Circumnetting Asbestos Fraud, Henry Waxman and Champerty

By January 6, 2011Briefly Legal, Taxation

Good commentary recently in several legal areas of interest to manufacturers…

Writing at, Rich Samp of the Washington Legal Foundation covers the CSX Transportation Inc. suit against a Pittsburgh law firm. As we reported yesterday, the Fourth Circuit just revived the case, CSX v. Gilkison. From “Asbestos Lawsuits as Racketeering Scheme?

Some defendants have successfully targeted absestos trial lawyers for their shady behavior (a WLF Web Seminar last April highlighted one example), and victims of asbestos litigation abuse had great hopes for a federal racketeering suit railroad firm CSX filed in 2007.  Those hopes flagged, however, when in March 2008, a federal trial judge dismissed CSX’s Racketeer Influenced and Corrupt Organizations (RICO) Act and state fraud claims as barred by the limitations periods of those two laws.

This week, the U.S. Court of Appeals for the Fourth Circuit, at the urging of CSX and a score of amici, including WLF (our brief here), vacated the district court’s opinion on the limitations issue and remanded the claims for further proceedings.

Walter Olson writing at Cato@Liberty welcomes the change in the leadership of the House Energy and Commerce Committee, “The Fall of the House of Waxman“:

Some lawmakers can talk a decent game about lean ‘n’ smart regulation, but no one ever accused Waxman of having a light touch. (The 900-page Waxman-Markey environmental bill, mercifully killed by the Senate, included provisions letting Washington rewrite local building codes.) He’s known for aggressive micromanagement even of agencies run by putative allies: his staff has repeatedly twisted the ears of Obamanaut appointees to complain that their approach to regulation is too moderate and gradual. More than any other lawmaker on the Hill, he’s stood in the way of any meaningful reform of the 2008 CPSIA law, which piles impractical burdens on small makers of children’s products, thrift stores, bicycles and others.

Chicago Tribune editorial, Dec. 23, “Lawsuit Loan Sharks“:

The offense of “champerty” has a long history in the law, and don’t let the Medieval-sounding name fool you: It’s alive and well in 21st-century Illinois.

Champerty involves financing someone else’s lawsuit in exchange for a cut of the payoff. The practice has expanded for more than a decade, thanks to weak laws, aggressive lobbying and erosion in ethical standards. Nowadays, litigation money-lenders woo potential plaintiffs with TV ads inviting anyone who has been in a car accident to give a call. They make upfront loans at enormous interest rates, getting paid back only if the case succeeds.

To protect the public against predatory practices, those loans should be covered by the same laws that govern any other type of consumer lending. Instead, litigation lenders have been pushing a bill in Springfield that would give them carte blanche to pocket a huge share of judgments won by individual plaintiffs with only a pretense of regulation. The Illinois Senate has approved a version of it, and a House committee has reviewed it with an eye toward a vote in January.

The bill is SB3322, and it’s being heard today in the Senate House Judiciary Committee. Travis Akin, executive director of Illinois Lawsuit Abuse Watch, has more on the bill here. If it becomes law in Illinois, look for other state legislatures to consider similar bills.

Sounds like the “trial lawyer tax break,” doesn’t it?

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