, creating     While the agency does a good job – con-
sponsors in the Senate. Most of these       an ever greater oversight challenge, the   sidering its staffing and budgeting prob-
lawmakers come from rural districts         Bush-appointed commissioners were          lems – it should be doing much better.
and states.About half of the independ-      silent when the commission’s work-         Rachel Weintraub, the director of
ent pharmacies are in communities           force – then just 420 workers — was        product safety at the Consumer Federa-
with fewer than 20,000 residents. As        cut almost to the bone. The commission     tion of America, observed:“Once there
expected, opposition to the legislation     currently has too few inspectors at our    is a recall, it is too late. Consumers are
comes from the insurance industry and       nation’s ports. The handful of agency      already exposed to the potential harm.”
PBMs, the middlemen they hire to            inspectors are hard-pressed to find dan-
                                                                                       Source: New York Times
manage a plan’s drug benefit.               gerous cargo before it enters the
  A University of Texas study found that    country.



38                                               BeasleyAllen.com
MORE RETAILERS FOUND TO HAVE LEAD-            serious problem in our country and one        the identity thefts. The TJX Companies
TAINTED ITEMS                                 that is occurring with increased fre-         has agreed to a settlement of class
                                              quency. Hardly a day passes that we           action lawsuits filed after a massive
   Major American retailers, including
                                              don’t hear of an incident involving this      security breach involving customer
Target, Limited Too, and Dollar General,
                                              growing crime. It has been reported           data. The proposed settlement, which
have found more lead-contaminated
                                              that TD Ameritrade Holding Corp. was          still requires court approval, includes
children’s products in their inventories,
                                              hit by computer hackers who accessed          three years of credit monitoring along
but have failed to notify the public,
                                              a database and stole contact informa-         with identity theft insurance for those
according to Congressional investiga-
                                              tion for the online brokerage’s 6.3           affected by the breach. In January, Fram-
tors. The products have been taken off
                                              million customers. The information            ingham, Mass.-based TJX disclosed that
shelves, documents released last month
                                              included names, addresses, and e-mail         computer hackers broke into its
by the investigators revealed. But no
                                              addresses, as well as “miscellaneous          systems. At least 45 million TJX cards
recalls have yet been issued for the
                                              account activity information” such as         were hacked. Customers who were
products, while the Consumer Product
                                              the number of trades conducted over           victims of identity theft as a result of
Safety Commission investigates or nego-
                                              the last six months. According to the         their social security numbers being
tiates recall terms. The disclosures came
                                              company, there is no evidence that            stolen in the breach will also be eligible
in response to questions asked by a con-
                                              Social Security numbers, account              for reimbursement. TJX operates off-
gressional committee of 19 companies
                                              numbers and birthdates in the database        price retailers TJ Maxx and Marshalls.
that had already recalled Chinese-made
                                              were stolen.                                  Source: Insurance Journal
products because of lead contamina-
                                                 It appears that passwords and user
tion. It is highly unusual for products to
                                              identifications were not in the database,
be pulled from store shelves for obvious                                                    STATE SECURITIES REGULATORS ISSUE
                                              client assets “were never touched,” and
safety reasons and the public not be                                                        SENIOR INVESTOR ALERT
                                              accounts opened after July 18th were
notified.
                                              not affected. At least, that’s what the          The North American Securities
Source: New York Times
                                              company now says and hopefully it is          Administrators Association (NASAA)
                                              accurate. It’s not clear when Omaha,          issued a Senior Investor Alert last
OFFICE DEPOT TO PAY $2.3 MILLION FOR          Nebraska-based TD Ameritrade found            month, warning that retirees and those
OVERCHARGING CUSTOMERS                        out about the security breach. But            nearing retirement can face serious
                                              according to a company spokesperson,          traps as they manage the savings they
   Office Depot Inc. has agreed to pay        the investigation has been going on “for      have accumulated throughout their
$2.3 million in civil penalties to settle a   some time.” Customers reported receiv-        working years. NASAA President Joseph
lawsuit claiming that customers               ing “spam” offering unsolicited stock         P. Borg, who as you know is Alabama
statewide were overcharged because of         tips and apparently that’s how the theft      Securities    Commission      Director,
faulty readings on scanners at the            was detected.                                 observed:
checkout line.       The office supply           Hackers have tried to hijack accounts
company agreed, as part of the settle-        at several online brokerages, including         Only the lowest of the low inten-
ment, that it would participate in price-     Charles Schwab Corp and E*Trade                 tionally seek to deprive retirees of
check programs to ensure customers            Financial Corp, which have said they            the savings they have worked so
are charged the right amount. Office          have a respective 6.9 million and 4.7           hard for so many years to accu-
Depot will also pay $285,791 to prose-        million brokerage accounts.Americans            mulate. NASAA members will con-
cutors in nine California counties for        lost about $49.3 billion last year to crim-     tinue our ongoing and active
the cost of their investigation. Addition-    inals who stole their identities, accord-       pursuit of criminals who cheat
ally, Office Depot will offer $5 coupons,     ing to a February study by Javelin              seniors out of their hard-earned
which will be available in a Sunday ad        Strategy & Research. The U.S. Federal           retirement savings.
circular sometime in the next few             Bureau of Investigation, the U.S. Securi-       The three most common traps facing
months to its customers. The coupons          ties and Exchange Commission and the          senior investors were identified: free
will be good for in-store purchases.          Financial Industry Regulatory Authority       lunch or dinner seminars, misleading
Office Depot will also offer a $5 refund      are also investigating the TD Ameritrade      professional designations, and abusive
if a customer is overcharged.                 incident.                                     sales practices involving variable and
Source: San Francisco Chronicle
                                                                                            equity index annuities and high-risk
                                              TJX SETTLES SECURITY BREACH LAWSUITS          investment products. These traps go
HACKERS STOLE 6.3 MILLION CLIENTS’ DATA                                                     hand in hand in aggressive marketing
                                                There has been a considerable               programs to create a perfect storm for
  Identity theft has become a most            amount of civil litigation arising out of     senior investment fraud. Since NASAA



                                                  BeasleyAllen.com                                                                 39
first identified the risk seniors face at    ing to Chrysler, the automaker has            TOYOTA ISSUES SAFETY RECALLS
free meal investment seminars in 2003,       received about 20 complaints of vehi-
state securities regulators have been        cles experiencing a delay in braking             Toyota Motor Corp. is recalling
actively investigating and bringing cases    when drivers tried to come to a stop          optional “all-weather” floor mats in
to stop the spread of abusive sales prac-    after coasting uphill.To fix the problem,     55,000 Lexus ES 350 and Toyota Camry
tices that often emanate from these          the computer connected to the antilock        passenger cars because the mat could
events.     Promoters often use the          brake system will be reprogrammed.            interfere with the gas pedal and lead to
promise of a free meal to lure potential     There has been one crash tied to the          a crash. The National Highway Traffic
clients to hear pitches of unsuitable or     issue and no injuries reported, accord-       Safety Administration issued a consumer
questionable investments. As Joe Borg        ing to Chrysler. Owners will be notified      advisory about the heavy-duty rubber
correctly observed:“Remember, there’s        of the recall by mail beginning later this    floor mats, noting that if unsecured, the
no such thing as a ‘free’ lunch.”            month.                                        map could move forward and trap the
   Preliminary results from an ongoing          Chrysler is also recalling 72,333          gas pedal, causing the vehicle to acceler-
NASAA survey of state securities agen-       Dodge Avenger sedans and Chrysler             ate uncontrollably. NHTSA considers
cies show that investment fraud against      Sebring convertibles from the 2008            this to potentially be a very serious
seniors continues to grow. Forty-four        model year to address problems with           safety issue.
percent of all investor complaints           the front door latches and locks. The            The Japanese-based automaker will
received by state securities regulators      company discovered problems with              notify owners this month and expects
come from seniors, up from 28% in            opening the vehicle doors through its         replacement mats to be available at
2005. In addition, variable and equity       internal monitoring program. Thus far         dealerships by late November. In a state-
index annuities were involved in 48% of      no accidents or injuries have been            ment, Toyota advised owners to regu-
the cases of senior financial exploitation   reported, and owners should be notified       larly check that their floor mat is
reported to state securities regulators,     of the recall this month. For more infor-     properly secured and said “under no cir-
according to the NASAA survey’s pre-         mation on the recalls, owners can             cumstances should more than one floor
liminary results. Recognizing that finan-    contact Chrysler at (800) 853-1403.           mat ever be used in the driver’s seating
cial education is a powerful weapon in                                                     position.” Owners can contact Toyota at
the continuing fight against senior                                                        (888) 270-9371 or (800) 331-4331 and
investment fraud, NASAA offers a wealth      HONDA RECALLS CIVICS                          Lexus owners can call (800) 255-3987
of investor protection information in its                                                  for more information.
                                                Honda Motor Co. said it was recalling
Senior Investor Resource Center.
                                             more than 180,000 Civics from the
NASAA is the oldest international organ-
                                             2006-2007 model year to fix a wheel-          NISSAN ISSUE SAFETY RECALLS
ization devoted to investor protection.
                                             bearing seal that could leak and lead to
Its membership consists of the securi-                                                       Nissan Motor Co. is recalling nearly
                                             a wheel falling off the car. In the recall,
ties administrators in the 50 states, the                                                  420,000 sport utility vehicles because of
                                             the automaker told the National
District of Columbia, Puerto Rico, the                                                     possible corrosion in the tube where
                                             Highway Traffic Safety Administration
U.S.Virgin Islands, the provinces and ter-                                                 motorists pump gas.The recall involves
                                             that the seal where the antilock brake
ritories of Canada, and Mexico.                                                            Nissan Pathfinder and Infiniti QX4 SUVs
                                             sensor mounts to the rear wheel
                                             bearing could allow moisture and salt to      from the 1997-2001 model years. More
                                             leak into the wheel bearing and cause         than 370,000 of the vehicles under
XIX.                                         corrosion. The conditions could lead to       recall were originally sold or are cur-
RECALLS UPDATE                               a wheel falling off and a crash, accord-      rently registered in 22 “cold weather”
                                             ing to Honda. The company says it has         states and the District of Columbia.
                                             received two complaints related to the        Another 45,000 vehicles are in Canada.
CHRYSLER ANNOUNCES RECALLS                                                                   According to Nissan, its recall was
                                             problem, including one in which a
                                             wheel came off the vehicle while it was       prompted by an inadequate amount of
  Chrysler LLC is recalling nearly
                                             being towed. Thus far, no injuries have       coating on a bracket by the fuel filler
300,000 sport utility vehicles to address
                                             been reported. Owners were being noti-        tube assembly. In states that use road
potential braking problems while
                                             fied of the recall this month and can         salt during the winter, a mixture of
driving uphill. The recall involves more
                                             contact Honda at (800) 999-1009 for           snow, water and salt could cause corro-
than 156,000 Jeep Grand Cherokees
                                             more information.                             sion on the bare metal part of the tube
and Commander SUVs from the 2006-
                                                                                           and allow fuel to leak. Nissan says there
2007 model years, more than 90,000
                                                                                           have been no reports of fires or injuries.
2007 Jeep Wrangler SUVs, and nearly
                                                                                           The states covered by the recall include:
50,000 2007 Dodge Nitro SUVs. Accord-
                                                                                           Connecticut, Delaware, Iowa, Illinois,



40                                               BeasleyAllen.com
Indiana, Kentucky, Massachusetts,            not covered by the recall to check to        NETTOCOLLECTION RECALLS CRIBS
Maine, Maryland, Michigan, Minnesota,        make sure the drop side is installed
New Hampshire, New Jersey, New York,         right side up and securely attached.The         NettoCollection LLC, of New York,
Ohio, Pennsylvania, Rhode Island, Ten-       newer hardware has a flexible tab at the     New York, has recalled about 400
nessee,Vermont,Virginia,West Virginia,       top of the lower track and a permanent       “Moderne” and “Loft” Cribs. The crib
and Wisconsin. Nissan dealers will           stop at the bottom.The older hardware        slats can separate from the side rails,
replace the fuel filler tube assembly        has a flexible tab at the bottom of the      posing an entrapment and strangulation
with a new one with an improved              lower tracks.                                hazard to young children. NettoCollec-
coating process. Owners will be noti-                                                     tion has received three reports of the
fied beginning in late November. For            In an earlier Simplicity crib recall, a   side rail spindles separating from the
more information, owners can contact         19-month-old child in Myrtle Creek,          top rail. Thus far, no injuries have been
Nissan at (800) 647-7261.                    Oregon, died January 6, 2006, in a crib      reported.The crib side rails are made of
                                             that carried the Graco logo. Mattress        wood and sold with a brown finish.
                                             support slats came out of the crib, and      Only cribs with model numbers NC-137
SIMPLICITY AND GRACO CRIBS RECALLED          the child suffocated after getting           and NC-140 and date codes 9/03 and
                                             trapped between the mattress and the         02/04 are included in the recall. The
   About one million Simplicity and                                                       model numbers, date codes and “Made
                                             footboard, according to the Commis-
Graco cribs have been recalled after                                                      in Poland” are printed on a label on the
                                             sion. That type of crib had been
three children became entrapped and                                                       crib end panels. For additional informa-
                                             included in a December 2005 recall of
suffocated. The recall, announced by                                                      tion, contact NettoCollection toll-free at
                                             about 104,000 Aspen 3 in 1 Cribs.The
the Consumer Product Safety Commis-                                                       (866) 996-3886 between 10 a.m. and 6
                                             latest recalled cribs, priced between
sion, came more than two years after a                                                    p.m. ET Monday through Friday or visit
                                             $100 and $300, were sold by U.S. retail-
California lawyer says he alerted the                                                     the firm’s Web site at www.nettocollec-
                                             ers and chains including Target Corp.,
federal agency about a 9-month-old who                                                    tion.com
                                             Big Lots Inc, Babies “R” Us and family-
died in a faulty crib. There have been
                                             owned Meijer Inc. from January 1998
three deaths connected with the cribs.
                                             through May 2007. The recall involves
One of the deaths involved a one year                                                     PLAY YARDS RECALLED AFTER 10-MONTH-
                                             multiple models and models numbers.          OLD DIES
old who died in a newer model of the
                                             The recalled Simplicity crib models
cribs, which hadn’t been recalled but
                                             include: Aspen 3 in 1; Aspen 4 in 1;            Kolcraft Enterprises Inc. is voluntarily
are being investigated by the safety
                                             Nursery-in-a-Box; Crib N Changer             recalling about 425,000 infant play
agency. In all three deaths, consumers
                                             Combo; Chelsea; and Pooh 4 in 1. The         yards following the death of a child.
had installed the drop-rail side of the
                                             recall also involves the following Sim-      The Consumer Product Safety Commis-
crib upside down, the agency said.This
                                             plicity-made cribs that were sold with       sion received a report of a 10-month-old
creates a gap in the crib that children
                                             the Graco logo:Aspen 3 in 1; Ultra 3 in      boy who strangled on the changing
can slide into and suffocate. Seven other
                                             1; Ultra 4 in 1; Ultra 5 in 1;Whitney; and   table’s restraint strap that was hanging
infants have been entrapped in the
                                             Trio.                                        down into Kolcraft’s “Sesame Begin-
cribs, according to the commission.
                                                The cribs have one of the following       nings”Travel Play Yard where the child
There have been 55 reports of the cribs’
                                             model numbers: 4600, 4605, 4705, 5000,       was located. Twelve different Kolcraft
drop sides detaching or the hardware
                                             8000, 8324, 8800, 8740, 8910, 8994,          play yards are included in this recall.All
failing to hold the side to the crib. Sim-
                                             8050, 8750, 8760 and 8996. The               of the play yards have raised changing
plicity Inc., of Reading, Pennsylvania,
                                             numbers are on the envelope attached         tables with a restraint strap that forms a
manufactured all the cribs, which were
                                             to the mattress support and on the label     loop beneath the changing table, posing
made in China.
                                             attached to the headboard. The               a strangulation hazard to a child in the
   The crib recall is the second-largest
                                             company is offering free repairs for         play yard. In addition to the strangula-
since the commission was created in
                                             cribs with older hardware. For more          tion hazard with the changing table
1972. In 1997, the commission recalled
                                             information, consumers can contact           restraint strap, one play yard also has a
1.2 million portable cribs made by
                                             Simplicity at 888-593-9274 or visit the      raised cradle that rocks back and forth.
Evenflo Company Inc. In a separate crib
                                             company’s Web site www.simplicity-           A child can roll and get trapped against
recall in June, the commission recalled
                                             forchildren.com. They can also go to         the side of the cradle in the Contours 3-
about 40,000 Nursery-in-a-Box cribs,
                                             the Web site of the CPSC, which is           in-1 Play Yard. If that happens, a child
manufactured by Simplicity, because the
                                             www.cpsc.gov.                                can suffocate. Kolcraft has received 45
assembly instructions incorrectly
                                                                                          reports of children rolling to the side of
explained how to attach the drop side.
                                                                                          the rocking cradle attachment. The
The commission has cautioned con-
                                                                                          recalled play yards were sold in a variety
sumers who have the newer versions


                                                 BeasleyAllen.com                                                                 41
of colors and patterns. The model           the Food and Drug Administration to         MORE PET FOOD RECALLED
number is printed on a white sticker        warn Americans not to eat fresh bagged
located on one of the feet of the play      spinach. The agency later lifted that         Bravo! LCC is recalling tubes of frozen
yard.They were manufactured in China.       warning after tracing the contamination     cat and dog food, because of a potential
                                            to spinach processed and packed by          bacterial contamination. The recall
                                            Natural Selection Foods in San Juan         includes various-sized tubes of Bravo
FISHER-PRICE RECALLS GEO TRAX               Bautista, California. The outbreak led to   Original Formula Chicken Blend frozen
LOCOMOTIVE TOYS                                                                         raw food and 2-pound tubes of Bravo
                                            stricter monitoring procedures by
                                            growers and processors and stepped-up       Basic Formula Finely Ground Chicken
   Fisher-Price Inc. has recalled about
                                            inspections by California health offi-      frozen raw food, because they could be
90,000 Geo Trax Locomotive Toys
                                            cials.The recall covers 10- and 16-ounce    contaminated with both salmonella and
because the surface paints on the toys
                                            bags, as well as 4-pound cartons and        Listeria monocytogenes. The original
contain excessive levels of lead. Thus
                                            cartons that contain four 2.5-pound         formula chicken was manufactured on
far, there have been no injuries reported
                                            bags, with the following tracking codes:    August 24th and the finely ground
by the company.The recall involves the
                                            12208114, 12208214 and 12208314.            chicken was manufactured on August
Geo Trax Freightway Transport and Geo
                                            Consumers with questions can contact        14th. The company also is recalling
Trax Special Track Pack locomotive
                                            Metz Fresh at (831) 386-1018.               various-sized tubes of Bravo Original
toys. These toys are red with yellow
                                                                                        Formula Turkey Blend frozen raw food
paint on the ladder and horn details.The
                                                                                        because they could be contaminated
recalled models were manufactured
                                            SUPPLEMENT PRODUCTS RECALLED                with listeria.This product was manufac-
between July 31, 2006 and August 20,
                                                                                        tured on August 24th. Both salmonella
2007 and have a date code between              TWC Global of Mountain View, Calif.,     and listeria can cause serious infections
212-6CK through 325-6CK or 001-7CK          is recalling 200 boxes of its supplement    in cats, dogs and — if there is cross-con-
through 232-7CK marked on the               products sold under the names Axcil         tamination — in young children, frail or
bottom of the product. The packaging        and Desirin because the products            elderly people and others with weakened
on the Freightway Transport model is        contain potentially harmful, undeclared     immune systems.Thus far, the company
marked H5705 and the packaging on           ingredients. Thus far, no illnesses have    has received no reports of illness in
the Special Track Pack model is marked      been reported, according to the             people or animals. For more information
K3013. For additional information,          company. The products, manufactured         call 866-922-9222 or go to the Web at
contact Fisher-Price toll-free at (888)     in the U.S. and sold on the Internet        http://www.bravorawdiet.com.
496-8330 anytime or visit the firm’s Web    nationwide, are sold as a 15-capsule
site at www.service.mattel.com.             blister-pack, packaged in a box. The
                                            Food and Drug Administration found
                                                                                        XX.
                                            samples of the products contained an
SPINACH RECALLED AFTER POSITIVE TEST
                                            active ingredient for an FDA-approved       SPECIAL
FOR SALMONELLA
                                            drug for erectile dysfunction.The unde-     RECOGNITIONS
   Metz Fresh of King City, California, a   clared chemicals pose a threat to con-
produce company, has recalled bagged        sumers because they may interact with
                                                                                        CAMPAIGN TO BRING AWARENESS TO
fresh spinach after a sample tested posi-   nitrates found in some prescription
                                                                                        ROLLOVER DANGERS STARTS IN
tive for salmonella. The recall comes       drugs and might lower blood pressure        MONTGOMERY
nearly a year after an outbreak of          to dangerous levels. Customers should
another pathogen, E. coli, in fresh         stop using the products immediately           People Safe In Rollovers, a public,
spinach killed 3 people and sickened        and contact their doctor if they have       non-profit organization dedicated to
200. The recalled spinach was distrib-      experienced any problems that might         raising public awareness about the dev-
uted throughout the 48 contiguous           be related to taking this product. Any      astating effects of roof crush injuries,
states and Canada and sold in both retail   reactions should be reported to the         has launched a national campaign to
and food-service packages. Salmonella       Food and Drug Administration’s Med-         create a mosaic of billboards across the
sickens about 40,000 people a year in       Watch adverse event reporting program       country. The erection of its first bill-
the United States and kills about 600. It   at www.fda.gov/medwatch/report.htm.         board, which measures 14 feet by 48
can cause diarrhea, fever, dehydration,     For more information, consumers can         feet, in Montgomery, Alabama, is in
abdominal pain and vomiting. Most           call the company at 650-575-0828.           honor of Claudette Phillips, a victim and
cases of salmonella poisoning are                                                       survivor of automobile roof crush
caused by undercooked eggs and                                                          injuries. On July 14, 2003, Ms. Phillips
chicken.                                                                                was wearing a seat belt while driving
   Last year’s E. coli outbreak prompted                                                with her daughter, Tyson, in her Jeep



42                                              BeasleyAllen.com
Grand Cherokee when the vehicle               yellow, and white logo – will be part of      that ASF puts on take back home a good
rolled over and crushed excessively into      the state’s $4.5 million television, print    feeling about our state and that’s very
Claudette’s survival space. Claudette,        and radio ad campaign. Birmingham-            important.
who was only 39 years old at the time,        based marketing firm Luckie & Co. was            ASF is the fifth largest Shakespeare
was left a complete quadriplegic. Her         selected by the Bureau to study the           Festival in the world based on atten-
daughter, Tyson, was unhurt in the            phrase’s appeal. The firm found that          dance. It is one of the top tourist attrac-
rollover. Claudette is taking a stand for     more than 70% of out-of-state residents       tions in Alabama. Thus far ASF has
what she believes in by using her own         and 65% of Alabama residents preferred        attracted more than 3 million visitors
experience to highlight the shocking          it over five others.                          from all 50 states and more than 60
statistics of 10,000 deaths and 24,000           The agency’s award-winning “Year of”       foreign countries.ASF had a $20 Million
catastrophic injuries yearly in rollover      program will continue, with 2008              annual economic impact on central
accidents in America.                         declared the Year of Alabama Sports –         Alabama and is responsible for over
  People Safe in Rollovers Foundation         2009 the Year of Alabama History – and        1,000 jobs in Montgomery.Actually,ASF
has plans to erect more billboards hon-       2010 the Year of Small Towns and              is an industry. Behind the stages in the
oring four more roof crush survivors in       Downtowns. The 2010 campaign will             building are the shops where costumes,
four southern cities. Birmingham,             include an Alabama reunion component          hats, wigs, props and sets are con-
Dothan, and Mobile, all in Alabama and        that invites people back to their home-       structed by artisans. Actors are profes-
Jackson, Mississippi have been selected       towns. The agency’s Year of Alabama           sionals and belong to Actors’ Equity
as the sites. All four of the victims being   Food campaign, which included a               Association. While the actors are from
honored are survivors of roof crush           brochure highlighting many restaurant         New York, Chicago and Los Angeles
injuries. In each case, juries found the      specialties and a chefs’ competition,         mostly, many of them have become
roofs of their vehicles to be defective.      won the top national honor at the             homeowners in the River Region, which
Safety advocates are lobbying Congress,       National Council of State Tourism Coun-       is very good.
which has jurisdiction over NHTSA, to         cils’ 2006 convention. The tourism               Every play at ASF is hand-crafted from
call a congressional hearing on the issue     industry contributes $8.3 billion to          scratch by talented artisans, actors,
of roof crush in rollovers. Many people       Alabama’s economy and is responsible          directors and designers.The production
in this country don’t realize that            for 162,688 jobs. Lee Sentell, who            of every play is executed by more than
rollovers are such a serious safety issue     heads up the agency, has done a tremen-       20 persons who are never seen by folks
on our nation’s highways. Neither do          dous job. If you get a chance let Lee         in the audiences. It is said by folks much
they realize that the roofs on many vehi-     know you appreciate his good work             more knowledgeable than I that theater
cles they ride in are not strong enough       that is paying off greatly for our state.     is people-centric, people-crafted, and
to protect occupants in case of a             Source: Mobile Press Register                 people-oriented. Obviously, the creation
rollover. Clearly, both Congress and the                                                    of each professional play is intricate and
National Highway Traffic Safety Adminis-                                                    quite expensive.We are truly blessed to
tration (NHTSA) have failed to do their       THE ALABAMA SHAKESPEARE FESTIVAL IS A         have ASF in the state and in the Capital
                                              STATE TREASURE
duty. Without such pressure, the auto-                                                      City. I am currently serving on the board
mobile industry has refused on its own           The State of Alabama is most fortu-        of directors of ASF and know first hand
to adequately deal with the rollover          nate to have within its borders and thus      that we must continue to support ASF in
problem.                                      able to lay claim to the Alabama Shake-       every manner possible.There are lots of
                                              speare Festival (ASF). In fact, I consider    states that would give whatever it
                                              it to be a state treasure in the true         would take to have something like ASF
TOURISM CAMPAIGN FOR ALABAMA                                                                within their borders!
ANNOUNCED                                     meaning of the term. ASF creates posi-
                                              tive news media attention, attracts a
  Alabama has become a tourist desig-         tremendous number of tourists each
                                                                                            THE RED TAIL FIGHTER GROUP RETURNS
nation state and that’s good news. We         year, supplements art education, allows
have lots to see and enjoy in Alabama         visiting artists to see a different picture     The historic Alabama fighter squadron
and that means we have to let folks           of our state, and actually helps attract      commonly referred to as “The Tuskegee
outside the state know about all we           industry to Alabama. For example, the         Airmen,” is returning to Alabama and
have to offer. A new theme is being           Hyundai officials from South Korea            that’s great news. General T. Michael
used by the state to sell Alabama.            were greatly impressed with what ASF          Moseley, Air Force Chief of Staff,
“Sweet Home Alabama” is the phrase the        had to offer when visiting the Capital        announced four significant changes for
state Bureau of Tourism & Travel has          City before deciding to locate here.          the air force in Alabama.The formation
selected to lure tourists in 2008. The        Folks from outside Alabama who take in        of an active associate fighter squadron
slogan – and its stylized red, blue,          performances of the multitude of plays        within the Alabama Air National Guard’s


                                                   BeasleyAllen.com                                                                 43
187th Fighter Wing will be part of the       THE STATE OF ALABAMA AND LAWYERS              visits may be trying to sell services that
change.The squadron will remain under        WORK TOGETHER TO PREVENT ELDERLY              sound like a good deal but really are not
                                             FRAUD                                         good. These people may also be trying
the leadership of the Guard, which will
maintain equipment, but active duty                                                        to get enough information to steal the
                                                In a first-of-its-kind partnership, the
airmen will become part of the                                                             person’s identity. Barbara Dieker, direc-
                                             Riley Administration and the Alabama
squadron. That’s a new approach being                                                      tor of the Office of Consumer Choice
                                             Association for Justice have teamed up
                                                                                           and Protection at the U.S. Administra-
utilized and would appear to be a good       to provide kits aimed at protecting
                                                                                           tion on Aging, and Irene Collins, who
one.                                         Alabama’s elderly from Medicare fraud.
                                             The state Department of Senior Services       heads up the State Department of
   The 160th Fighter Squadron of the
                                             will distribute 100,000 of the Medicare       Senior Services, attended the Gover-
187th was inactivated and a new
                                             Protection Toolkits through senior            nor’s news conference, along with
squadron was activated on the orders of                                                    Gibson from our firm. They observed
General Moseley and Governor Bob             citizen centers and Meals on Wheels
                                             programs. Interested persons can call         that the kits were good and would be
Riley.The new squadron will be desig-                                                      extremely helpful in the fight against
                                             the department at 1-877-425-2243 for
nated the 100th Fighter Squadron, more                                                     fraud.
                                             more information or to get kits.There is
commonly known as the Tuskegee                                                             Source: Associated Press
                                             a period from November 15th to Decem-
Airmen of World War II. Before returning     ber 31st when the elderly can change
to Alabama, the 100th Flying Training        their Medicare Advantage health plans
Squadron was based at Randolph Air           and Medicare prescription drug plans.         XXI.
Force Base in Texas. It will now be in       Governor Riley, who unveiled the toolk-       FIRM ACTIVITIES
Alabama under its new designation and        its at a news conference last month,
complete with the distinctive red tails      observed: “This would not have been
                                                                                           EMPLOYEE SPOTLIGHTS
that were the squadron’s trademark.          possible without the donation of
The squadron will be back in Alabama         $75,000 from the Alabama Association          Ben Locklar
for the first time since the end of WWII.    for Justice.” All Alabama citizens who           Ben Locklar, who is a graduate of
Lt. Walter Palmer, one of the original       are eligible to participate in the health     Cumberland School of Law at Samford
Tuskegee Airmen, was a pilot during          and drug plans must be made knowl-            University in Birmingham, joined our
WWII. He and another Tuskegee airman         edgeable about the potential for fraud        firm in 2005. Prior to going to law
                                             and hopefully these kits will be of great     school, Ben worked as a Montgomery
were special guests at the announce-
                                             benefit.                                      Police Officer. He practiced law for 14
ment ceremony, which was held in
                                                Gibson Vance, who is a shareholder in      years in a very good firm in Mont-
Montgomery.
                                             our firm and who is also the associa-         gomery. Since coming to work with
   To continue the consolidation of          tion’s president-elect, observed that the     our firm, Ben has worked almost exclu-
training in the Air Force, General           partnership with the state marked a first     sively in our Mass Tort Division, manag-
Moseley announced that the Air Force         for the organization and its charitable       ing the Vioxx cases this firm has filed
Reserve Command commissioning will           arm, the Alabama Civil Justice Founda-        around the country.
also move to Maxwell and join the            tion.While most Medicare providers are           Ben has been married for almost 23
Officer Training School. Other than the      honest, a small number of providers find      years to his wife,Angela, and they have
Air Force Academy and ROTC programs,         ways to steal millions of dollars each        two children, Katie and Sarah Beth.
Maxwell is the only place active duty        year.The toolkits, which are now avail-       Katie is a freshman at the University of
airmen can be commissioned.Air Force         able, remind the elderly to ask questions     Alabama, and Sarah Beth is a junior at
officials are also looking into holding      of anyone promoting health care plans.        St. James School. Angela is currently
officer training for the Guard at            They should also take enough time to          working on her master’s degree in
                                             make good decisions. There are also           nursing and should become a nurse
Maxwell. Governor Riley says bringing
                                             explanations in the materials of red          practitioner within the next year. Ben
the planes with the red tails of the 100th
                                             flags to look for and numbers to call to      and his family have had quite a year.
Fighter Squadron back to Alabama solid-
                                             report suspected fraud.                       Their home was destroyed by a tornado
ified the historical impact of Maxwell
                                                A common type of fraud is for              earlier this year, but they recently were
and Alabama’s military. I sincerely hope     someone identifying themselves as a           able to move back into the home.
that all Alabama citizens understand         Medicare employee to call or visit an         Other than spending time with his
fully the importance of Maxwell Air          elderly person to try to sell a service. It   family, Ben feels most at home on the
Force Base to our state and to our           should be noted that Medicare does not        back of a horse. He and his daughters
nation. We are most fortunate to have it     make home visits or unsolicited phone         have ridden and competed for the past
located in the Capital City.                 calls. People who make the calls or           several years. Ben says he enjoys the


44                                               BeasleyAllen.com
challenges that his job offers and has      Interestingly, those requirements change      job for the firm and is a valued
enjoyed practicing law on more of a         daily. Before coming to Mass Torts,           employee. We are fortunate to have him
national level than he had in the past.     Benita worked in our Accounting               with us.
He is doing outstanding work and was a      Department. She has been married to
welcomed addition to the firm. Ben is a     her husband, Darrell, for 29 years and        Michelle Lysdale
very hard worker who is a credit to his     they have two sons, ages 25 and 23. The         Michelle Lysdale, who has been with
profession.                                 older son has recently gotten engaged         the firm over four years, works in the
                                            and will get married June of 2008. In         Consumer Fraud Section as a Legal Sec-
Bill Robertson                              her spare time, Benita and her husband        retary for Clint Carter. She started in
   Bill Robertson, a native of Eufaula,     love to ride motorcycles. Benita is a         March of 2003 as legal secretary to
Alabama, graduated from Auburn Uni-         very good employee and a valued               Roman Shaul before moving to work for
versity in 1999 and received his Juris      member of the Mass Torts team.                Clint in February of 2005. As Clint’s
Doctor degree from Thomas Goode                                                           Legal Secretary, Michelle makes sure
Jones School of Law in 2005. Since          Mike Bush                                     that the day-to-day operations are per-
joining the firm’s Fraud Section as an         Mike Bush, who came to work for the        formed in a timely fashion. She has
Associate in 2005, Bill has primarily       firm as an Investigator in January of         been working hard on the AWP litigation.
focused his practice on cases that          1995, currently works in our Personal           Michelle is married to Casey Shaw,
involve fraud and bad faith committed       Injury/Products Liability Section. He         who is a Narcotics Investigator for the
by insurance and finance companies.         also helps out with other investigative       Central Alabama Drug Task Force and a
However, he has handled various other       needs for the firm. As I have stated on       member of the Elmore County SWAT
types of claims involving fraudulent        numerous occasions, our investigators         team. She has two daughters: Brittnee,
activity as well.                           keep a very busy schedule. An impor-          19 and Laken, 13. Brittnee is a second
   Bill is very active in the Montgomery    tant part of their work involves helping      year student at Southern Union State
County Bar Association’s Young Lawyers      the lawyers investigate product liability     Community College, and Laken is an
Section, and is currently serving the       cases. Mike retired from the Mont-            eighth-grader at Edgewood Academy.
office of Secretary/Treasurer of that       gomery Police Department after over 20        Laken is also a member of the Senior
organization.As the Secretary/Treasurer     years of service as an accident recon-        Co-ed Level 4 Cheerleading Squad at
of the MCBA’s Young Lawyers Section,        structionist. This experience has been        Top Dog. In her spare time, Michelle
Bill handles the record keeping and         most helpful in his work for the firm.        enjoys relaxing with family and friends.
financial affairs of the organization,         Mike and his wife Michelle recently        She works hard and is a very good
along with numerous other responsibili-     celebrated their 25th wedding anniver-        employee.
ties. He is also involved in numerous       sary. Michelle is an RN specializing in
other bar association activities, both      labor and delivery and is employed at         Kristi Smith
state and local.                            Jackson Hospital. In fact, she has assisted      Kristi Smith, who has been with the
   Bill is married to the former Leslie     in the delivery of several children born      firm for eight years, works in the Toxic
Gaither of Eufaula.They are members of      to firm employees. Mike and Michelle          Torts/Business Litigation Section as Scar-
First United Methodist Church in Mont-      have two sons: Matthew, 18, who               lette Tuley’s Legal Assistant. In this posi-
gomery and are also very active in com-     recently graduated from Alabama Christ-       tion, Kristi assists with client work,
munity affairs. Leslie is expecting the     ian Academy with a 4.05 GPA and is a          including filing initial pleadings and dis-
couple’s first child in March. Bill is a    freshman at the University of Alabama         covery items, reviewing documents,
very good lawyer who is a definite asset    enrolled in the Blount Scholars Under-        organizing and managing document
to the firm. He is an extremely hard        graduate and Honors Program; and              databases, and organizing and managing
worker who believes in what he does         Nolan, 15, who is a 10th grader attend-       multi-plaintiff cases. She received her
for his clients and puts their interests    ing Alabama Christian Academy. Nolan          bachelor’s degree in Criminal Justice
first and foremost.                         plays the alto saxophone in the March-        and Public Safety from Auburn Univer-
                                            ing Eagle band.                               sity Montgomery in 1999. Kristi also
Benita Bunch                                   Mike is in charge of the field crew at     holds a Legal Assistant Certificate.
  Benita Bunch, who has been with us        Alabama Christian and is responsible for      Kristi has been married to Patrick
since December of 2000, currently           striping and painting the football field      Smith, a Montgomery firefighter, for 4
serves as Clerical Assistant to Andy        before each home game. He is also the         years, and they live in Wetumpka,
Birchfield in the Mass Torts Section. She   Director of Staging, Maintenance and          Alabama.They are the proud parents of
works with Andy, his secretary Genie,       Performance for the Marching Eagle            a 2 year old son named Blake and are
Leigh O’Dell, and Linda Reynolds            Band. In the spare time he has left, Mike     expecting another baby in April. Kristi
(Section Head Administrator), assisting     enjoys hunting, fishing, and Crimson          and her family are members of Thorington
them with whatever they need done.          Tide Football. Mike does a very good          Road Baptist Church in Montgomery,


                                                BeasleyAllen.com                                                                   45
Alabama. Kristi is another hard worker        the Consumer Product Safety Com-       been exaggerated or simply
who does an excellent job for the firm.       mission has fined Mattel twice for     invented. With respect to job cre-
We are most fortunate to have her with        such delays since 2001.The Com-        ation in particular, significant tort
the firm.                                     mission collects millions of dollars   law change would be more likely
                                              in penalties every year from U.S.      to slow employment growth than
                                              companies that import or sell          to promote it.” But the so-called
XXII.                                         products that violate mandatory        “tort reform” movement marches
                                              safety standards, fail to report       on in perfect step with government
SOME CLOSING
                                              potential hazards and fail to          deregulation.We’ve watched state
OBSERVATIONS                                  report lawsuits and settlements for    after state weaken the ability of
                                              product-related injuries.And those     citizens to seek redress in the
EVERYBODY SHOULD READ THIS OPT ED             are just the ones that get caught.     courts. Access to justice for “the
PIECE                                         Clearly, dangerous goods are slip-     little guy” is the real target of these
                                              ping past the safety standards set     “reforms”— not the “problems”
  Jay Cook, a lawyer from Athens,             by the many regulatory govern-         they’ve trumped up to trick us into
Georgia, wrote an opt ed piece that was       ment agencies that are supposed        giving them what they really
published in the Atlanta Journal Consti-      to be protecting us, including the     want: damage controls that take
tution last month. He covers an area of       Food and Drug Administration and       the teeth out of our juries and the
concern that affects all U.S. citizens. It    the Environmental Protection Agency.   bite out of compensating the
tells us how corporations put profits                                                victims of their corner-cutting.
over safety and how that corporate            Last year, Dr. David Graham, the
                                              senior FDA drug safety researcher      Tort law is a small but important
mentality hurts folks. Jay, a former presi-
                                              who blew the whistle on dangers        facet of our civil justice system.We
dent of the State Bar of Georgia, is cur-
                                              of the pain-killer Vioxx, told the     call it a tort when somebody acts
rently president of the non-profit
                                              Senate Finance Committee that          unreasonably and harms another
Georgia Civil Justice Foundation. I am
                                              “the FDA is incapable of protecting    person’s body, property, legal
setting out Jay’s remarks below:
                                              America from unsafe drugs or           rights or reputation.You can’t call
                                              from another Vioxx.” Now we’re         the police when somebody
                                              learning that the EPA has been         commits a tort, but you can file a
CORPORATIONS PUT PROFIT BEFORE SAFETY
                                              suppressing a report on the possi-     suit in the civil courts to seek an
                                              ble dangers of a chemical used in      appropriate legal remedy.The rules
  First it was Vioxx. Then it was poi-                                               of our tort system are roughly the
                                              microwave popcorn. Copies of the
  sonous pet food. Now it’s toxic toys                                               same common-sense principles we
                                              report were provided to popcorn
  and       chemically      enhanced                                                 all learned as kids: Everybody
                                              producers last July, but kept secret
  popcorn. Last year alone, unsafe                                                   should play fair. The one who
                                              from the public. But even with
  products killed more than 8,000                                                    broke the rules of fair play should
                                              potent regulatory enforcement,
  Americans and sent millions more                                                   pay for the damage they caused.
                                              Americans injured by defective
  to emergency rooms. But let’s not           products have only one place to
  lay the blame on the crippled regu-                                                Our Founding Fathers understood
                                              turn for a remedy: our court           that we needed these systems in
  latory agencies or the Chinese.For          system. But that, too, is being
  once, let’s lay the blame where it                                                 place to make us safe and regulate
                                              neutered by the same forces that       the practices of fair play. Let’s cut
  really belongs: on the doorstep of          are muzzling our watchdogs. A
  those megacorporations that cut                                                    to the chase: There’s nothing
                                              multimillion-dollar propaganda         wrong with making an honest
  corners and break rules to gain             machine has convinced many of          buck. America was built on hard
  unfair advantage over American              us (and our elected officials) that    work and free enterprise. There’s
  businesses, big and small, that             tethering our tort system will         nothing wrong with wanting
  don’t.                                      improve the economy.                   higher profits. The American
  Recently, The Wall Street Journal           It may be just the opposite.A brief-   Dream still lives or dies in the
  reported that Mattel, which has             ing paper published last year by       profit margin. But there is some-
  recalled more than 20 million               the Economic Policy Institute con-     thing wrong when profit-making
  dangerous toys this summer                  cluded:“The costs of the tort system   turns into corner-cutting that puts
  alone, has delayed reporting                have been grossly exaggerated,         public safety in peril. And there is
  product defects because it finds the        and its supposed impact on job         definitely something wrong when
  reporting rules “unreasonable.”             creation, research and develop-        some conscienceless megacorpora-
  According to The New York Times,            ment, productivity, and profits has    tions engage in “remedy rigging”:
                                                                                     gaming the system so that even


46                                              BeasleyAllen.com
  when they cheat and get caught,             civil war and it wasn’t the one now           events. I will pass on the comforting
  they get no more than a gentle              being fought in Iraq.This warning was         message sent by Jody for your benefit.
  slap on the hand.                           from President Abraham Lincoln and is         By the way, the surgery was a 100%
Source: Atlanta Journal Constitution          found in a letter to Col.William F. Elkins    success and all is now well. Jere Jr. was
                                              on November 21, 1864. However, it             back at work in a week and hasn’t
                                              could easily be a current warning for         missed a beat since. The following was
THE PRESIDENT WARNS OF AN                     today. We are experiencing a bloody           the reminder I received:
APPROACHING CRISIS
                                              civil war in Iraq, which is not only costly
                                                                                              A Song of Ascents. I will lift up my
  Most of us believe the President of         to the American taxpayers, and costing
                                                                                              eyes to the hills– From whence
the United States is in a position to         thousands of American lives, but I fear
                                                                                              comes my help? My help comes
know what is good for the people of           some large and politically powerful cor-
                                                                                              from the Lord, Who made heaven
our country and also to warn us when          porations are profiting greatly because
                                                                                              and earth. He will not allow your
dangers arise. Being the leader of the        of the war. Hopefully, our Republic is
                                                                                              foot to be moved; He who keeps
most powerful nation in the world             not being threatened in the manner
                                                                                              you will not slumber. Behold, He
carries with it a great number of respon-     being foreseen by President Lincoln. My
                                                                                              who keeps Israel shall neither
sibilities. One of them is to warn people     prayer is that we will survive the ill-
                                                                                              slumber nor sleep.The Lord is your
of dangers on the horizon that would          advised involvement in another
                                                                                              keeper; The Lord is your shade at
affect our country and its citizens           country’s civil war and get on with
                                                                                              your right hand. The sun shall not
adversely. The following warning was          solving our own problems at home and
                                                                                              strike you by day, nor the moon by
apparently based on knowledge                 abroad.
                                                                                              night. The Lord shall preserve you
acquired by a good man while serving                                                          from all evil; He shall preserve
as our President:                                                                             your soul. The Lord shall preserve
                                              XXIII.                                          your going out and your coming
  I see in the near future a crisis
  approaching that unnerves me
                                              MY CLOSING                                      in from this time forth, and even
  and causes me to tremble for the            COMMENTS                                        forevermore.
  safety of my country.As a result of                                                         Psalms 121:1-8
  the war, Corporations have been                Recently, my son Jere Jr. was sched-
  enthroned and an era of corrup-             uled to have surgery and all of our
                                                                                              Sometimes, we all need to be
  tion in high places will follow, and        family was greatly concerned because
                                                                                            reminded that God is sovereign and all-
  the money power of the country              there had been no warning signs of any
                                                                                            powerful. He is definitely in control of
  will endeavor to prolong its reign          problems and the surgery was of a
                                                                                            our lives and is available for us at all
  by working upon the prejudices of           serious nature. Jody Stewart, who is a
                                                                                            times – good and bad – and will never
  the people until all wealth is              local lawyer, and my son have been
                                                                                            let us down. The fact that God really
  aggregated in a few hands and the           friends since their grade school days.
                                                                                            loves all of us unconditionally and keeps
  Republic is destroyed. I feel at this       After hearing about Jere’s need for
                                                                                            His promises without fail is the most
  moment more anxiety for the                 surgery, Jody called me to make sure
                                                                                            reassuring message that any of us could
  safety of my country than ever              that we weren’t too worried. After the
                                                                                            ever receive. I have to be reminded of
  before, even in the midst of war.           call, he sent me a word of encourage-
                                                                                            that from time-to-time and I really
  God grant that my suspicions may            ment. Jody simply just wanted to
                                                                                            appreciate friends like Jody who take
  prove groundless.                           remind me that God is in charge of our
                                                                                            the time to do the reminding when it’s
  This profound warning, issued over          lives and offers support in times when
                                                                                            needed.
100 year ago, came near the end of a          we may be concerned over coming




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