The Senate on Wednesday confirmed John “Jack” McConnell to the U.S. District Court for the District of Rhode Island, voting along party lines, 50-44.

McConnell’s confirmation was made possible when 11 Republicans earlier joined the Democrats in a 63-33 vote to invoke cloture. Those votes should be seen as a statement on the confirmation process, that is, trying to dial back the partisan conflict that afflicts consideration of judicial nominees.

Sen. Lamar Alexander (R-TN), who voted for cloture but against confirmation, made the case this way:

[The] Senate is a body of precedent. One important precedent is that never in Senate history has a President’s district court nomination reported by the Judiciary Committee been defeated because of a filibuster, that is, because of a cloture vote. Once a nominee for federal district judge has gotten to the floor, the majority of senators have made the decision in an up-or-down vote.

Therefore, I will vote today for cloture in order to allow an up-or-down vote on the President’s nomination of John McConnell. Then, I will vote “no” on confirmation because I believe he is a flawed nominee.

Flawed is a gentle description. McConnell is probably the worst judicial nominee that President Obama has put forward.
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As reported below, Virginia Attorney General Ken Cuccinelli is the latest attorney general to hire private-sector attorneys to sue a company on a contingency basis. Unfortunately, it’s not only state attorneys general who allow profit-seeking trial lawyers to undertake the government’s business. City and county officials have done the same thing.

The most prominent example comes from the oft-bizarre government of Santa Clara County and its running mates in California. In 2000,  Santa Clara and nine other cities and counties retained Motley Rice and three other law firms to bring a lead pigment public nuisance action against a group of manufacturers. The retainer agreement specified that the government would “retain final authority over all aspects” of the litigation, an arrangement that is difficult to maintain in practice — “How’s the case going?” “Oh, good. I’ll fill you in later” — and deeply suspect on policy grounds. Indeed, the trial court held that a previous ruling in the well-known Clancy case (People ex rel. Clancy v. Superior Court, 39 Cal.3d 740) precluded the government from hiring lawyers on a contingency-fee basis.

The California Court of Appeal concluded otherwise, holding that the “control” language in the retainer agreements means that the outside lawyers are merely “assisting” the government in a subordinate role and lack any decision-making authority or control over the case. This July, the California Supreme Court upheld the appellate court’s ruling.

The manufacturers are now appealing the California ruling to the U.S. Supreme Court, and the National Association of Manufacturers and other business groups last week joined in an amicus brief in support of the appeal in Atlantic Richfield et al. vs. Santa Clara County et al. The amicus brief, available here, frames the discussion:

The Supreme Court of California held that govern-mental plaintiffs pursuing civil public nuisance prosecutions brought “in the name of the People of the State of California” may do so under a contin-gency fee retainer agreement with outside plaintiffs’ law firms in which the government entities agree to compensate the law firms by paying them 17 percent of any recovery. This brief addresses the following question:

1. Whether contingency fee agreements that give private prosecutors a direct, personal, and substantial pecuniary interest in the outcome of governmental prosecutions seeking to vindicate the sovereign’s interests in public nuisance cases violate the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution.

Yes, yes they do.

Others joining the brief are the American Chemistry Council, American Coatings Association, National Petrochemical and Refiners Association, Property Casualty Insurers Association, and the Public Nuisance Fairness Coalition. Filing on our behalf is the Houston office of Gardere, Wynne, Sewell LLP. For more background, see the NAM’s Manufacturing Law Center’s entry. We’ve blogged previously on the issue here.

The Senate Judiciary Committee today voted 13-6 to support confirmation of  John “Jack” McConnell to be a U.S. District Court Judge for Rhode Island.

McConnell is the Motley Rice partner and campaign contributor who, with the state attorney general’s office, orchestrated the state’s public nuisance lawsuit against paint manufacturers in the hopes of earning millions of dollars in contingency fees. The Rhode Island Supreme Court eventually threw out the suit.

Cornell University law professor William A. Jacobson has been following McConnell’s nomination. He reports, “The Most Important Judicial Nomination You Never Heard Of Set For Vote Today”:

At the hearing this morning, Jeff Sessions (R-Ala.) spoke at length in opposition to the nomination. Sessions mentioned numerous instances of McConnell and his firm rewarding politicians with campaign contributions after receiving state business, and how McConnell publicly rebuked the Rhode Island Supreme Court in very unflattering terms after the Court threw out McConnell’s landmark lead paint lawsuit (which was started when Whitehouse was Attorney General).

In defense of McConnell, Sheldon Whitehouse accused opponents of McConnell of attempting to “smear” McConnell. Whitehouse, as usual, changed the subject and engaged in a lengthy lecture making it seem as if anyone who opposed McConnell was against the jury system and our entire system of justice.

John Cornyn (R-Tx) stated that he opposed the nomination, taking Whitehouse to task (my paraphrase) because while it was not necessary to be pro-business to get on the bench, it was necessary not to be anti-business.

From the AM Law Litigation Daily, “Judge Dismisses Cleveland’s Suit Against Subprime Lenders“:

Perhaps Cleveland mayor Frank Jackson scored points with his base when he announced back in January 2008 that the city was suing 21 financial institutions. Likening the banks’ activity to that of organized crime, the city claimed the banks had created a public nuisance by fueling subprime mortgages that left certain neighborhoods devastated by foreclosures. But the city’s legal reasoning has not impressed Cleveland federal district court judge Sara Lioi, who dismissed the case with prejudice on Friday.

The city sought to recover damages related to the costs of “monitoring, maintaining, and demolishing foreclosed properties” and “the diminution in the city’s property tax revenues caused by the depreciating effect foreclosures have had on the affected homes and surrounding properties,” according to Judge Lioi’s opinion. But Judge Lioi found, among other things, that Ohio state law preempts the city’s public nuisance claim and that the allegations did not sufficiently show that the defendants were the proximate cause of the alleged damages.

The city’s suit, like so many others, was always political grandstanding more than cogent law. A block of Cleveland is blighted because Credit Suisse First Boston securitized mortgages? You might as well sue the Mayor of Cleveland for promoting policies that undermine the city’s tax base that pay for police and city services. You might as well sue the people who trashed the buildings and actually, you know, created the blight.

Twisting public nuisance law to serve political purposes or to tap a new source of revenue has proved a dismal failure, as Rhode Island and Ohio’s lead paint lawsuits demonstrate. Time for candidates and voters to hold the elected officials who brought the suits accountable.

(Hat tip, Walter Olson, Point of Law, with much background at this post.)

The right decision, Mr. Attorney General, abiding by the intent of the law and protecting the taxpayers in the process.

AG news release, “CORDRAY DISMISSES LEAD PAINT LAWSUIT”

(COLUMBUS, Ohio) – After careful consideration, Ohio Attorney General Richard Cordray today voluntarily dismissed the lead paint lawsuit filed by former Attorney General Marc Dann in April 2007. This lawsuit was pending in the Franklin County Court of Common Pleas against ten paint manufacturers and was focused on abatement of lead paint throughout Ohio.

“I understand and strongly agree that exposure to lead paint is a very real problem,” said Attorney General Cordray. “But I also know that not every problem can be solved by a lawsuit.” After assessing the law, facts, and adverse legal rulings in these types of cases nationally, the Attorney General concluded that those at risk – and Ohio’s economy – would be best served by focusing on how public/private partnerships can be enhanced to address any existing problems with lead paint exposure.

The Rhode Island Supreme Court last year dismissed the state’s lawsuit against paint manufacturers, and the city of Columbus, Ohio, quickly dropped its public nuisance suit afterward. We always suspected the winner of the AG’s race to replace the disgraced and resigned Marc Dann would get around to dropping the state’s lawsuit once the political environment settled down. And as we noted last month, “Richard Cordray was elected last November, and he bears no responsibility for having brought the suit. He would bear the responsibility for additional legal costs if he continues the suit in the face of clear evidence it will fail in the courts.”

So, good legal move and good political move, Mr. AG.

Just to be clear, the NAM CPSC Coalition’s petition (see this post) to the CPSC requested a delay in the effective date of the lead content standards in the Consumer Product Safety Improvement Act. The first paragraph in the letter from the CPSC coalition:

On behalf of the Consumer Product Safety Commission Coalition of the National Association of Manufacturers (NAM CPSC Coalition), and the undersigned parties to this letter (hereinafter referred to collectively as (“the Requesters”), we respectfully request the Commission to issue an immediately effective emergency rule staying the effective date of limits on lead content in accessible parts and components in children’s products established under Section 101(a)(2) of the Consumer Product Safety Improvement Act of 2008 (“CPSIA”) (Pub. L. 110-314). The length of the requested stay is 185 days, or until 90 days after final comprehensive rules and interpretative regulations implementing Section 101 are issued, if later. We do not think that when it adopted the deadlines in the CPSIA Congress realized or intended to effectuate a massive economic dislocation at a time when so many businesses are teetering on the edge of financial ruin and we are suffering the largest job losses in decades.

The CPSC instead issued “a one year stay of enforcement for certain testing and certification requirements”

For more commentary, see the Reform CPSIA website, http://reformcpsia.org/

UPDATE (8:50 a.m.): Also, as the Coalition’s analysis of the CPSC’s action notes: “CPSC’s actions grant no relief to manufacturers, retailers, thrift stores, resellers, distributors or others who have asked the CPSC for clarity regarding the definition of accessible components and exclusion of certain products or materials.  For example, if a manufacturer requests that a product be exempted by rulemaking, and ultimately it is not exempted, any such product sold would be subject to recall and the manufacturer could potentially be subject to class action litigation for selling banned hazardous substances.  Because these risks are too great, many manufacturers may not take these risks by continuing to sell products.”

UPDATE (9 a.m.): News coverage…

• Washington Post, “Officials Delay New Toy-Testing Standards“
• Seattle Post-Intelligencer, “Small businesses get reprieve on children’s lead law “
• Bloomberg, “US Panel Delays Requirement That Toys Be Tested for Lead “

The Rhode Island Superior Court today ruled that the state must reimburse manufacturers who were forced to pay for “co-examiners” involved in development of a lead-paint abatement plan, costs pushed onto the paint companies before the R.I. Supreme Court dismissed the state’s lawsuit against them.

The latest ruling is another rebuke to the state’s attorneys general (past and present) who dreamed up this idea of suing companies under an expanded “public nuisance” theory of law, trying to shake them down for billions of dollars. The AGs hired private attorneys on contingency to pursue the litigation against the manufacturers (Sherwin-Williams Co., Millennium Holdings LLC and NL Industries.)

From the news release issued by the three defendant companies today:

“The Court got it right,” said Charles H. Moellenberg, Jr., an attorney for The Sherwin-Williams Company. “These companies should not bear the costs of litigation that the Supreme Court said should have been dismissed at the outset ten years ago. This case demonstrates that state and local governments solicited by trial lawyers to file public nuisance lawsuits should recognize that these cases are not cost-free.”

In July 2008, in a long-awaited ruling, the Rhode Island Supreme Court rejected the Attorney General’s public nuisance lawsuit filed nine years earlier against former manufacturers of lead pigment used in residential paint, saying the case should have been dismissed at the beginning. After the jury verdict, the state filed a motion seeking costs of more than $1 million. Following the Supreme Court decision reversing the jury verdict, defendants Sherwin-Williams, NL Industries, Inc., and Millennium Holdings LLC, filed a motion seeking reimbursement of $242,121.21 in costs they paid to court-appointed co-examiners whose work began before the Supreme Court reversal.

In its ruling today, the Superior Court said: “With regard to the actions taken by both parties here, as a matter of law and fairness, the Court finds little merit in the State’s suggestion that the Defendants should bear the burden of paying the Co-Examiner expenses.” The decision added: “The State made a calculated decision to pursue a claim against the Defendants and voluntarily participate in the judicial system, and thus may not invoke sovereign immunity to shield it from the imposition of costs.”

For a copy of the decision,  click here.

The ruling should send yet another message to the attorney general’s office in Ohio, which is still litigating a public nuisance claim similar to Rhode Island’s. Richard Cordray was elected last November, and he bears no responsibility for having brought the suit. He would bear the responsibility for additional legal costs if he continues the suit in the face of clear evidence it will fail in the courts.

BTW, it was former Rhode Island Attorney General Sheldon Whitehouse — now a U.S. Senator — who brought the suit against the paint companies, and current AG Patrick Lynch who continued it.

More….
Providence Business Journal, “R.I. must bear cost of lead-paint plan”
Providence Journal, “RI to reimburse lead-paint companies”
Jane Genova, Law and More blog.

UPDATE (3:15 p.m.): Genova knows the lead paint litigation and players well, and she observes: “Bad news for the RI plaintiff. This motion represented only the first of several that will likely be filed by the defendants to recover other costs and expenses associated with the nine years of litigation. Surely, this will not sit well with the taxpayers of the state.”

Yes, it’s completely understandable that the news media are now, this week, jumping on the story about the new consumer product safety law threatening the economic viability of toy companies. (See here and here.) You’ve got the Christmas angle, the coming effective date of the law’s testing provisions, the toy manufacturers are making a PR effort, etc.

But you know, these objections were being raised during debate on the various consumer product safety bills that eventually became Consumer Product Safety Improvement Act of 2008. Many manufacturers pointed out that the lead-content restrictions bore little if any connection to health risks and that testing costs could prove prohibitive.

And the warnings proved prescient. The AP now reports, “Ho, ho, no: Toymakers say lead law harms workshops“:

SAN FRANCISCO (AP) — Worries over lead paint in mass-market toys made the holidays a little brighter for handcrafted toy makers last year, but now the federal government’s response to the scare has some workshops fearful that this Christmas might be their last.

Without changes to strict new safety rules, they say, mom-and-pop toy makers and retailers could be forced to conduct testing and labeling they can’t afford, even if they use materials as benign as unfinished wood, organic cotton and beeswax.

“It’s ironic that the companies who never violated the public trust, who have already operated with integrity, are the ones being threatened,” said Julia Chen, owner of The Playstore in Palo Alto, which specializes in wooden and organic playthings.

With respect, Ms. Chen, and we appreciate your frustration, but it’s not really ironic. It’s entirely predictable.

More from the St. Paul Pioneer-Press, “Local toy makers say new safety law is overreaching, unfair“:

As the owner of St. Paul’s Peapods natural toys and baby care store, Dan Marshall is all for keeping children safe.

But Marshall is afraid that a new law will put toy makers in the Twin Cities out of business. (continue reading…)

The Los Angeles Times reports on the damage the Consumer Product Safety Improvement Act is doing to the toy industry, “For some toy makers, rules to protect kids may be toxic“:

There’s no sign of an economic slowdown at Larry Mestyanek’s toy factory in Compton.

Whirring machines cut letters from the alphabet out of red, blue and yellow slabs of wood, making long rows of the letter E. Across the room, men with air filter masks sand toddler’s chairs that are lined up in rows as if expecting a convention of miniature leaders. The machines are so loud it’s hard to hear the rows of tiny wooden music boxes playing a disjointed lullaby.

But the bustle of activity belies what Mestyanek says is a real concern for his company, TAG Toys. A new federal regulation that took effect this week requires him to have all his products tested for lead paint by an outside firm, and Mestyanek says that could wipe out his small profit, forcing him to raise prices.

“I like the idea of safety, but this is just overreacting,” said Mestyanek, who employs 45 people. The tests for each of his 175 toys run about $2,000, he said. That’s a $350,000 hit to his bottom line, or close to what he makes in annual profit.

The Washington Post also covered the inimical effects of the legislation, as we blogged about here. But should anyone be surprised by the unintended consequences of the law? The American public has a tough time accurately assessing risks, and the fervor of the pro-regulation crowd often produces overkill. If jobs are destroyed for no real benefit, well…

Remember, parents: The safest toy for your children is the one you don’t buy.

And isn’t that sad.

The American Tort Reform Foundation’s latest “Judicial Hellholes” report adds a useful new chapter, a review of the unjust connection between politically ambitious state attorneys general and private attorneys they hire on a continency basis to sue business on behalf of the state. The short essay is entitled, “Dangerous Liaison.” Thesis:

[The] actions of a handful of state attorneys general also contribute to growing concerns in the business community about the ability of defendants to receive fair trials. This happens when what are essentially private lawsuits are filed, often in a plaintiff-biased local court, with the backing of the state government and a strong incentive to obtain the highest monetary award possible. It’s a system of legal kickbacks known as “pay to play,” wherein lawyers who contribute to the campaigns of the state’s highest ranking attorney can then get a contract for a piece of the action and, in some cases, develop the action themselves and get a go-ahead to pursue it in the state’s name.

Cited are examples of this undemocratic, abusive process in Mississippi, Ohio, West Virginia and Rhode Island, the last state being notable for the public nuisance suit against lead paint manufacturers, eventually thrown out by the state Supreme Court.

Having covered the R.I. lead-paint litigation, Jane Genova of the Law and More blog also follows cases involving ambitious politicians turning to contingency fee arrangements to sue business. She recently noted another case of private lawyers being hired on spec to do the state’s work in Pennsylvania. From “Contingency – Philly Judge allows it in govt case against BigPharma“:

The use of contingency in cases filed by government entities probably will eventually wind up in the U.S. Supreme Court – and sooner than later with the emboldened state attorneys general and plaintiff bar. 

The latest ruling on that controversial issue has been by a Philadelphia County Court of Common Pleas.  That state judge Howland Abramson gave his okay to the participation of private law firm Bailey Perrin Bailey of Houston in the lawsuit filed by Pennsylvania Governor Ed Rendell against Janssen Pharmaceuticals.  The firm is accused of off-labeling marketing of drug Risperdal. 

As John O’Brien reports in LEGAL NEWSLINE, the defendant objects to the use of contingency based on the argument of violation of due process.  O’Brien states, “The Due Process Clause requires Rendell to be guided by the sense of public responsibility for the attainment of justice, Janssen says. ‘The risk that Bailey Perrin’s financial stake in the outcome will affect government decision-making in connection with this action is real and serious.’”  A number of legal experts view the due-process argument as the strongest against contingency in cases filed by government entities.

Manufacturers are also closely watching a case in California where the county of Santa Clara used contingency fee attorneys in lead-related lawsuits against ARCO and Sherwin-Williams.