the jere beasley report jun. 2003

i.CAPITOL OBSERVATIONS

A Crossroads For Alabama

The time has come for a completereform of the way we run and pay forstate government in Alabama. Therecan no longer be a waiting for “tomor-row” to come. This means no moreband-aid approach to problem solving.Our tax structure and the ways wespend our tax money are grossly unfair,inefficient, and inadequate and that iswell documented. I am convincedbeyond any doubt that the need forreform of the tax structure is moreurgent today than ever before. Thefiscal crisis that faces our state may bethe catalyst needed to bring about thelong overdue reform. I do not believethat any person in state governmentcan dodge the responsibility thatcomes along with their office when itcomes to this issue. Of course, therewill be roadblocks. The corporateworld generally does not want govern-ment to pose any threat to their ownspecial interests. However, it is hightime that the politicians put the peoplefirst and the special interests a distantsecond in their setting of priorities. Itappears that we finally have a Gover-nor who will do just that. I have tobelieve that a majority in both theHouse and Senate will do that which isrequired to put our fiscal house in order.

We have an abundance of richnatural resources as well as a work-force that is second to none. In spite of

this, we continue to lag behind the restof the nation in almost every economiccategory. The blame for those short-comings cannot be put at the feet ofordinary citizens in Alabama. Theyhave done their share and more overthe years. Instead, the responsibility formaking our government work is withthe people we elect. These officeholders must also take the blame whenwe allow things to get in the “mess” wecurrently have in Alabama. If our Gov-ernor and Legislature let this windowof opportunity slip by without solvingthe problems that have hindered bothpublic education and the operation ofstate government for years, it will be acrying shame. In fact, it will be inex-cusable. It appears that the Governoris willing to do his part. It will now beup to the Legislature to do its part. Iam confident that the majority of boththe House and Senate will do just that.

The Special Interest Groups

The special interest groups will haveto cooperate with the Governor andLegislature in the special session if thetask at hand is to be successful. I havetalked to a number of lobbyists and itappears that a few groups are not toohappy with the Governor and hispackage of bills. Hopefully, all specialinterest groups will put the state’sinterest first for a change and supportthe Governor. If this happens, our statewill surge ahead of all states in ourregion and move to the top of the economic ladder in short order. Thechoice for all of us is very clear – wecan either support the Governor andmove our state forward or we can

JEREBEASLEYREPORTJEREBEASLEYREPORTBeasley,Allen, Crow, Methvin, Portis, & Miles, P.C., Attorneys at Law JUNE 2003

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T H E

Arbitration

IN THIS ISSUEI. Capitol Observations . . . . . . . . . . . . 1

II. Case of the Month . . . . . . . . . . . . . . 3

III. Nursing Home Update. . . . . . . . . . . 3

IV. Legislative Happenings . . . . . . . . . . 7

V. Court Watch . . . . . . . . . . . . . . . . . . 8

VI. The National Scene . . . . . . . . . . . . 10

VII. Congressional Update . . . . . . . . . . 12

VIII. Campaign Finance Reform . . . . . . . 13

IX. The Corporate World . . . . . . . . . . 13

X. Business Litigation . . . . . . . . . . . . 16

XI. Product Liability Update . . . . . . . . 17

XII. Premises Liability Update . . . . . . . 22

XIII. Workplace Hazards. . . . . . . . . . . . 25

XIV. Transportation . . . . . . . . . . . . . . . 25

XV. Mass Torts Update. . . . . . . . . . . . . 28

XVI. Insurance and Finance Update . . . 30

XVII. Healthcare Issues . . . . . . . . . . . . . 33

XVIII. Predatory Lending Update. . . . . . . 36

XIX. Monsanto . . . . . . . . . . . . . . . . . . . 36

XX. Environmental Concerns . . . . . . . . 36

XXI. Arbitration Update . . . . . . . . . . . . 37

XXII. The Consumer Corner. . . . . . . . . . 40

XXIII. Tobacco Update . . . . . . . . . . . . . . 43

XXIV. Recalls Update . . . . . . . . . . . . . . . 44

XXV. Alabama Watch Update . . . . . . . . . 48

XXVI. Firm Activities . . . . . . . . . . . . . . . . 49

XXVII.A Tribute to My Friend-Jim Fyffe . . 50

XXVIII. Closing Remarks . . . . . . . . . . . . . 51

oppose him and continue to seeAlabama lag behind our sister states. Itis either sink or swim time – there canbe no middle ground – for the AlabamaLegislature. Those citizens and corpora-tions who haven’t paid their fair shareof taxes must step up to the plate anddo the right thing. Several special inter-est groups have a great deal of catchingup to do. Hopefully, the groups that arepaying for the attack ads on the Gover-nor will have the courage to go public,instead of hiding behind a “shamname,” and explain why they want ourstate to remain in the economic cellar.I have great difficulty in understandinghow any group could not want to dotheir fair share at this critical point inour state’s history.

The Special Session

Since this is being written at the startof the second week of the specialsession, it is too early to get a real goodreading on how things will go in thesession. Thus far, only a few Legislatorshave expressed their feelings on theGovernor’s package. However, groupslike Alfa and the large timber tractowners have expressed their opposi-tion to the tax increases that will affectthem. Hopefully, by the time you readthis, some real progress will have beenmade. Some of the bills have alreadyhad committee approval in the House.In any event, an unexpected develop-ment is the move by the Senate leader-ship – and specifically President ProTem Lowell Barron – to inject the con-troversial nursing home immunity billsinto the session. This could prove to bea disaster. It will be an interestingsession, to say the least.

Stealing Is Stealing – Even WithA Fountain Pen

Most of our readers won’t rememberthe notorious bank robber called PrettyBoy Floyd. However, I am sure all of ushave read about his exploits during thedepression years. He stole with a gun

and was a real bad fellow. A ballad waswritten several years ago that is quiteapplicable to the corporate stealing wehave experienced over the past fewyears.

Yes, as through this world I’ve wandered

I’ve seen lots of funny men;Some will rob you with a six-gun,And some with a fountain pen.—”The Ballad of Pretty Boy Floyd,”by

Woody GuthrieI have written and spoken volumes

about the attacks on our constitutionalright to a jury trial. We have also beenbombarded with stories of how manyin Corporate America have lied,cheated, and actually stolen from theirstockholders, employees, and even thegovernment. However, there is anotherform of stealing that may affect ordi-nary citizens just as much. An experi-enced jurist once made thisobservation: “Without a jury of one’speers, the system simply does not workthe way the authors of our Constitutionenvisioned. Justice is too important tobe left to judges and lawyers alone.Justice must remain in the hands ofordinary people.” Many of us are sittingback today and watching justice beingwrestled from the hands of ordinarypeople. Armed with form contractswith fine print,corporations are silentlystealing our rights. Many contractstoday have arbitration clauses that areliterally robbing individuals of theirrights to a jury. In fact, this robberyactually takes away the right to go tocourt at all.These clauses are buried inemployment contracts, purchase agree-ments for cars,mobile home purchases,repair invoices, loan agreements, allsorts of consumer purchases, and thelist goes on. Just look at the fine printin a credit card or cell phone agree-ment for example – you will find anarbitration agreement.

These are “mandatory” arbitrationclauses that are binding and final.Signers virtually forfeit all of their rightsto go to court, no matter how badly acompany may have cheated them.

Instead, consumers are permitted onlyto submit their claims to an arbitratorfrom a national arbitration corporation.These arbitrators do business con-stantly with the companies that usethem and are – predictably – extremelytilted toward them. Individuals have noright to appeal the arbitrator’s deci-sions.Arbitrations are generally held insecret, which serves to conceal badcorporate practices, and that is nevergood. Consumers have no power toinvestigate what the corporation did tothem or whether it was done to thou-sands of others. The corporation mayhave been in a thousand other arbitra-tions where customers had beencheated in the same way, and no indi-vidual,or the public,will be able to findthat out.

With the stroke of a pen, a disrep-utable corporation places its conductbeyond the reach of the civil justicesystem. Even if a consumer spots sucha clause in a contract, he or she has nopower to force any change in the agree-ment with a corporation. The con-sumer generally, as a practical matter,has no choice. The use of mandatory,binding arbitration in consumer con-tracts is nothing more than stealingwith a fountain pen. Stealing is steal-ing, and whether carried out with agun or a pen, it is still stealing. Some ofour politicians could be consideredaccomplices to this activity by theirrefusal to come to the aid of con-sumers. All too many in CorporateAmerica have done great damage totheir victims, much the same as didPretty Boy Floyd, just on a grander scaleand with their pen instead of a gun.

Ads Begin Against Riley’s TaxPlan

The opposition to the Governor’s$1.2 billion tax plan started with theAlabama Coalition Against TaxIncreases running TV ads in at leastHuntsville, Birmingham, and Mont-gomery. The ads, which call the gover-nor “Billion Dollar Bob,” urge taxpayers

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Jere Beasley 3ATTORNEY AT LAW

CONSUMERREPORTwww.beasleyallen.com

to try to stop his proposals. Tuscaloosabusinessman Stan Pate boasted to theAssociated Press that he was amember of the coalition. According toa report by AP, the group had initiallypurchased about $31,000 in televisiontime. Pate is obviously fronting for afew special interest groups that areafraid to put their names on the ads.The ads sure do smell like the work ofSiegelman confidant Joe Perkins. Inany event, regardless of who put themon the airways, the ads are in verypoor taste and probably are helpingthe Governor, rather than hurting him.

II.CASE OF THEMONTH

Our firm recently settled a wrongfuldeath action against Columbus PaperCompany, Inc. (COPACO) for$5,988,000. The tragic lawsuit aroseout of a 2-vehicle collision, whichoccurred on August 19, 2002, onAlabama Highway 169 in Lee County,Alabama. Mrs. Karla Willis, a 45-year-old lady from Eufaula,Alabama, was onher way to Auburn for an appoint-ment. While there, she planned to visittwo of her children, one a teacher andthe other a student at Auburn Univer-sity at the time. Unfortunately, a 2002Freightliner straight truck driven by aCOPACO employee was also on thathighway, having made several deliver-ies that morning. The driver of thetruck was headed back to Columbus,Georgia, to pick up another load. Thetruck was a van type, approximately26 feet long.

As the COPACO driver approachedthe Willis vehicle, he ran off thehighway onto the right shoulder, strik-ing a mailbox. As he attempted tocorrect the problem, the driver lostcontrol of the truck, crossed the cen-terline into the northbound lane oftravel, and struck Mrs.Willis’ car, eventhough she was completely off thehighway. After the initial impact, Mrs.

Willis’ car was pushed backward,turned clockwise, and was struck asecond time by the COPACO truck.Mrs. Willis, who was trapped in thevehicle, suffered severe, life threaten-ing injuries. She subsequently died inthe hospital. This violent crash causedthe death of this fine lady, who was agood wife and mother, and who justhappened to be in the path of aperson who really shouldn’t have beendriving a truck that day. Mrs.Willis wasa young, active, and extremely popularlady who worked at St. James Episco-pal Church in Eufaula. Everybody inEufaula who knew Mrs. Willis lovedher and without a doubt she will besorely missed. Her death will leave avoid, not only in her family, but in theentire community.

The state trooper who investigatedthe crash concluded that the COPACOdriver most likely fell asleep whileoperating his truck, causing him tolose control. According to thetrooper’s investigative report, thedriver did not even remember leavingthe roadway. The driver admitted tohaving taken medicine on the day ofthe collision and cold and sinus med-ications were found in his truck. Thedriver’s medical records, which weobtained, revealed that he had beentreated for bronchitis a week beforethe collision. He had been treated foracute bronchitis and was given med-ications to take. At that time, just daysbefore the incident, he was complain-ing of fatigue, fever, chills, and abnor-mal activity levels. At the time of thecollision, the driver was taking medica-tion, including a new antibiotic pre-scription, an antihistamine, a nasalspray, and prednisone. His medicaltreatment started just 14 days beforethe collision when he was treated forfatigue and weakness. Clearly, basedon our investigation, this driver had nobusiness operating a large truck on theday of this collision. That was the faultof COPACO, his employer. In additionto being allowed to operate a largetruck while on medication and falling

asleep, this driver was not experiencedin driving large trucks. His work expe-rience was as a nursing assistant for anumber of years and only drove adump truck for a short time beforegoing to work for COPACO.

Julie Beasley of our firm, along withJimmy Calton, and Jim Calton, Jr. fromEufaula, represented the Willis familyin this case. I helped out some duringthe settlement negotiations. This was aprime example of a corporation allow-ing persons to operate large trucks onthe highways of this state withoutproper training and supervision. Theresult of COPACO’s wrongdoing in thiscase was the tragic death of an inno-cent victim. Our prayers go out to thesurviving family members.

III.NURSING HOMEUPDATE

The Senate Battle Carries Over

Unless President Pro Tem LowellBarron and his nursing home buddiesare able to force the nursing homebills through during the specialsession, they will be back when theregular session reconvenes on June9th. In that event, the State Senate willresume its struggle with the nursinghome so-called “pool bill” when itreturns to work. The Senatorsadjourned on May 15th withouthaving debated the bill on the floor,which is a small win for the residentswho have to be confined to nursinghomes in our state and for Alabama cit-izens generally. However, because ofSenator Barron’s intense interest inpassing the immunity bill for his“buddies” in the nursing home indus-try, the battle is far from over. Lowelland I have been friends for a numberof years. In fact, I have representedhim in a civil lawsuit when he suedAlfa. However, I have been most disap-pointed in Lowell’s involvement in this


important legislative fight. It is difficultto understand how Lowell could nowpossibly want immunity from lawsuitsfor the nursing home industry. Heclaims that his motives are aimed atsaving the Democratic Party. If that istrue, his salvation plan is ratherunusual. I always thought the Democ-ratic Party was the party of the people– not that of the rich and powerful –and that one of its responsibilities wasto protect the elderly from abuse,neglect, and mistreatment.

As we know, nursing homes inAlabama already have tremendous pro-tections and advantages over residentsin facilities who are abused, neglected,or mistreated by the nursing homes.When these victims have to file law-suits – they start with two strikesagainst them. This is because of twospecial laws passed by the prior Legisla-ture. The first is the prohibition againstdiscovery of prior incidents of wrong-doing of a like nature. The second isthe fact that a victim can’t sue anursing home for hiring an incompe-tent employee. When you considerfurther that Alabama nursing homesrank at or near the bottom in all areasof concern for residents, the pushing ofthese immunity bills is just plain wrongand can’t be justified. There is also alaw in place that puts an unreasonablylow cap on punitive damages thatalready covers nursing home lawsuits.

Finally, the Litigation AccountabilityAct, which prohibits the filing of law-suits without merit (frivolous lawsuits)in Alabama, has been on the books foryears. This Act also applies to lawsuitsfiled against nursing homes. That iswhy there have been no lawsuits filedagainst Alabama nursing homes thatcould be labeled “frivolous.” What moreprotection do they need? What do thenursing home bosses have to hide? Itmay have something to do with eitherthe nursing home owners’ own liabilityinsurance company, which is located inthe Cayman Islands or with all of theirrelated companies that sell goods andservices to their own nursing homes

without having to take competitivebids. To this day,not one Senator to myknowledge has any information oneither the insurance company or therelated companies. Any person whodoubts this can simply ask their ownSenator for information on either ofthese two significant matters. What-ever the reasons for these unpopularbills being pushed so hard by a few inthe Senate, those reasons must be verystrong and compelling.

Nursing Home Bills IntroducedIn Special Session

Since the nursing home bills wereintroduced in the special session onthe first day, I will discuss them here.As all Alabamians now know, we face afiscal crisis in Alabama that threatensthe very fiber of our State Government.Both public education and most of allthe functions of State Government arein serious peril. At this point in time,correcting the fiscal problems has to bethe top priority for the Governor andfor each member of the Legislature. Iwas shocked to learn that the nursinghome industry has now placed thespecial session in jeopardy by introduc-ing two of their ill-conceived immunitybills in the special session. It is incon-ceivable that the nursing home ownersand their cadre of lobbyists would putthe entire session at risk and jeopardizeGovernor Riley’s reform package in anarrogant effort to push their ownselfish interests. It is my belief that theteam of “Perkins, Fine, and Barron” willtry to use the Governor’s package insome manner to force passage of thenursing home bills during this session.Hopefully, I am wrong on that score.However, by the time this is read, Isuspect we will all have an answer –the bills will have either passed or beendefeated.

I sincerely hope that members of theSenate will not participate in this effortby the nursing home bosses. When anoverwhelming majority of Alabamapeople do not believe that the nursing

home bills should pass in any form, it isbeyond comprehension to see howtheir introduction in the State Senatecan do anything but hurt the chancesof solving our “fiscal mess.” If theSenate leadership plans on holding theRiley package hostage in hopes ofpassing the nursing home bills, it willdo more to destroy the DemocraticParty than you could ever imagine. Ifthat is the plan, people certainly won’tunderstand or tolerate it back home. Ifthe nursing home industry and theirlobbying team destroy the specialsession, it will indeed be a sad day forAlabama. For the good of our state, Isincerely hope and pray that this effortby the nursing home industry will berejected. Government has a duty toprotect two groups of people in ourstate – the elderly and the very young –and that is a given fact. To mistreat,abuse, or neglect either group is justplain wrong. To protect those who areguilty of such conduct is even worse. Idon’t believe that responsible membersof the Senate will be a party to passingbills that will result in “hurting”the elderly.

Good Nursing Home Care CostsLess Than Poor Care

A recent study sought to answer thequestion of whether good nursinghome care costs less than poor care.This study was conducted byresearchers from the Sinclair School ofNursing at the University of Missouri.The results of the study were recentlypublished in Nursing Outlook, the offi-cial journal of the American Academyof Nurses. The researchers found thatgood nursing home care actually costsless than poor care. The researchersrandomly selected 90 nursing homes tobe the subject of their initial study. Thestudy revealed that good quality carecosts $13 per resident per day less thanpoor quality care. For a 120-bed facil-ity, this would result in a $600,000annual saving compared to facilitiesthat provided poor quality care.

To confirm the findings of this



smaller study, the researchers examinedstate-wide nursing home data by audit-ing Medicaid cost reports from allnursing homes in Missouri to analyzedirect patient care costs and total costs.The researchers compiled clinical infor-mation and quality indicators fromminimum data sets prepared by thenursing homes. The researchers usedthis information to classify the nursinghomes as having consistently providedgood resident care or poor residentcare. The outcome, not surprisingly,revealed a significant difference in thecost of care between the two groups.The nursing homes that consistentlyprovided good quality care had a totalmedian cost of $85.35 per resident day,as compared to $92.31 per resident dayfor facilities classified as providing poorquality care. The statewide researchrevealed an added cost of $400,000 peryear in a 120-bed facility, which pro-vided poor quality care. I am not sur-prised by the results of this study. Ithink anyone who operates a businesswould agree that it is always cheaper toprovide good quality services. Moreimportantly, in the nursing home arena,providing good quality care results inpositive outcomes for our elderly citi-zens. This study confirms the need forone of the primary functions of thejury system in our country, which is tomake the cost of “doing bad”more thanthe cost of “doing good.”

State Department InvestigatingDeath At Nursing Home

The Alabama Department of PublicHealth is investigating a Birminghamnursing home after an 84-year-oldwoman fell out of a window on EasterSunday. Mrs. Juanita O. Cantrell ofHueytown fell from a second-floorwindow around 11:00 p.m. The ladydied instantly. It was reported that aguard found her. Mrs. Cantrell, a grand-mother, was a resident at the CivicCenter Health and Rehabilitation facil-ity in Birmingham. Northport HealthServices Operations LLC, based in

Tuscaloosa, owns the facility. NormanEstes, who has spent most of the lasttwo months in Montgomery pushingthe nursing home immunity bills, isPresident and Chief Executive Officerof the company. A spokesman for thenursing home issued this statement:“We do confirm that there was a deathat our facility Sunday, April 20th. Theappropriate authorities have been noti-fied.Without the explicit consent of thefamily, we are unable to release anyadditional information at this time.”However, it has been rumored that Mrs.Cantrell jumped. The family does notbelieve the resident died because shejumped out of the window. Whethershe jumped or fell, it is shocking that anursing home facility would haveunguarded windows on an upper levelfloor. It is equally shocking that thelady was unsupervised or monitored.

The State Health Department hasconfirmed that it is investigating thefacility, but would not say if the investi-gation centers on Mrs. Cantrell’s death.“We are conducting an investigation atEstes Civic Center, but it’s not con-cluded. I can’t tell you anything about ituntil it is concluded,” according to RickHarris, Director of the Bureau of HealthProvider Standards at the HealthDepartment. Estes operates 22 facili-ties in Alabama. Three facilities are inNorthport, one is in Moundville, andfour are in Birmingham.

State Finds Fault In Death OfNursing Home Resident

Texas authorities are pursuing civilpenalties against a Richland Hills,Texas,assisted living center after anAlzheimer’s patient who could barelywalk escaped and later died after wan-dering in traffic.Officials with the TexasHuman Services Department reportedthat they would refer the case to theTexas Attorney General’s office afterfinding that the Alterra Clare BridgeCottage was “grossly negligent.” Thisrequest was made, not only on behalfof the deceased patient’s family, but

also on behalf of other patients. Theother eleven patients were left alonewhile the only two attendants on dutycared for the dying woman in thestreet. Even though the problems thatled to the February death have sincebeen corrected, state officials will seekpenalties because of the “egregious”nature of the death. The Alzheimer’spatient crawled out a window andwalked nearly a block away from thecenter about four hours after she hadbeen transferred from another facilityowned by Alterra.According to reports,the lady “had a slow gait” and “couldbarely walk.” Officials at the first facilityhad informed those at the RichlandHills Center that the resident had to be“redirected at least 50 times a day” toprevent her from leaving.

The following information was con-tained in the report (the resident wasreferred to as “Resident A”):

The facility failed to ensure that staffwas knowledgeable of Resident A’shistory of elopement.The facility failedto ensure that staff conducted elope-ment drills.The facility failed to ensurethat staff conducted searches for resi-dents when warning alarms sounded.The facility failed to replace windowdevices after remodeling to deterelopement.As a result of the facility’sfailures, Resident A eloped from a facil-ity window, was hit by a car and sus-tained fatal injuries.

The center’s staff did not fullyapprise Kemp’s family of the stateguidelines, nor did the staff have thefamily sign an admission agreement,according to the report. A registerednurse at the facility told state investiga-tors that one of her responsibilities isto assess patients before they move tothe facility. Neither the lady nor herfamily had been assessed before shewas admitted.

The department report also criti-cized the facility because no employeeswere watching the other residentswhile the two workers cared for thedying resident.The nurse told authori-ties that all of the patients in the facility


were flight risks because of theirdementia.The report said “the failure toimplement protective measures afterthe incident involving [Kemp] consti-tuted a threat to the health and safetyof the 11 remaining residents.”This wasnot the first incident in which a patientleft the Richland Hills facility.Accordingto company officials, some patientsactually walked out after the buildingopened in January 1999. The alarmsystem was not working then.The facil-ity has also been investigated in con-nection with complaints of neglect inAugust 2001 and in August 2002. Thecompany has more than 20 assistedliving centers in Texas.All the centershave had complaints of some nature.

Arkansas Nursing Home VerdictReduced On Appeal

On May 1, 2003, the Supreme Courtof Arkansas reduced a $78 millionverdict in a nursing home case to $26million. The case had been filed againstAdvocat, Inc., which is the owner of 64nursing homes in the southeast UnitedStates and Canada, and Rich MountainNursing and Rehabilitation Center.Margaretha Sauer had been a residentat Rich Mountain for five and a halfyears before she died on July 19, 1998,at the age of 93. She died from severemalnutrition and dehydration. Accord-ing to the nurse’s notes at Rich Moun-tain, at the time of her death, Ms. Sauerhad lost 15 pounds in the last monthand was in need of a feeding tube. Shehad severe bedsores on her body, whichdeveloped from lying in urine and feces.She also suffered from contractures andshe had a urinary tract infection.

At the conclusion of the trial, whichlasted 8 days, the jury was asked to con-sider claims for ordinary negligence,medical malpractice, breach of con-tract, and wrongful death. The juryreturned a verdict of $78 million forMs. Sauer’s Estate on all four counts.After all post-trial motions were denied,the defendants appealed, arguing thatboth the compensatory and punitivedamages were excessive. The evidence

that the Supreme Court reviewed onappeal was shocking. Surveys from theoffice of Long Term Care were repletewith statements saying there was notenough help in the nursing home tofeed, bathe, or clean residents. Therewas evidence of “false charting” bynursing home staff to show more staffthan actually present. In addition, therewas damaging testimony from severalwitnesses. Faye Chamberlain, a formernurse assistant at the home, hadwritten a letter to President Clinton in1997 about the nursing home’s inadequa-cies. Mark Hemingway,a former regionalvice-president of the defendant, testifiedto a change in corporate philosophy in1996,stressing “profits over care.”

Testimony further revealed that attimes, there was not even enough hotwater for the patients to take showers.Ms. Sauer was often found wet withurine, without being changed for fourhours at a time. She had pressure soreson her back, lower buttocks and arms;and was found on several days sitting inher own waste. At times, the poor ladyhad no water pitcher in her room. Tes-timony was that Ms. Sauer did notreceive a bath for weeks, due to shortstaffing. She was described as “alwaysthirsty” and the nurse’s notes indicatedthat she was heard moaning andcrying. In light of this testimony, theArkansas Supreme Court concludedthat the reprehensibility of the defen-dant’s conduct was very high.However, the court held that the com-pensatory and punitive damagesawarded by the jury in this case wereexcessive. As a result, the damageswere reduced to $26 million. This casedoesn’t involve conduct of a single, iso-lated fact situation where a residentwas abused, neglected, and mistreated.Unfortunately, this type situation is alltoo common in our nursing homes allover the country, including Alabama.

Another Arkansas Trial StartsUp With An Alabama Connection

Covington Court Health and Rehabil-itation Center and Northport Health

Services are being sued over the deathof a female resident of the Fort Smith,Arkansas, nursing home. There is anAlabama connection to this case sinceTuscaloosa-based Northport owns Cov-ington Court. The lawyers for the plain-tiff are contending that the nursinghome failed to provide adequate carefor the elderly female victim simplybecause the company was more inter-ested in saving money than caring fortheir residents. The unfortunate ladywas a resident of the nursing homefrom February 2000 until July 2000.During that period of time, it is allegedthat the nursing home was consistentlyunderstaffed, which resulted in sub-standard care. This lady died from aninfection in her blood. It was allegedthat bedsores, caused by a failure to beturned, caused the infection, whichresulted in her death. This nursinghome is owned by Norman Estes, whois working hard in Alabama on thenursing home immunity bills.

Georgia Nursing Home Residents Escape Caps

The most recently completed battlein an epic war that has become all toofamiliar was waged recently in Georgia.The combatants know one anotherwell and have fought numerous pastbattles worthy of recordation in myth.The proverbial role of “David” wasplayed by Georgia elderly citizens,along with other citizens of consciouswho care about the plight of seniors.Their antagonist, assuming its usual roleof the salacious juggernaut “Goliath,”was played by some very tough andwell financed folks in the nursinghome industry and their tremendousnumber of persons on their lobbyingteam. Clearly, the economic and influ-ential giant in this battle, and the defi-nite favorite by the odds makers goinginto the fight, was the deep-pocketedand powerful nursing home industryand their highly paid lobbyists. Thank-fully, the outcome of this epic battlewas no different than that described inthe Bible. Good prevailed as it should



have. The Georgia Legislature, to theircredit, refused to be conned by thenursing home industry.

IV.LEGISLATIVE HAPPENINGS

The Special Session

The Alabama Legislature has anopportunity to go down in history asthe body that pulled our state out ofthe fiscal bog that is literally destroyingour public educational system and iscurtailing our state’s ability to performother essential functions of govern-ment. In fact, the demise of the state’seconomy can be attributed to ourband-aid approach to problem solvingby past Governors and Legislatures. AsI was riding home on May 19th, thefirst day of the session, I heard a radioad attacking Governor Riley. It was atypical attack by a special interestgroup hiding behind a shadow groupwith a catchy title. I have since seenthe TV ads of a similar nature. With thefiscal crisis facing our state being sograve, it is difficult to understand howresponsible groups could attack theGovernor for working to solve ourstate’s problems. It may develop thatBob Riley might wind up with a newcircle of friends, folks who love ourstate, and who are willing to sacrifice alittle to reform the way governmentworks in Alabama. When you considerthat some in Alabama who can cer-tainly afford to pay more taxes, andwho haven’t paid their fair share in thepast, are now mad with the Governor.One has to wonder what their plans forAlabama are. It is difficult to under-stand how these folks can fuss at a Gov-ernor who is trying to “fix” theproblems. The citizens who have beenat the low end of the economic rung inour state have been saddled with thetax burdens for years. It is high timefor them to get some relief. It is also

high time that we get down to the busi-ness of finding permanent solutions toour fiscal and economic problems inour state.

Another Critical Need ForReform

There are currently some 565 indi-viduals who are registered to lobbymembers of the Alabama Legislature ona regular basis. Interestingly, this is fourlobbyists per Legislator. That mismatchmay be a contributing factor, if not theroot cause, of our state’s current fiscal“mess.” Unfortunately, the laws regulat-ing the activities of these lobbyists areextremely lax in our state. There havebeen a number of editorials in newspa-pers around the state encouraging theLegislature to make these laws muchstronger. Putting some teeth in thelaws regulating lobbying activities cancertainly do no harm. In fact, I believeit would greatly improve the overallperformance of our Legislature.Anyone who has observed the Legisla-ture in action realizes that the lobbyistsare extremely powerful and influential.Not surprising is the fact that thespecial interest groups that hire andpay these men and women demandstrict performance by their lobbyteams on a day-to-day basis. Of the 565lobbyists, I suspect you can count thosewho look out for the interests ofAlabama consumers on your 10 fingersand that may be a stretch. This mayaccount for why our state is noted forhaving such “sorry” consumer protec-tion laws and why mandatory, bindingarbitration is still a tremendousproblem for Alabama consumers.

It should be noted that lobbyists andtheir employers in 39 states, includingAlabama, spent almost $10 millionwining and dining and influencingState Legislators during 2002. That isthe amount that was reported. Isuspect the real total is much higher.Unfortunately, many details about howthose dollars were spent remainhidden from public view. A study by

The Center For Public Integrity made adetailed study of lobbying activities anddisclosures in all the states. Few statesdid well in this study. Alabama certainlydid not do well and that comes as nosurprise. The study clearly underscoresthe definite need for a reform of theentire lobbying system. When you con-sider that in Alabama the lobbyists areconsidered the fourth branch of gov-ernment, the necessity for stronger reg-ulation is most evident.

Plenty Of Work Left

When the Legislators return to workon June 9th for the remaining 12 daysof the regular session, there will be agreat deal of important work left forthem to do. I am told the Senate leader-ship will likely have two bills on thetop of their agenda when they returnand those are the nursing home immu-nity bills (if not passed in the specialsession) and the pay day loan bill. Ifthat is true, it will be a sad commentaryon how the Alabama Senate is nowoperating. There are too many impor-tant matters that should be dealt withto put unpopular special interest legis-lation at the top of their agenda. Sincethere is almost no support for either ofthe bills referred to above, it is a realmystery as to why a few Senators are socommitted to passing these anti-con-sumer bills. In any event, a great deal ofimportant matters remain to beaddressed. One thing that should happenwould be to kill Alfa’s corporate farmimmunity bill. There are other bad billsthat should be killed and obviouslythere are a number of good bills thatshould be passed. It should be notedthat the state’s budget will still have tobe dealt with – either in the regularsession or in another special session.So, without question, there is a greatdeal to do in the remaining 13 days ofthe regular session.


A Message To The GovernorAnd To Our Legislative Leaders

I join with a number of consumeradvocates and urge the Governor andAlabama Legislature to put helpingpersons who haven’t had the sameopportunities as some of us have hadin Alabama at the top of their legislativeagenda. Tax reform and constitutionalreform, along with the upgrading ofpublic education, should be on thisagenda. Passage of strong consumerprotection laws, the upgrading of theAlabama Insurance Department, andregulation of all predatory lendersshould be on the agenda. A reader ofthe report sent me a passage from theOld Testament that all Legislatorsshould read.

“Woe to those who make unjustlaws, to those who issue oppressivedecrees, to deprive the poor of theirrights and withhold justice from theoppressed of my people, makingwidows their prey and robbing thefatherless.” Isaiah 10:1,2

V.COURT WATCH

The Tort Reform War Rages On

Tort law battles are now being foughtin the nation’s capitol and in one-thirdof the states in the United States. Sincethe fights are being taken to both theState Legislatures and to Congress it hasto be taken as the most serious assaulton the court system ever. Apparently,the U.S. Chamber of Commerce hasbeen chosen to lead the charge for thetort reformers. The chamber some-times offers not just “advice,” but alsolots of money and so-called experts tohelp mislead politicians and the publicon the tort reform issue. Individual tortreform packages vary widely from stateto state. The centerpiece of all pack-ages, however, is a cap on damages. Wehave found that restrictions on noneco-

nomic damages such as pain and suffer-ing are hard for the tort reform groupsto justify. It is even more difficult tosell the idea of capping wrongfuldeath. I understand that tort reformpackages have been introduced in 17states so far this year.There is no tellinghow much money has been spent onpushing tort reform legislative pack-ages over the years. Some observersput the figure in the hundreds of mil-lions. When you go back for 12 years,during which time the now infamousKarl Rove has been driving the tortreform train, the number may exceed$1 billion. Where does all of thatmoney come from? The tobacco, insur-ance, drug, and automobile industriesare certainly suspects.

While the tort reformers had victo-ries in Pennsylvania,Nevada, and Missis-sippi last year, things haven’t gone aswell for them this year. As you know,President Bush has called for damagecaps and an end to joint and several lia-bility on the national level in medicalmalpractice cases. The President men-tioned the need for tort reform in hisState of the Union address in January.Supported by the drug industry, insur-ance companies, and a good number ofthe “bad guys” in Corporate Americathat had long pursued changes in thecivil justice system, the tort reformerslooked to 2003 with high expectations.However, ordinary folks have figuredout that the tort reformers could careless about them and are only interestedin profits for Corporate America. Thedestruction of the court system willultimately lead to a weakening of ourcountry simply because without thecourts, we are much like the countrieswhere there are no private rights. If agroup wanted to take over our govern-ment, the first thing they would do is todestroy the court system.

The Effect Of A Cap On A RealVictim Of Wrongdoing

The tort reformers lose sight of thefact that their uncaring and callous

attempts to pass oppressive tort reformactually hurts “real people” on a recur-ring basis. Putting caps or limits ondamages is always their main objective.Sometimes it takes a “shock”to see howtruly unfair putting caps on folks canbe. A prime example of how tortreform and caps don’t work for victimsis found in a Virginia case. A jury in Vir-ginia awarded a National Science Foun-dation employee Craig Allen $6.5million in a medical malpractice case.Unfortunately, Mr. Allen will onlyreceive a fraction of that award after itis automatically reduced by the state’sstatutory cap on medical malpracticedamages.Allen suffered from an inflam-mation of the spine that his doctorfailed to diagnose.The doctor assumedthat the tingling he complained of wasa side effect of the anti-depressant Mr.Allen was taking. The defense did notcontest the $1 million in projectedincome the 33-year-old would lose, nordid they contest the $2.5 million inmedical expenses to be incurred in thefuture. Under the Virginia law, that $3.5million, plus $3 million more added bythe jury, will be automatically cut to$1.55 million.The Virginia tort reformlaw imposes a cap of $1.5 million on alldamages in a medical malpractice case.That limit, set in 1999, increases by$50,000 each year until 2006. Afterthat, it increases by $75,000 annuallyuntil the cap reaches $2 million. Moststates that limit damages in such casesuse so-called “soft caps” – ones thatlimit noneconomic damages or puni-tive damages only. So, in this case, thevictim would not even be compen-sated for his medical expenses andwould receive nothing for lost earn-ings, pain and suffering, and mentalanguish.

This case is a prime example of theunfairness of the Virginia statute and ofcaps on damages generally. Capspunish the people who are injured theworst. Historically, large verdicts inmedical cases are the exception ratherthan the rule. That is true in Virginiaand certainly is the case in Alabama.



According to observers of the Virginialitigation scene, the damages cap hasn’thad a chilling effect on case filings,prosecutions, awards or settlements.Asyou might expect, however, litigatingcases under the cap does change trialstrategy.All of the defense’s force goesinto disproving liability or causation. Inmost cases many defendants don’t chal-lenge damages at all. The most egre-gious cases go to trial and those caseswill always get reduced. The wrong-doer knows going in that the victimwill wind up being punished again.The result of putting caps on damages– as was done in Virginia – places thefinancial burden of damages caused bywrongdoing, regardless of how bad theconduct is, on the victims and theirfamilies. Only the most callous in oursociety would allow that to happen.

Court-Sanctioned Secrets CanKill

Last month, we reported on theGeneral Motors document that hasrevealed a deep,dark secret concerninguntold deaths resulting from a defec-tive vehicle. Since last month, we havebeen asked lots of questions aboutwhat GM has done. There can be littledoubt but that the C/K pickup truck isa dangerous vehicle, which is prone tofiery crashes and explosion. More than700 people have burned to death infires triggered by C/K crashes since thetruck was introduced in the 1970s. GMkept the public from knowing anythingabout the massive problem. Thecompany spent years paying off victimsand their families through secret courtsettlements meant to ensure that thedetails of those cases never emerged.

GM is hardly alone in trying to keepthis sort of negative information secret.Tire makers and drug companies,among others, have also settled claimsagainst their products using strategiesthat aim to ensure that the publiclearns little about the claims — not thesettlement amounts, not the underlyingfacts, not even, if possible, that a lawsuit

was brought at all. Pfizer, for instance,secretly settled dozens of lawsuits inconnection with its Bjork-Shiley heartvalves, which were used by 50,000patients before the product was finallyrecalled in 1986. Firestone recalled 6.5million tires in August 2000, but onlyafter eight years of accidents anddeaths led to lawsuits that the companyquietly settled. Firestone launched therecall only after details from one ofthose court files leaked out.

The public is rightfully alarmed bythese secrecy strategies because lack ofknowledge by the public increases thedanger to those who may still be usingor considering a defective product.There is also a need with informationthat the law otherwise protects, liketrade secrets. Secrecy is fine whendealing with personal matters, such asin a divorce. Secrecy is clearly wrongwhen people remain exposed to thesame danger that harmed the victim ina lawsuit. The laws in every stateshould be amended to bring aboutsome meaningful changes in the area ofsecrecy:

Courts should not seal their own fileswithout compelling justification. Courtfiles and courtrooms must be open tothe public and the news media.

Judges should never be allowed toseal information that might reveal anongoing public danger. Preventingharm is always more important thananyone’s interest in secrecy.

Defendants should be barred fromconditioning settlements on a plain-tiff’s blanket promise of confidentiality.

Confidential settlements should bebanned outright in product liabilitycases and in cases involving corporatefraud.

Unfortunately, victims of corporatewrongdoing are often forced to acceptsecrecy in exchange for a settlementthat is badly needed. They are forced toput their own needs and interestsahead of the public’s interests.The onlyway to stop that from happening is toforbid it. American corporations shouldput the safety of their customers ahead

of profits and should warn the publicof potential dangers and hazards. Suchhopes have thus far, however, provedmisplaced. For this reason, it is up tothe courts and Legislatures to protectthe public from the strategies thatmake secrecy possible, for the lowercourts to utilize on punitive damagesawards.

The U.S. Supreme Court SendsFord Damage Cases Back ToThe States

The U.S. Supreme Court has orderedlower courts in California and Ken-tucky to reconsider two multimillion-dollar judgments against Ford MotorCo. The giant automaker had chal-lenged punitive awards in two cases instate courts – $290 million in a Califor-nia court and $15 million in Kentucky.As we all know, punitive damages aresupposed to punish defendants anddeter similar behavior; compensatorydamages are designed to compensatevictims for their actual losses. In anearlier case in April involving StateFarm Insurance Company, the HighCourt struck down as excessive a $145million punitive-damages award againstState Farm. In that case, $1 million incompensatory damages has been awarded.The justices said the sheer size of thepunitive award, which was calculatedby taking into account State Farm’s net worth, violated the Constitutionalguarantee of due process.The Court’sruling, while significant, doesn’t repre-sent a total defeat for victims of corpo-rate wrongdoing. We all recognize thatthere is a limit to the size of punitivedamage awards. However, it isn’t clearexactly where the courts will draw theline. It will take a few more trips to theHigh Court before a more definite rulewill be established, if that is possible.


VI.THE NATIONALSCENE

A Two-Trick Pony

I spent the first two years of my lifein Tyler,Texas. I guess that is where Ipicked up my love for horses. I mustconfess that I always wanted a ponywhen I was a small boy, but for somereason I never got one. We had a fewmules out on the farm – but not asingle pony. When my folks movedback to Pratts Station in rural BarbourCounty, where my family had farmedsince 1819, I found that several of mynew young friends did have ponies.Over the next few years, I did learn alittle about the animals. I soon foundout that all you could teach a pony wastwo tricks and no more. That rule ofthumb made a real impression on me.Now, years later, it appears that wehave an occupant in the White Housewho could be described as a two-trickpony. Our President has clearly mas-tered two tricks and those are tortreform and tax cuts. I hope my Repub-lican friends don’t take offense to thisassessment of the President’s abilitiesor performance.

I must confess that President Bushhas finally convinced me that he hastremendous ability and also the capac-ity to perform a given task very well.However, I suspect the RepublicanParty bosses are quite happy with thetwo tricks mastered by this President.They apparently believe those two areenough to guarantee his reelection. Tothe credit of George W. Bush, however,some of us have never even gotten tothat second level. While I have atremendous respect for the office ofthe Presidency, I am most concerned,however, that the welfare of ordinaryfolks seems to be a low priority for theBush White House. I sincerely hopethat I am wrong in my views when itcomes to the White House, but I seelittle evidence to rebut my beliefs.

Karl Rove Makes Trial LawyersThe Bush Target

When President Bush was Texas’Gov-ernor, his number one advisor, KarlRove, came to the conclusion that triallawyers made good targets. That sort ofthing followed Bush to the nation’scapitol. Now the White House and itsGOP congressional allies are attackingtrial lawyers on a regular basis. In arecent book about President Bush,Rove is quoted as having persuaded thePresident to elevate the importance oftort reform in the Texas governor’srace. In a memo obtained by the Associ-ated Press in December, the WhiteHouse identified legal reform as one of10 possible “signature issues” headinginto the President’s bid for re-electionin 2004. The barrage of proposals byRepublicans - from legislation to presi-dential executive orders - has con-sumer groups working on severalfronts to protect themselves. Obvi-ously, that is a good strategy, especiallysince the White House has friends withunlimited funds to spend. Every majorcorporation in America and thousandsof lobbyists, with many millions of cam-paign contributions available for theiruse, are working overtime in theirefforts to shut the courthouse door toall American consumers. Republicanssay their efforts have nothing to dowith punishing a Democratic con-stituency. Instead, they parrot the usualtort reform line and blame frivolouslawsuits for everything in sight.

Business Groups Attack Lawmakers

The U.S. Chamber of Commerce hasbecome one of the nation’s most pow-erful political lobbies.The organizationhas actually become an extension ofthe National Tort Reform Association.The Chamber has concluded that afederal court ruling on the new cam-paign finance law allows it to continueto run ads targeting members of Con-gress with attack ads. The Club for

Growth, another tort reform group,alsocontends the decision lets it run adsmentioning lawmakers. This groupstarted airing a second batch of attackads attempting to force two reluctantRepublican Senators, Olympia Snoweof Maine and Ohio’s George Voinovich,to support President Bush’s tax-cutpackage. The group ran its first adsbefore the court ruling. It is ratherinteresting that the Bush White House– led by Karl Rove – would actuallyattack their own Senators. What willthey do to Democrats between nowand next November?

Republican Senator John McCain hasa different interpretation of the highcourt’s decision. The Arizona lawmakerbelieves ads such as the Club’s can’tlegally be run. The Club for Growthand the U.S. Chamber are amongseveral organizations that asked thejudges handling the case to overturnthe ad restrictions and other parts ofthe law, arguing that they violated freespeech and other constitutional rights.It and several other groups, includingthe National Rifle Association,AFL-CIO,and American Civil Liberties Unionchallenged the new law. The Chamberinterprets the ruling to mean that an adon a political issue mentioning a candi-date’s name doesn’t necessarily provethe ad is designed to influence an elec-tion. When you consider the tremen-dous power of the Chamber ofCommerce when it puts the organiza-tion’s name and the tort reformers’money behind an attack ad and how itis perceived by most citizens, itbecomes abundantly clear that the newlaw shouldn’t allow their attack ads. Infact, the Chamber of Commerce has nobusiness putting its label on politicalads. Most folks believe the NationalChamber of Commerce controls thelocal Chambers of Commerce, and thatisn’t the case. Unfortunately, the U.S.Chamber has become a political entityand nothing more. The local chamberspromote local businesses and generallydo their job in a non-political manner –as it should be. I have to wonder what



really motivates the U.S. Chambertoday. More will be said on the federalcourt ruling in the Campaign FinanceReform Section.

A Second Powerful StalkingHorse

This month, I will briefly mentionone other group – organized last year –that is a key member of the nationaltort reform team. This group is wellfinanced, well connected, and has acarefully planned agenda and thatagenda is not good for ordinary citi-zens. I will write more on “CommonGood” next month. In the meanwhile,if you want to learn more about thisgroup, go to their Website www.our-commongood.com. It doesn’t take aPhD in political science to figure thisgroup out and to spot its real agendaand that is to destroy the court system.

Halliburton Contract LargerThan Previously Known

This probably shouldn’t come as abig surprise, but Halliburton Co.’s emer-gency,no-bid contract to work on Iraq’soil wells is much more than firstreported. We now need a full disclo-sure of the terms. The Army’s admis-sion that the company has a far morelucrative role than originally believed iscertainly disturbing. Prior descriptionssaid Vice President Dick Cheney’sformer company would only fight oilfires. Now we learn that the contractalso lets the company operate the oilfields for a time and distribute thepetroleum. Information received fromthe U.S. Army Corps of Engineers,which awarded the contract, makes itclear that Halliburton did much betterthan originally thought. Cheney’soffice has said repeatedly that the VicePresident has no role in Halliburton’soperations or its government contracts.I am sure The Corps didn’t intentionallymislead the public about the contract.Some members of Congress are con-cerned, however, that the Bush Admin-

istration’s reluctance to provide com-plete information about this and otherIraqi contracts has denied Congressand the public important information.

Halliburton Discloses BriberyPayment In SEC Filing

There have been so many examplesof corporate wrongdoing over the pastfew years, that nobody is surprisedwhen more “bad stuff” is uncovered. Ihope Corporate America still considersbribery a crime and something toavoid. However, a subsidiary of Hal-liburton Co. paid a Nigerian tax official$2.4 million in bribes to get favorabletax treatment in that country. This wasdisclosed by Halliburton in a federalfiling. In a filing made May 8th with theSecurities and Exchange Commission,the company said its KBR subsidiary“made improper payments of approxi-mately $2.4 million to an entity ownedby a Nigerian national who heldhimself out as a tax consultant when infact he was an employee of a local taxauthority.” The filing stated that thepayments were found during a routineaudit. As a result, I understand thatseveral employees were fired. Hallibur-ton said it was cooperating with theSEC in its review. A company spokes-woman told the Houston Chroniclethat the bribes were paid between2001 and 2002. The company may oweNigeria as much as $5 million in backtaxes. As you know,Vice President DickCheney led the company until August2000.As expected, the Bush Administra-tion denied there was any connectionbetween Cheney’s former role inrunning the company and the mostinteresting no-bid contract with thegovernment for work in Iraq. InNigeria, the engineering, construction,and oil field services company is con-structing a liquefied natural gas plantand developing an offshore oil and gasfacility. I am sure that the Vice Presi-dent is not using his vast power andinfluence in our nation’s capitol to helphis old company. However, it appearsthat somebody is doing a good job oflobbying for Halliburton. If a steelworker from Gadsden bribed a tax offi-

cial to avoid paying his taxes, I suspectthat man would be put under the jail.How can Halliburton get away withbribery and then get a multi-billiondollar no-bid federal contract?

Pentagon Consultant Was Out-Of-Bounds

Some political types question whyordinary people don’t trust politiciansand don’t believe that government gen-erally takes care of the rich and powerful.The following episode certainly doeslittle to change their opinions. A keyPentagon adviser apparently briefed aninvestment seminar on ways to “profit”from conflicts in Iraq and North Koreajust weeks after he received a top-secret government briefing on thepending crises in the two countries.Richard Perle, who until March waschairman of the Defense Policy Board(a group of outside advisers to the Pen-tagon), also serves on the board ofseveral defense contractors.We had apiece on this board last month. The LosAngeles Times reported that Perleattended a Defense Intelligence Agencybriefing in February and three weekslater participated in a Goldman Sachsconference call in which he advisedinvestors in a talk titled “Implications ofan Imminent War: Iraq Now. NorthKorea Next?” Surely, this would createa serious conflict of interest for Perle.Unfortunately, too many politicians inour nation’s capitol apparentlycondone this sort of thing. Hopefully,that mindset will change one of these days.

Perle has been one of Defense Secre-tary Donald Rumsfeld’s closest advis-ers. He was a vocal advocate of goingto war against Iraq. Perle resigned aschairman of the Defense Policy Boardon March 27th, only after it wasreported he had worked as a consult-ant to bankrupt telecommunicationscompany Global Crossing Ltd. This cor-poration was trying to get Pentagonapproval to be sold to Asian investors.In offering his resignation, Perle deniedany wrongdoing and said he didn’twant questions about his outside inter-


ests to be a distraction to SecretaryRumsfeld. However, he remained amember of the board. RepresentativeJohn Conyers Jr. (D-Mich.), the rankingDemocrat on the House Judiciary Com-mittee, has asked the Pentagon’sInspector General to investigate Perle’sbusiness activities and any conflictsthey might pose for his membership. Ibelieve Perle should be asked to resignfrom the board immediately. In fact,Congress should take a close look atthe entire board.

The Trade Deficit Is Out OfControl

Many economic experts are greatlyconcerned over our ever-increasingtrade deficit. The U.S. trade deficitwidened in March to $43.5 billion, thesecond highest on record, as imports offoreign-made industrial supplies, includ-ing crude oil, rose to an all-time monthlyhigh. On May 13th, the CommerceDepartment reported that the trade gapgrew by 7.6% in March from February’sdeficit of $40.4 billion. Although exportswent up for the third month in a row inMarch, imports rose nearly five timesfaster, leading to a bloated trade deficitthat was second only to the record deficitof $44.9 billion produced in December.Economists were expecting the deficit toget much larger in March, but not asmuch as it did. To combat the tradedeficit, the Bush Administration says theUnited States should seek to boost Ameri-can exports by attacking foreign tradebarriers, rather than raising barriers toimports coming into the country.

Trade critics, including labor unions,say the deficit is evidence that PresidentBush’s free-trade policies are not workingand are actually contributing to very largejob losses in manufacturing. Manyprivate economists say the weaker U.S.dollar, which has lost ground over thepast year, is helping out exports at a timeof a weakened global demand. Weakgrowth abroad,however,will continue tobe a challenge for U.S. exporters, econo-mists say. A weaker dollar makes U.S.-made products more competitive on

foreign markets and less expensive foroverseas buyers.The U.S. dollar fell lastmonth to a new four-year low againstthe Euro. The decline came one dayafter Treasury Secretary John Snow saida weaker dollar would help U.S. exports– a view that some private economistsand U.S.manufacturers share. However,traders viewed the remarks as signalinga retreat from the long-standing posi-tion of the Bush Administration and theprevious Clinton Administration insupport of a strong dollar.

We have severe economic problemsin this country and if we don’t startmoving in the right direction, we willbe in for some very hard times. Wehave seen record surpluses turn intoall-time record deficits in two shortyears. A tremendous number of goodjobs were created during the Clintonyears. In fact, 20 million jobs werecreated in 8 years, which I believe wasa record. We now face a tremendousnumber of job losses in this country. Itis most disturbing that over 2 millionAmericans have lost their jobs underthe economic policies now in place injust slightly less than 3 years. There hasto be a reason. We should be creatingjobs – not losing them to foreign coun-tries – and that is a real problem thatwill get worse if not corrected. I don’tpretend to be an expert on the eco-nomic woes facing our nation.However, common sense tells me thatlosing surpluses and building hugedeficits is not good, especially whenyou factor in a significant increase inour trade deficit. In any event, for all ofthese reasons, the economy will mostlikely be the central issue in next year’snational elections.

VII.CONGRESSIONALUPDATE

Two Outstanding Alabama Senators – From Different ErasAnd Different Parties

I have been blessed in my lifetime to

have crossed paths with some out-standing individuals. One of myfavorites will be mentioned. In the late1960s, as a very young country lawyer, Ihad the rare opportunity to becomeassociated with a true gentleman fromGadsden, Alabama. During the fall of1967, I was asked to serve as State Cam-paign Manager for James B.Allen, whowas running for the U.S. Senate. Theformer two-term Lieutenant Governorwon that race in 1968 and went on to adistinguished career in the Senate. JimAllen became one of the mostrespected members of the Senate andwas widely recognized as a master ofthe Senate rules. He was a true states-man, not just a politician, and wasextremely popular throughout thestate. An interesting point that hasgone largely unnoticed is the fact thatprior to the 1968 race, Senator JimAllen was known as “James Allen.”From the date he became anannounced candidate in 1967,however, he was known as “Jim Allen.”The results of an early poll run by thecampaign and advice from my friendfrom Baldwin County, Jimmy Faulkner,brought about the name change. Somuch for trivia. Senator Allen was agreat Alabamian and a great U.S.Senator. He was a good man who diedmuch too early in life.

We are again blessed to have a SeniorSenator from Alabama who has made aname for himself in our nation’scapitol. Richard Shelby is withoutquestion one of the most powerfulmen in government today. He is con-servative on fiscal matters, but is a realfriend of consumers. Senator Shelbyhas the respect of his colleagues in theevenly divided upper chamber and isclearly one of the most influentialmembers of that body. We are fortu-nate to have Senator Shelby serving ourstate. He has the ability to work withall members of the U.S. Senate – Repub-licans and Democrats alike – and that isgood, not only for Alabama, but for thenation. Hopefully, Richard Shelby willbe in the U.S. Senate for years to come– Alabama and the nation need him!



The Combination Of War AndTax Cuts

I am certainly no expert on thesubject, but I do have strong opinionsconcerning the combination of wagingwar and providing tax cuts. When youfactor in the cost of the “wars” inAfghanistan and Iraq and the continu-ing costs of occupying these foreigncountries with the tax cuts pushedthrough Congress by the President, itseems we are heading in the wrongdirection. We have seen record govern-mental surplus turn into record deficitsin just a short time and the economy ina tailspin. It seems to me that we areheading for fiscal disaster if we con-tinue down this “political path.” Con-gress passed and sent a $350 billion taxcut to the President. The measurepassed the Senate by a 51-50 vote, withVice President Cheney casting the deci-sive vote. The bill also contains $20billion for the states’ use. I hope myopinions are wrong, but I really don’tbelieve they are. In any event, time willcertainly tell if the President did theright thing or if he was acting for politi-cal purposes. If the economic woes arenot reversed, however, members ofCongress who supported the tax cutsmay be praying that people will forgivethem for supporting the President’splan.

VIII.CAMPAIGNFINANCE REFORM

What’s Left Of The New Cam-paign Finance Law?

A ruling on the Campaign FinanceReform law by a special three-judgefederal court panel seems to have lefteverybody unhappy. The panel heldparts of the Act unconstitutional andparts were upheld. Apparently, politicalparties can now return to raising softmoney. Contributions of any size and

unlimited donations from any sourcewill again be allowed.The parties canspend this money on party-buildingcosts such as get-out-the-vote drivesand overhead, but not for issue ads orhelping specific candidates. Thefederal judges rejected a broad ban onelection-time political ads by interestgroups.That barred a range of groups –sometimes financed with corporateand union money – from airing issueads mentioning federal candidates inthose candidates’ districts in the monthbefore a primary election and withintwo months of a general election.However, the court upheld backuprules blocking many groups from airingads that promote, support, attack, oroppose a candidate at any time. Itremains to be seen how far interestgroups can go when featuring candi-dates in ads. Also rejected was arequirement that political partieschoose between coordinating spendingwith candidates – making the spendingsubject to federal contribution limits –and spending independently to helpthem, without limits. The court uphelda tougher standard for determininghow much interest groups, politicalparties, and candidates can coordinateelection activity before interest groupor party spending is considered a dona-tion to a candidate subject to federallimits. Those suing cover the politicalspectrum, including the National RifleAssociation, Republican National Com-mittee,AFL-CIO, U.S. Chamber of Com-merce, and California Democratic andRepublican parties. The case will nowgo to the U.S. Supreme Court. Hope-fully, the entire Act will be upheld. Thethree-judge panel stayed its ruling andthe matter will ultimately be decidedby the Supreme Court.

The American people want the wildspending in political races stoppedboth on the national and local levels.Instead of trying to undo what Con-gress did, the political parties shouldjoin forces to bring about completecampaign finance reform. However, aslong as Corporate America maintains its

current political posture, the prospectsare not good for more reform of a“broken” system. Hopefully, the U.S.Supreme Court will uphold thechanges made to date. At least that wasa step in the right direction.

IX.THE CORPORATEWORLD

Wall Street SettlementLast month, we discussed the recent

$1.4 billion dollar settlement betweenState and Federal securities regulatorsand ten of the largest Wall Street firms.We now learn that the agreement wasaccompanied by thousands of pages ofdamaging e-mails and memoranda thatsecurity regulators have released. Theallegations were that, to attract corpo-rate underwriting deals, investmentbankers pressured analysts to produceglowing reports they knew were false.Consequently, analysts artificially raisedshare prices by ignoring the flaws inthe companies they recommended.Five Wall Street firms even paid theirrivals to put out misleading researchreports on their clients to create theillusion of widespread support. Toensure that the analysts kept up thecharade, their superiors paid themaccording to how many new invest-ment banking business they attracted.Further, to reward executives forsending them business, bankers “virtu-ally bribed” CEOs, according to regula-tors, with shares of hot initial publicofferings. Unfortunately, the personsdamaged the most by this unbelievableconduct were average investors, con-sumers who dealt with retail stockbrokers.

The settlement is meant to keepinvestors from being defrauded and torestore the integrity of research byforcing structural reforms of the “terri-ble ten.” The settlement is also meantto increase the information available toindividual investors by requiring thefirms to provide free copies of


independently produced analysis andto support an investor-education fund.It is my opinion that, as well inten-tioned as these requirements are, realchange will only occur if there is achange in the corporate culture, start-ing at the very top. Already, there areserious concerns as to whether anychange in the corporate mindset isoccurring. Only one day after the set-tlement was announced, MorganStanley CEO, Phillip J. Purcell, statedpublicly that he saw nothing in the set-tlement agreement “that will concernthe retail investor about Morgan Stanley.”This is rather shocking, consideringthat Morgan Stanley paid $125 milliondollars of the $1.4 billion dollar settlement.

Many believe that regulators mustfollow up on promises to bring casesagainst the Wall Street executives, man-agers, and CEOs who oversaw researchand banking during this time in orderfor real change to occur. It is disap-pointing that so far only two individu-als, former analyst Jack Grubman ofSalomon Smith Barney and Henry Blod-gett of Merrill Lynch, have been “pun-ished.” Both have been barred for lifefrom the securities industry only aftertaking home multi-million dollarpaydays during the height of the fraud.Despite what many believe is real evi-dence that senior managers knew thatretail customers/investors were losingmoney because of tainted research,none were charged in the settlement.Regulators claim that cases are pendingagainst more than a dozen top man-agers, including Citigroup Chairmanand CEO, Sanford I.Weill, and MichaelCarpenter, Citigroup’s former head ofinvestment banking, for failing to super-vise Salomon Smith Barney officials.Some State Securities Regulators arealso looking into bringing criminalcases against individuals.

Despite the many good thingsincluded in this settlement, one sourceof conflict still remains: As researchproduces no revenues, it will continueto be indirectly subsidized by invest-ment banking, which often accounts

for about one quarter of the revenuesof these firms. It is generally under-stood that, knowing where their pay-checks come from, analysts willcontinue to write reports that arepleasing to their banking clients. Thebreakdown of the settlement is asfollows: Citigroup will pay $400million, Merrill Lynch will pay $200million, Credit Suisse First Boston willpay $200 million, Morgan Stanley DeanWitter will pay $125 million, Goldmanwill pay $100 million, UBS Warberg,BearSterns, Lehman Brothers and J. P.Morgan Chase will pay $80 million,while U. S. Banc Corp Piper Jaffray willpay $32.5 million. Class actions andarbitration claims continue to bepursued and many of the e-mails anddocuments that were released will beused in those claims.

Just a few examples of the type ofinformation that has been releasedinclude a statement from a LehmanBrothers equity analyst in an August2000 e-mail to his supervisor complain-ing about investment banking influ-ence. The statement read,“Enough isenough. It is hard enough to be rightabout stocks, it is even harder to buildcustomer relationships when all yourcompanies blow up, you knew theywere going to and you couldn’t say any-thing.” Information at Salomon SmithBarney regarding analyst Grubmanincluded one broker telling superiorsthat Grubman should be fired, andanother even called him a “crook”while yet another wrote “I hope SmithBarney enjoyed the investmentbanking fees he generated, becausethey came at the expense of the retailclients (investors).”

Senator Shelby Speaks OutAs most folks already know, I have

tremendous respect for SenatorRichard Shelby, who in my opinion is areal champion for people in the U.S.Senate. Importantly, the Senator recog-nizes the difference in “right” and“wrong!” Senator Shelby has voicedskepticism that the government’s $1.4

billion settlement with 10 major invest-ment firms referred to above will fun-damentally change Wall Street’s culture,saying that top executives need to beheld accountable. Shelby, who is Chair-man of the Senate Banking Committee,said at a hearing called to examine theaccord: “I believe that the Wall Streetculture must change from the topdown, and I am not convinced that the(settlement) has done enough tochange attitudes at the top of the biginvestment firms. Without holdingexecutives and CEOs personallyaccountable for the wrongdoing thatoccurred under their watch, I do notbelieve that Wall Street will change itsways or that investor confidence willbe restored.” The executives whocaused their companies to do “bad”things should be prosecuted in thecriminal courts. The possibility offuture enforcement action against exec-utives of the Wall Street firms is stillopen, according to the SEC boss.“Ongoing actions by the SEC will bedirected toward supervisory responsi-bilities of brokerage executives.”according to William Donaldson, Chair-man of the SEC. Lawsuits filed againstthe companies by the SEC have uncov-ered an industry-wide pattern of abuse,financial incentives, and pressures thatled analysts to publish false stockreports. Senator Shelby suggested thatthe amount of fines being paid by WallStreet’s biggest firms was “relativelysmall.” I totally agree with the Senator.The civil courts are still open toinvestors who were defrauded. Thelosses suffered by the investors arealmost beyond comprehension.

Under the settlement, the firms willnot be able to deduct any of the pay-ments of fines against their taxes.Because that prohibition does notextend to the firms’ payments to com-pensate investors or pay for independ-ent research or investor education,some lawmakers have criticized the set-tlement.Senator Charles Grassley (R-Iowa),Chairman of the Senate Finance Com-mittee, already has proposed legislation



to put more restrictions on the firms’ability to deduct payments against theirtaxes so that U.S. taxpayers won’t haveto pick up part of the tab. I understandthe firms promised in the settlementnot to seek insurance reimbursementfor fines they paid. However, it’s notclear whether the companies will try todeduct more than $900 million in otherpayments related to the pact. Theaccord does not clearly addresswhether millions of dollars paid towardthe restitution fund, independentresearch and investor education maybe recovered. Hopefully, regulators leftthese details up to state courts, whichhandle most insurance disputes.

WorldCom SettlementAt a time when the tort reformers are

busy trying to shield CorporateAmerica from paying for its transgres-sions, the wrongdoers are lining up to“pay” their way out of trouble. As youmay have read, WorldCom has agreedto settle accounting fraud charges bypaying $500 million to investors. Thefederal judge presiding over the matter,however, said he wants more timebefore approving what would be thelargest fine ever levied against a publiccompany. The U.S. District Court judgehas indicated that several issues aboutthe fraud committed by WorldComneed to be addressed before he signsoff on the deal between WorldCom andthe Securities Exchange Commission.Last year, it was discovered that World-Com had engaged in accounting irregu-larities of approximately $11 billion,which led to the largest bankruptcy inU. S. history. It is reported that World-Com expects to emerge this year fromthe $103 billion bankruptcy that led tothe indictment of Scott Sullivan, thecompany’s former CEO. Frankly, the$500 million fine is nothing more thana slap on the wrist for WorldCom. Inmy opinion, WorldCom came outsmelling like a rose since the fineamounts to one week’s revenues forthe company. In fact, it will get $300million back from the IRS for lying on

its tax returns. I don’t believe weshould turn corporate crooks loosewith only a slap on their wrists.

Corporate Tax Cuts And Corporate Tax CheatingAs I prepared this portion of the

report, a version of the President’s taxcut proposal had passed in Congress.Conferees from the House and Senateagreed on a sizeable tax cut. I suspectthere will be very little for an ordinarycitizen to be happy about in the finalversion of the tax cut bill. From what Iheard and read today, it certainlyappears to be a tax cut primarily for thewealthy and Corporate America and onethat does very little for ordinary people.The Senate version of the tax cut had aprovision that would have penalizedcompanies that move their headquartersto offshore tax havens. As previouslyreported, there is an increasing numberof U.S. corporations that have moved tooffshore locations and are cheating theAmerican people who work hard andpay their taxes. Clearly, this is wrongand shouldn’t be allowed. The offshoreprovisions had the support of SenatorCharles Grassley (R-Iowa), who is Chair-man of the Senate Finance Committee.The ranking member of the Commit-tee, Senator Max Baucus (D-Mont.), wasalso a strong supporter of the measure.Representative Richard Neal (D-Mass.),who has sponsored a bill in the Houseof Representatives to close the loop-hole that allows corporations to rein-corporate offshore and save hundredsof millions of dollars in federal taxes,had hoped that the conference com-mittee would include the Senate provi-sion in the final version of the bill. Ihaven’t read the final version of the taxcut bill – as worked out by the confer-ence committee – but I doubt seriouslythat the offshore measure was left in.However, Corporate America can’t beallowed to use the existing loophole inthe Tax Code and avoid paying U.S.taxes. If the tax cut bill failed to includethe measure referred to above, Con-gress still has an obligation to act and soon.

Bayer® Fined $5.6 Million InDrug Scheme A federal judge has approved the

criminal fine of $5.6 million againstBayer Corp. as part of the previouslyreported settlement to resolve allega-tions it overcharged the governmentinsurance program for the poor for twoof its drugs. Bayer® agreed last monthto plead guilty to violating the FederalPrescription Drug Marketing Act and topay the criminal fine for overchargesinvolving its antibiotic Cipro and itshigh blood pressure drug Adalat. TheU.S. District Court Judge approved theplea and fine on May 8th. Under thesettlement agreement announced lastmonth, drug giants Bayer® and Glaxo-SmithKline agreed to pay a combinedtotal of nearly $345 million to settleclaims they used a labeling scheme toovercharge the Medicaid program. Inaddition to the $5.6 million criminalfine, Bayer® agreed to pay $252 millionin civil damages. Glaxo agreed to pay acivil fine of nearly $88 million for over-charges involving its anti-depressant Paxiland the nasal allergy spray Flonase.Unlike Bayer®, the company was notaccused of any criminal wrongdoing.Bayer® has a great deal of exposure incivil cases for its drug, Baycol. Manyclaims are pending around the country.

Former Qwest Exec To Pay $4.4Million A former Qwest Communications

executive will pay $4.4 million foraccepting lucrative initial public offer-ing, IPO, shares in exchange for hisfirm’s investment banking business,according to a settlement reached withNew York Attorney General EliotSpitzer. The payment by Qwestfounder and former chairman PhilipAnschutz will be roughly equal to hisprofit from the practice of IPO “spin-ning” and will go to charity and aninvestor assistance fund. The settle-ment marks the first time an executivehas relinquished profits linked to “IPOspinning.” The Attorney General


accused Anschutz and four other cor-porate executives of receiving millionsof dollars in hot IPO offerings from theSalomon Smith Barney division of Citi-group.Anschutz and the other execu-tives were also accused of failing todisclose that they received the IPOshares.When the shares were later pub-licly traded, they reaped millions ofdollars in profits for the executives.The cases against the other four execu-tives continues.

Scandals In Corporate America

When you think about things likeburglary and stealing, you immediatelythink about the corporate scandals thatinvolved WorldCom, Enron, ArthurAnderson,Tyco,Adelphia, HealthSouth,and the list goes on. Actually, it isimpossible to turn on the television setor open the daily newspaper withoutbeing confronted with another corpo-rate scandal. Reports of financiallytroubled companies and their account-ing firms cheating the public and gov-ernment regulators are commonplace.Not only are American citizens nowfaced with losing their jobs, but theyare also faced with the loss of theirstock portfolios and retirement savings.A recent nationwide survey conductedby BowneDescisionQuest has revealedsome most interesting and alarmingconclusions:

76% of the people surveyed areangry with Corporate America.

76% believe the way executives arepaid promotes corruption.

73% believe auditors cover up fortheir clients.

71% expect managers and executives tolie when confronted on the witness stand.

78% believe many corporationsdestroy documents to avoid the taxa-tion and responsibility.

85% believe large corporations hidethe truth about the dangers of theirproducts.

If these survey results are accurate,we are in deep trouble in this country.Government must work diligently torestore confidence in our nation’seconomy and in the corporations that

used to be held in high esteem.Destroying the court system and takingaway the right to trial by jury surelyisn’t the way to do it. Personally, Ibelieve criminal prosecution and longjail terms are the place to start.

X.BUSINESS LITIGATION

A Medical Doctor Takes HisCase To CourtA jury in St. Louis, Missouri, has

awarded Dr. David L. Gearhart$195,500 in actual damages in a caseinvolving allegations that St. Luke’s Hos-pital tried to ruin his private medicalpractice after he was fired from thestaff of the hospital in 1998. The juryfound in favor of the obstetrician, andagainst St. Luke’s Hospital and itsparent, Unity Health System. The juryfound against a doctor, a formerpartner, who was also sued.When thisissue went to the printer, the jury wasstill deliberating punitive damages. Thetwo doctors sold their practice to St.Luke’s in April 1997. It was reopenedunder St. Luke’s as ComprehensiveWomen’s Health Care. In June 1998, Dr.Gearhart gave a television interviewcritical of staffing changes in theobstetrics department. He was subse-quently fired for those remarks by thehospital’s president. However, the firingitself wasn’t an issue in the trial. Dr.Gearhart alleged that employees ofComprehensive failed to give out hisnew phone number to his patients; thatthe hospital tied up payments owedhim for months at a time, and thatUnity sent the accounts of 456 of hispatients to a collection agency who gotcollection letters even though they hadbeen unaware they owed money. Thehospital’s actions allegedly led Dr.Gearhart to seek psychiatric help andto undergo double bypass heartsurgery. Apparently, the jury agreedwith Dr.Gearhart.

Xerox Settles Lawsuit AgainstLab Xerox Corp. has settled a defamation

lawsuit filed against an independent labthat had tested its products.The com-panies agreed not to disclose the settle-ment terms. Xerox had accusedBusiness Equipment Research & TestLaboratories of defamation and interfer-ing with customer relations. BERTL,based in Englishtown, New Jersey, pub-lishes independent product evaluationson copiers, printers, color systems, andmultifunction devices. Xerox commis-sioned BERTL to conduct a series oftests comparing the performance of itsdocument center systems against com-petitors in November 2001. Xerox thenprepared the test data for use in aninternal sales training tool, which thecompany claimed was allowable underthe companies’ agreement. BERTLthen allegedly sent an e-mail to its com-petitors containing an altered versionof the test summary, which suggestedthat Xerox could not use the data forinternal training. Subsequently, BERTLfiled 16 counterclaims in U.S. DistrictCourt against Xerox and Xerox Canadafor $53 million in compensatory andpunitive damages. The counterclaimsaccused Xerox of copyright infringe-ment, appropriation of trade secrets,trademark misuse, false advertising,breaches of access license,and defamation.

Asbestos Fund At HartfordNearly TriplesThe Hartford Financial Services

Group announced on May 15th that itwas nearly tripling its reserves to payfor potential claims for asbestos-relatedillnesses and deaths. The company, thenation’s seventh-largest insurer, said itwould add $3.97 billion to its asbestosreserves, bringing them to $5.96billion. The company also said it wasgetting out of the volatile business ofreinsurance, or providing coverage toother insurers. Hartford’s increase inreserves for asbestos, once the mostwidely used insulating material, comesafter a string of similar steps by otherbig insurers over the last year. It is by



far the largest increase, significantly sur-passing the $2.45 billion that the TravelersProperty Casualty Corporation addedin January, bringing its total asbestosreserves to $3.4 billion. Hartford’s bigincrease comes as insurers, industrialcompanies, victims’ lawyers, unions, theBush Administration and Congress aretrying to agree on a global settlementintended to end asbestos litigation andplace a cap on total potential payoutsat $100 billion to $125 billion. Overthe last two years, 200,000 lawsuitshave been filed seeking damages forasbestos exposure.

XI.PRODUCT LIABILITY UPDATE

Claim Of Fraud By Ford CouldHave Wide Impact

We reported in our March issue onFord Motor Company’s intentional con-cealing of evidence in Bronco II law-suits. The claim that Ford fraudulentlyconcealed evidence could have animpact nationally on similar cases thatare either pending or have previouslysettled. It appears that Ford Motor Co.falsified testimony and concealedharmful documents in serious BroncoII rollover accidents over a period often years. The testimony of David J.Bickerstaff, a former engineer for Fordwho worked extensively on the designand testing of the Bronco II in the early1980s, helped Ford in many of theapproximately 600 cases brought bydrivers, passengers, and families ofthose injured or killed in Bronco IIrollover accidents. The engineer testi-fied that, based on his assessment, theBronco II was safe and did not have apropensity to rollover. More specifi-cally, Bickerstaff testified that theBronco II’s “stability index” was not amajor factor in rollover propensity. Healso testified that those working underhim at Ford were not telling him thevehicle needed to be improved from arollover standpoint.

As we learned prior to the South Car-olina case, Bickerstaff’s testimony wasnot always so favorable to hisemployer. Specifically, in a July 9, 1990deposition, the Ford engineer testifiedthat stability index was a major factorin a vehicle’s resistance to rollover andthat people working under him in 1982were telling him that the Bronco IIneeded to be improved from a rolloverpropensity standpoint. Bickerstaff,who left Ford in 1982, subsequentlychanged his story. As reported, in June1990, lawyers for Ford met with Bicker-staff in a hotel room getting ready for Bickerstaff’s deposition testimonyin a Bronco II rollover case in Texas.Shortly after the meeting, Bickerstaffsent a letter to two of Ford’s attorneys,which read in part: “I feel I should be reimbursed my current rate. I wouldsuggest you retain our services to assist you in preparing myself, in Ford’sfavor, as we discussed per our phoneconversation of 6/18/90.” You candraw your own conclusions as to whatthis was all about. Court documentssuggest that Bickerstaff has been paidas much as $5 million for his favorableFord testimony over the years. The1990 letter written by Bickerstaff didnot surface until 1995, despite earlierdiscovery requests to Ford. Ford finallyproduced the letter after it was referredto by Bickerstaff in a deposition in1995 for a rollover trial. Ford also failedto produce a second document – atesting memo from Ford to the ArizonaProving Ground acknowledging stabil-ity and design problems with theBronco II.

It is our opinion that the South Car-olina decision will have a broad and sig-nificant impact on previous and futureBronco II rollover cases. This caseshould open the door for many victimswho settled their cases believing thatFord would use Bickerstaff as a starwitness against them. There have beenabout 600 cases involving Bronco IIrollovers that have settled with Bicker-staff being listed by Ford as an expertwitness. If a trial lawyer or a client had

done what Ford and its “expert”allegedly did in the South Carolinacase, there would be an uproar in Cor-porate America that would equal theattention given to the aftermath of thebombing of Pearl Harbor in 1941.Lawyers in our Product LiabilitySection have gotten accustomed to cor-porate defendants bending the rules,but on most occasions we simplycouldn’t prove unethical conduct.Now, Ford has apparently been caughtred-handed. The company’s conduct, aswell as that of their lawyers, should bedealt with by the courts and bar associ-ations. This sort of conduct by partiesto litigation can’t be tolerated. I wouldlike to hear the justification by the U.S.Chamber of Commerce and theNational Tort Reform Association forFord’s conduct.

The Environmental Working Group, aWashington, D.C.-based not-for-profitcorporate watchdog group, has beenkeeping tabs on Ford over Bronco II lit-igation. EWG recently filed a letterwith the U.S. Department of Justiceasking the government to conduct acriminal probe of what the organiza-tion calls “Ford’s pattern and practiceof willfully concealing safety-relateddefect data from courts, federal regula-tors, and consumers.” Hopefully, therewill be a meaningful investigation.EWG’s position has been that Ford hasalready compromised safety. EWG hasdetailed histories of Ford rollover litiga-tion on its Website:www.ewg.org.

GM To Put Stability Systems OnFull-Sized Vans

General Motors will install stabilitycontrol systems as standard equipmentin the GMC Savana and ChevroletExpress 15-passenger vans sometime inthe 2004 model year. Installation prob-ably will start after January 1st, accord-ing to GM. Stability systems aredesigned to help drivers keep controlof their vehicles in risky situations,such as driving on ice or gravel, ormaking emergency lane changes. GM


says while it won’t directly preventrollovers, it “may help drivers avoid theconditions that cause them.” Theautomaker has been studying the feasi-bility of putting this technology in thevans for more than a year. GM alreadyoffers the system, referred to as Stabili-Trak, Precision Control and Active Trac-tion, in other vehicles. It will be calledStabiliTrak in the vans.

While General Motors hasannounced that it will install the stabil-ity enhancement systems on thesevans, this is no substitute for a fullredesign of these deathtraps. Littlemore than tin cans originally designedto haul cargo, the vans have devastatedentire church and school communitiesas a result of rollovers resulting indeadly crashes. GM’s failure and refusalto retrofit its existing 15-passenger vanson the highway is hard to justify. Thecompany should have added stabilitycontrol systems to all its rollover-pronevehicles – including vans – a long timeago.This new system won’t fix the fun-damental design flaws that are found inthese vans. The vehicles haveextremely weak roofs that crush in arollover, putting the heads and spinesof passengers at great risk for seriousinjury, and opening large portals forejection.The vans also have weak doorsand poor restraint systems that fail tokeep passengers in place during acrash. The hazards created are evidentin the crashes.

Public Citizen called on all manufac-turers last fall to retrofit, or recall alto-gether, the vans that are currently onthe highways, so as to prevent morerollovers. GM’s recent action showsthat these top-heavy vans, which havekilled more than 400 people, shouldnot be allowed to “haul”people. Simplyput – the vans are unreasonably danger-ous. More people should not have todie before these vans are either fixed orremoved from the highways. All safetygroups should join with Public Citizenand let the public know that the pro-posed “fix”by General Motors is grosslyinadequate.

SUVs Fare Poorly In Latest Government Rollover Tests

Sport-utility vehicles performedpoorly in the latest round of rollovertests released on May 20th, with nonewinning the government’s highestsafety rating. The National HighwayTraffic Safety Administration releasedrollover ratings for fourteen sport-utility vehicles from the 2003 modelyear. Most got three out of five starsfrom the agency. None got a four- orfive-star rollover rating. That showslittle improvement from the 2001model year, when the Pontiac Aztekwas the first SUV to win a four-starrollover rating from NHTSA. In 2002,the Aztek and the Acura MDX earnedfour stars.

Two General Motors SUVs — theCadillac Escalade EXT and the ChevyAvalanche — and the MitsubishiMontero Sport received two-starratings. SUV rollover ratings became abig issue earlier this year when NHTSAchief Jeffrey Runge said at an auto con-ference:“I wouldn’t buy my kid a two-star rollover vehicle if it was the lastone on earth.” Runge quickly retreatedand tried to explain away his state-ment. He said later he only meant thatbuyers should be aware of the driver’sexperience when choosing a vehicle.However, the head man at NHTSA hasrepeatedly expressed concern aboutthe high rollover rates of SUVs. Morethan 60% of fatalities in SUVs involverollovers, compared to 22% of cardeaths. A NHTSA spokesman believes itis a good predictor of vehicle perform-ance. NHTSA plans to abandon themathematical formula later this year infavor of a new, moving test that willshow how the vehicle responds tosharp turns. That will be a much betterindicator of how the vehicles willperform.

Vehicles did much better in NHTSA’scrash test ratings, which also werereleased. The Chrysler Pacifica, whichwas the only 2004-model vehicletested, won five-star safety ratings in all

four front- and side-impact crash teststhat NHTSA performs. No other SUVwon five stars in every test. Chryslersaid the Pacifica is one of the first tooffer standard side curtain airbags aswell as inflatable knee blockers toprotect occupants’ legs.

Confidential Information Concerning GM C/K TrucksReleased

As previously reported, GeneralMotors Corp. paid at least $495 millionto settle nearly 300 lawsuits filed byfamilies of victims who were killed incrashes involving the popular C/K lineof pickup trucks. News of the payouts,reported in the Los Angeles Times,came when a Montana federal judgereleased an exhibit in a case brought bythe estate of a family killed in a pickupaccident. The exhibit was unsealed bythe judge at the request of the newspa-per. All American citizens owe theTimes a long round of applause. Thecivil suits involve C/K pickups that hadfuel tanks mounted outside the vehi-cles’ protective frames. Critics havemaintained for several years that thedesign left the tanks prone to explodein crashes. GM produced more than 9million of the pickups from 1973 to1987 with fuel tanks outside the frame,and later changed the design. GM hadargued against releasing the document,saying it would violate confidentialagreements reached with plaintiffs allover the country. Obviously, GMdoesn’t like this turn of events. Incredi-bly, GM’s spokesperson, in a statementthat the now infamous “Baghdad Bob”would have been proud of, claimedthat the number and size of the settle-ments did not mean that the C/Kpickups were unsafe.

The document — known as Exhibit8 and carrying the heading “Byrd v.General Motors” — was produced byGM in response to a demand for infor-mation from lawyers representing theplaintiff.Three persons were killed in afiery wreck of their C/K pickup. The

exhibit says in full: “There have been297 settlements of lawsuits and claimsinvolving 1973-87 C/K pickup truckswhich resulted in 331 individual settle-ment agreements. The total amountpaid in settlement to date is$495,076,104.This yields an average of$1,495,698 per individual settlement,or $1,666,923 per lawsuit/claim.” Oneof the cases was settled in October2000 for an undisclosed sum. At thetime of the settlement, the Times askedthe judge to release Exhibit 8. Afterhearings on the issue, the courtordered the exhibit unsealed in January2001,but GM appealed.

You may recall that federal regulatorshad begun an investigation into GM’struck line, but dropped it in 1994 inexchange for a $51 million paymentfrom the vehicle maker that was to beearmarked for safety programs.At thetime, I didn’t believe that the “deal”wasin the best interest of consumers. I amnow convinced that it wasn’t. After thefederal inquiry was dropped, at least 65people are believed to have beenburned to death in C/K crashes. Thatnumber could be conservative sinceGM demands secrecy when settlingcases.

The GM document provides a rareglimpse into the confidential settle-ments paid by GM in a string ofproduct liability cases.This points outclearly why companies zealously guardsuch information from public view. Ihave always contended that corpora-tions have a duty to make this typeinformation known to the public. AGM spokesman criticized the judge’sdecision to release the exhibit and saidthe judge had “set a dangerous prece-dent” that could encourage defendantsto engage in protracted litigation ratherthan settle product liability claims. Iwould certainly like to hear an explana-tion for that prediction. Why wouldGM want to try a lawsuit when theyknow the defective vehicles havecaused the deaths of untold numbersof innocent people?

The Ninth Circuit Court of Appeals

overturned the court order andremanded the case to the judge forfurther consideration. The trial courtthen again unsealed the document in aruling that sought to address issuesraised by the Appeals Court. Federalregulators, in exchange for a $51million payment from GM earmarkedfor safety programs, dropped an investi-gation in 1994 that could have led to arecall of millions of C/K trucks. Thefailure to mount a recall followed hun-dreds of deaths in C/K pickup acci-dents. Auto safety groups had longcontended that, from a fire-risk stand-point, the C/K pickup was the mostdangerous vehicle ever sold. After thefederal inquiry was dropped, the Times’investigation found that at least 65people were believed to have burnedto death in C/K crashes. We havehandled a number of these cases andare bound by confidentiality andrestrictive court orders. The release ofthis GM document will alert the publicto the magnitude of the sidesaddle fueltank design hazard.

Head Injuries Are Noted inCrash Tests of 3 SUVs

The National Highway Traffic SafetyAdministration announced recentlythat results from a side-impact crashtest showed that passengers in threesport utility vehicles would have suf-fered a high likelihood of severe or fatalhead injuries. The vehicles, all 2002models, were the Daewoo Nubira andthe Suzuki Grand Vitara (both consid-ered small SUVs) and the MitsubishiMontero Sport (considered a midsize).The disclosure was the first time thatfederal safety officials had providedinformation on potential head injuriesin side-impact crash test results. Theagency also said it would recalculatefuture crash test measurements toreflect head injuries. Since 1997,NHTSA has been measuring the effectsof a vehicle’s being hit from the side.However, the previous tests reflectedonly chest injuries to test dummies

inside the vehicle. When the testsstarted, the dummies were not sophisti-cated enough. Now, the agency has anew type of dummy that can helpmeasure potential head injuries. As aresult, NHTSA plans to note when ahead injury score indicates a higherlikelihood of a severe or fatal braininjury. The agency will begin theprocess of revising safety standards toinclude the head injury information.Hopefully, the revision will be madethis year.

The head injury data is not yetincluded in NHTSA’s crash-test ratings,which award up to five stars, thehighest rating, according to how vehi-cles perform. That is how the GrandVitara and the Montero Sport were ableto receive five-star ratings for side-impact safety despite the potential forserious head injury. The Nubirareceived three stars. The Nubira is nolonger sold in the United States.General Motors, which took a stake inDaewoo’s automotive operations lastyear, stopped importing Daewoo vehi-cles for the 2003 model year, whichbegan last October. GM eventuallyplans to begin selling Daewoo productsthrough its own dealers.

NHTSA has noted that the driver’sside door on the Ford Explorer and itssister SUV, the Mercury Mountaineer,became unlatched during a side-impactcrash test. Both, however, received five-star ratings for driver’s side safety. Inaddition, the agency said that the frontpassenger in a Hyundai Santa Fe SUVwould have had a high chance of suf-fering a thigh injury in a full frontalcrash. Despite that, the Santa Fereceived a four-star rating. The autoindustry, faced with mounting criticismover the increase in fatalities involvingsport utility vehicles, recently agreed tocooperate with the government toexplore new tests and standards toaddress SUV safety. Numerous safetyadvocates have criticized the idea ofpermitting the industry to regulateitself. It would be like putting theproverbial fox in charge of the hen




house. There is nothing in our experi-ence in handling significant product lia-bility cases that leads me to believe thatthe automobile industry would ever“voluntarily”regulate itself. Profits havealways driven the industry – with safetyoftentimes taking a back seat.

Crash-Avoidance Technology

In the mid-1960s, there were 5.5deaths for every 100 million vehiclemiles traveled. Under pressure fromconsumer advocates and governmentregulators, the auto industry finallymade some fundamental safetychanges, building cars that crumplearound their occupants, installingbetter restraint systems, and makingairbags standard equipment. By 1992,the fatality rate had fallen by more thantwo-thirds, to 1.75. Over the next tenyears, however, the rate improved.Unfortunately, motor vehicle deathsrose last year in this country to theirhighest level since 1990. The risecapped a decade in which the rate ofdeaths per miles traveled leveled offafter twenty-five years of falling sharply.Most of last year’s jump in fatalities wascaused by rollover crashes involvingSUVs or pickups. The recently reportedrise in U.S. highway fatalities showsthat vehicle safety has taken a back seatto profits. There has been a markedchange in buying habits of the motor-ing public. Cars now represent nomore than half of all vehicles on theroad. For the first time, SUVs and otherlight trucks outsold passenger cars lastyear. SUV and pickup sales nowaccount for the bulk of profits for U.S.automakers. These popular vehicles,which are not built like cars, are beingused by families as passenger vehicles.They are especially popular with youngpeople. Unfortunately, while thesevehicles are not like passenger cars,that is the way most of them are used.

Auto industry officials insist thatSUVs are just as safe as cars and try toput the blame on people for the motorvehicle crashes. Clearly, folks who

don’t wear safety belts do contribute tothe death rate. However, auto safetyadvocates correctly dispute the claimsthat people are the problem. Thesimple fact is that there is a higher mixof SUVs and unstable vehicles in theentire fleet. Safety advocates are callingfor the government to set roof crushstandards for SUVs. They are alsoasking carmakers to install roof-mounted airbags that can protectagainst head injuries during rollovers.If these things are done, it will have amarked improvement in safety and areduction in the fatality rate.

Clarence Ditlow, director of theCenter for Auto Safety, applauded therecent popularity of smaller, car-basedSUVs – often called crossovers or CUVs– because their smaller, more forgivingframes pose less of a threat to othercars. Auto industry researchers mustmove into the realm of designing vehi-cles that can avoid wrecks in the firstplace. Some types of crash-avoidancesystems are already on the market.Interestingly, these systems are morewidely available in Europe than in theUnited States.That should not come asa big surprise to safety advocates whohave been around a while, since wehave always been far behind Europeancountries on safety issues.

Mercedes, Jaguar, Lexus, and Infinitioffer what is called “adaptive cruisecontrol,” which uses either radar orlasers to sense when other traffic isgetting too close and makes the carslow down. Automakers market thesystems as a convenience rather than asafety feature. Bob Ervin, head of engi-neering research at the University ofMichigan Transportation Research Insti-tute, is supervising the field-testing of adevice that goes one step further, usingfull-time radar to keep a car fromhitting any obstacles. According toknowledgeable sources, the technologyworks. The unknown factor is howdrivers will interact with it, how muchthey will trust the system, and howmuch control they are willing to sur-render. One of the most promising

advances in crash avoidance is elec-tronic stability control. Such systems,already widely available in Europe, butoffered on only a few U.S. luxury carsand SUVs, use gyroscopes and othersensors to judge when a vehicle isbeginning to tip on its side.Then thesystem can apply brakes to individualwheels to prevent a rollover. Mostsafety advocates contend that theseshould be standard on all SUVs. Regula-tors at NHTSA are said to be taking aclose look at stability control.

Government’s Product LiabilityCase Settled

Wal-Mart has agreed to pay a$750,000 penalty to resolve a govern-ment lawsuit that said the companyfailed to report safety hazards fromdefective exercise “glider” machines.Wal-Mart also agreed to better trackinformation about product safetyhazards, the Consumer Product SafetyCommission and the Justice Depart-ment brought the suit. Apparently,Wal-Mart reported injuries involving theglider machines to the manufacturer,but for some reason saw no reason toalert the CPSC. In May 2001, thefederal government accused Wal-Martof failing to report hazards with Weiderand Weslo brand exercise gliders.Despite knowing of at least twenty-nine consumers who were injuredwhile trying the equipment in Wal-Martstores, the retail giant failed to notifythe CPSC. Injuries included fracturedvertebrae, herniated discs, and a com-pression injury to a woman’s spine.People used the gliders by sitting on aseat while pushing pedals with theirlegs and pulling handlebars with theirarms. The seat on the gliders could col-lapse during use, causing people to fall,according to the CPSC. The lawrequires companies to immediatelyreport dangerous products to the gov-ernment. In November 2001, IconHealth & Fitness Inc., the Logan, Utah-based manufacturer of the gliders,agreed to pay a $500,000 civil penalty



for failing to report 68 injuries involv-ing the same exercise equipment. Aspreviously reported, Icon recalledabout 75,000 of its folding exercisegliders in 1999.

Goodyear Tires Under Fire

There have been a number of law-suits filed against Goodyear, alleging adefect in a particular type of tire thatthe company manufactured. The law-suits claim the rubber tread on the tirespeeled away from the steel beltsbeneath and that this “tread separation”caused crashes, injuries, and in somecases, death. The tires that are in ques-tion are certain Goodyear Load Range“E” type tires made between 1991 and2000. It is estimated that millions of thetires remain on the road on large,heavily loaded sport utility vehicles,pickups and commercial-sized vans.Goodyear claims the tires “were, andstill are, quality tires.” The companyurges drivers to make sure the tires areproperly inflated. However, there havebeen lots of problems with these tires.

In a deposition obtained by GoodMorning America, a retired Goodyearengineer testified that by the mid-1990s, the company was concernedenough about the tires to begin aninternal investigation. Goodyear wasconcerned about the number of treadseparation claims. “Those claims weregrowing at an alarming rate,” engineerBeale Robinson testified in a video dep-osition. Between 1991 and 2001, therewere tread separations in 15,000 LoadRange “E” tires. Goodyear says its inves-tigation found no defect in the tires.Further, the company said that incrashes it looked at, tread separationwas caused in every case by eitheroverloading of the vehicle, under-infla-tion of the tire, or other misuse of thevehicle. Admittedly, some drivers dooverload their vehicles, and someunder-inflate the tires. Clearly, thosefactors are not good practices. Untilrecently, however, few folks were ade-

quately warned about such practices.A National Highway Traffic Safety

Administration investigation turned up87 reported crashes involvingGoodyear Load Range “E” tires between1991 and 2001.Approximately half ofthe crashes caused injuries — a total of158 injuries — and some were veryserious. Eighteen people died. In 1996,Goodyear redesigned the tires, addingan extra nylon cap or overlay betweenthe tread and the steel belts. GoodMorning America reports that since thegovernment investigation closed,Goodyear received reports of ten morecrashes serious enough to causetwenty-six additional injuries and fivemore deaths. Last year, after the gov-ernment asked more questions aboutthe tires, Goodyear said it wouldreplace LRE tires with the newer typeon 15-passenger vans and ambulances.Most of the injuries and deaths linkedto the tires have been in large vans.After that, NHTSA closed the investiga-tion. However, the agreement does notapply to millions of others with thecontroversial tires on their SUVs,pickups, or utility vans. If thosemotorists want new tires, they mustpay for them.The tires were all madeby Goodyear, but many of them don’thave the Goodyear brand on them,because they were sold by many differ-ent retailers under various brandnames. However, the tires do all havethe words “Load Range E” on the side-wall.Also, the new design tires with thenylon cap say 2 polyester cords, plus 2steel cords, plus 2 nylon cords. If youdon’t see those 2 nylon cords, you mayhave one of the old design tires. AGoodyear dealer can determine if LoadRange E tires are made by Goodyear.

Certain Hazards Created ByChildren’s Clothing

When purchasing clothes for chil-dren, parents need to look past theappearance and the name brand. Flam-mable clothing can cause serious and

permanent injury and even death espe-cially for children. Clothing that cancatch fire easily are associated with 200to 300 emergency room-treated burninjuries to children annually. Studieshave shown that children are most atrisk from burn injuries that result fromplaying with fire (matches, lighters,candles, burners on stoves) just beforebedtime and just after rising in themorning. Manufacturers and retailershave a duty to sell children’s clothingthat satisfies flammability regulations.When clothes manufacturers and retail-ers fail to observe these standards, chil-dren suffer.

Children’s clothing can be separatedinto sleepwear and all other types ofclothing. Children’s sleepwear isdefined as any product or fabricintended or promoted for use in chil-dren’s sleepwear. Children’s sleepwearmust either be made of flame-resistantgarments or be snug-fitting. As of June28, 2000, the Consumer Product SafetyCommission (CPSC) required all hang-tags and permanent labels to specify ifthe clothing is flame-resistant or snugfitting. Flame-resistant garments aremade from inherently flame-resistantfabrics or are treated with flame-retar-dants and do not continue to burnwhen removed from a small flame.Snug-fitting sleepwear is made ofstretchy cotton or cotton blends that fitclosely against a child’s body. Snug-fitting sleepwear is less likely thanloose clothing to come into contactwith a flame, and does not ignite aseasily or burn as rapidly because thereis little air under the garment to feed afire. Although rarely publicized, manu-facturers and retailers commonlyviolate these clear standards. Forexample, in 1999, Gap recalled 231,000children’s pajamas because they failedto meet flammability standards.Parents should note that unless labeledas flame retardant or flame resistant allclothing should be considered flammable.

All other types of children’s clothingare governed by standard flammability


tests. Standard flammability measureignition ease, flaming, rate of burn, orflame spread. Fabrics that exhibitnormal flammability are entitled Class1 textiles. Class 1 textiles are accept-able for use in clothing. Fabrics thathave raised fibers are considered to beof intermediate flammability and maybe used in clothing. These fabrics areentitled Class 2 textiles. Finally, Class 3textiles are fabrics that exhibit rapidand intense burning. Class 3 textilesare dangerously flammable and maynot be used in clothing.

Fibers burn differently. Generally,cotton ignites and burns easily. Poly-ester and nylon are slower to ignite,butwill eventually burn with a flame. Themelting residue from polyester andnylon is a very high temperature andcan cause deep and severe skin burns.On the other hand, wool and silkshrink from flames and are hard toignite; however, they burn easily.Blended fabrics like cotton and poly-ester are oftentimes more dangerousthen either individual fiber. Manymajor retailers have produced clothingfor the public that failed standard flam-mability tests. In 2000, Kmart recalled42,000 fleece sweatshirts. In 1998,Hardwick Knitted Fabrics, Inc. wasforced to recall 16,800 children’s vests,pants, men’s shirts, and ladies tops forfailure to meet flammability standards.In 1997,Target Stores recalled 106,000fleece sweat shirts for men and boys.Finally, in 1996 a national retailerrecalled 40,000 flammable sheer silkchiffon scarves. The testing revealedthat the scarves burned faster thannewspaper.

Occasionally, retailers will voluntarilyor involuntarily recall garments that failflammability standards. More oftenthat not, the only redress is to file alawsuit against the clothes manufac-turer. We currently represent a younggirl who was severely burned becausethe shirt she was wearing was defec-tive and unreasonably dangerous. Theshirt fabric is a blend of polyester andrayon. This young person sustained

serious and permanent burns to herchest, arm and face. She will be scarredfor the rest of her life. Consumers,especially parents, should take note ofthe clothes they purchase to avoidserious injury or even death. Manufac-turers must take all steps possible toavoid putting dangerous and hazardousproducts, which will be used by chil-dren,on the market.

XII.PREMISES LIABILITY UPDATE

Alabama Power Didn’t Learn ALesson

Several years ago, our firm handled acase in Montgomery,Alabama, where ayoung man was electrocuted by a guywire that became energized. Welearned during the case that AlabamaPower Company had a large number ofguy wires located around the state thathad a configuration on its power polesthat made them highly dangerous andhazardous. Some of these dangerousguy wires at that time were actually onschool grounds. Now an Alabama juryhas awarded a $3 million verdict inanother lawsuit filed against theAlabama Power Company in a mostsimilar case. The 50-year-old man in therecent case was severely burned whenhe touched a guy wire. The victim wasleaving Outback Steakhouse in Mont-gomery when he realized his frontbumper was caught on an unprotectedguy wire located in close proximity tohis parking space. When our clientattempted to remove the guy wire fromthe bumper of his vehicle, an electricalcurrent was conducted through theguy wire and into his body. As a result,he was severely burned, resulting inpermanent scarring. He also sufferedpermanent injuries to his left arm andhand and was required to undergo mul-tiple skin grafts and two years of physi-cal therapy. Unable to continue in his

occupation as one of the top huntingand fishing guides in the south, ourclient has suffered a significant loss ofincome. The utility company filedwritten admissions during the trial,which acknowledged that the poleconfiguration advocated by our expertwas a safer method than was used onthe pole involved in this incident inpreventing a guy wire from becomingenergized. Alabama Power Companyalso admitted that it was aware that onprior occasions, guy wires havebecome energized resulting in injury ordeath.

Obviously, the first case we tried inMontgomery in the 1980s, where aninnocent truck driver was electrocutedwhen a guy wire contacted the door tohis truck, should have been a warningto Alabama Power Company. In thefirst case, the Montgomery County juryawarded $5 million for that death, afterhearing the power company witnessesadmit they had a great number of guywires that were dangerous, when weonly asked for $3 million. We learnedthen that Alabama Power Company hada tremendous number of dangerousguy wires around the state as men-tioned above – some on schoolgrounds. The jurors we talked to afterthe trial told us they were shocked tohear the evidence in that case andhoped their verdict would make thecompany locate the hazards and “fix”the problems. Obviously, there havebeen other cases. No safety engineercan justify a guy wire becoming ener-gized. Certainly, no layperson shouldanticipate that such a “dead” wirewould be “hot” and pose such a haz-ardous condition.

The current jury verdict was com-prised of $1 million in compensatorydamages and $2 million in punitivedamages. Some jurors commented afterthe trial that they hoped the $2 millionpunitive award would motivateAlabama Power to correct its remainingunsafe pole configurations.Where havewe heard that before? It was clearly asurprise to everyone in the courtroom



that guy wires could ever become ener-gized under any circumstance. Ourclient settled with Outback Steakhouseand Hadmanco, the building owner,before the case went to trial, for$800,000. Graham Esdale and LaBarronBoone from our firm and Lynn W. Jinksof Jinks, Daniel & Crow L.L.C., locatedin Union Springs, represented the plain-tiff.

Companies Pay $12 Million ToSettle Lawsuit By WomanBurned By Power Line

A Kansas City woman, who sufferedsevere burns and lost her arm and legfrom a downed power line, has settledher lawsuit for $12 million. The 35-year-old’s case was against the KansasCity Power & Light Co., its parentcompany, Great Plains Energy Inc. (theparent company) and parts supplierHubbell Power Systems Inc. The victimsaid while she appreciated the settle-ment, but she would give it all back ifshe could have her arm and leg back.The victim was injured in 2002 whenshe and her family were loadinglaundry into her car. A power linesnapped and fell on the victim, herhusband, and her two children. Theline burned the poor lady over half herbody. Doctors had to amputate herright arm and leg in order to save herlife.The other family members sufferedelectrical shocks, but none were sosevere. The three companies paid thesettlement – $11.5 million to theprimary victim, $400,000 to herhusband, and $50,000 to each of hertwo children, ages ten and three. Theline fell because KCP&L improperlysecured it with a clamp intended fortemporary repairs. Before the accident,the victim worked in data entry for abank. Her burns were so serious thatshe has not been able to use prostheticlimbs. At least these defendants inKansas City did the right thing andsettled the case. Hopefully, they willtake remedial action to keep this sortof thing from happening again.

A Serious Breach Of Security AtMarion Military Institute

In the past, our firm has handledseveral cases against Marion MilitaryInstitute. In fact, we currently havesuch cases pending. Marion MilitaryInstitute is a private military schoollocated in Marion,Alabama. The schoolaccepts both male and female appli-cants, ranging from junior high stu-dents to Associate Degree students. Alllive and study within the confines oftheir campus. The co-ed nature of thecampus and the integration of collegeand high school age cadets with juniorhigh cadets is a lethal combination forassaults on both female and youngcadets. With the make-up of thestudent population, it would appearthat security would be a top priority atMarion. Unfortunately, that doesn’tseem to be the case.

We have recently concluded a casewhere a junior high female cadet (14-years-old) was raped by a high schoolcadet in the female dormitory. Themale cadets made entry through aground level window. To the school’scredit, since this incident occurred, allfemale cadets were moved to a secondfloor dormitory area. Unfortunately,after this move occurred however, twomore rape incidents occurred at thesecond floor dormitory area after secu-rity measures were breached. The lackof adequate security to protect thecadets is difficult to understand andcan’t be justified.

We are currently handling a casewhere a hazing incident occurredinvolving a junior male cadet. Thehazing was carried out by four highschool male cadets. It is commonknowledge that certain types of hazingconduct occur at military academies,fraternity organizations, and othersimilar groups. However, there must belimits if such activities are allowed totake place. In this case, the high schoolcadets invaded the dormitory room ofa junior high cadet late one night andinflicted rectal injuries with a broom

handle. There was an adult supervisoron the same floor in the dormitorywhere the incident occurred. This typeactivity can’t be tolerated in a civilizedsociety.

Parents are leaving their vulnerablechildren in the hands of a schooladministration that either cannotprovide adequate security or refuses todo so. The type of conduct by cadetsthat we have encountered and the lackof security by the administration isintolerable and must come to a halt. Ifparents are contemplating leaving theirchildren at a place such as a militaryschool, they should thoroughly checkout all security measures the school hasin place to protect children in theircustody and under their care. Youwould think a military school wouldhave adequate security measures inplace. Unfortunately, we have notfound that to be the case at Marion Mil-itary Institute.

Ed McMahon Settles His MoldLawsuit

Insurers and other defendants willpay Ed McMahon $7.2 million to settlea lawsuit alleging that toxic moldspread through his Beverly Hills home,sickening Johnny Carson’s “TonightShow” sidekick and his wife and killingtheir dog. The settlement is the highestpublished recovery in the nation by anindividual alleging property damage ina mold case. Ed and Pamela McMahonsued American Equity Insurance Co. inApril 2002 for breach of contract, negli-gence, and intentional infliction ofemotional distress. The couple andmembers of their household staff wereallegedly made sick by toxic mold thatspread through their six-bedroomhouse after contractors failed to prop-erly clean up water damage from abroken pipe.

McMahon’s doctor ordered the then-80-year-old to move out of his 8,000-square-foot house overlookingColdwater Canyon after he spent fourmonths on antibiotics for coughing,


sneezing, and congestion. His healthimproved. The McMahons’ dog, Muffin,had to be put to sleep after contractinga respiratory illness. The McMahons,who at first rented a $23,000-a-monthhouse but then moved to reduceexpenses, are having the mold removedfrom their property by replacing wallsand treating beams.They plan to returnhome in five or six months.

The pipe broke in July 2001 andflooded their den, which was filledwith memorabilia from McMahon’s tel-evision career.The McMahons discov-ered mold in the den a month later. Itspread through the heating and air-con-ditioning ducts to their bedroom, invad-ing their closets and contaminatingtheir clothes, according to the suit.Workers originally painted over themold, prompting the McMahons toquestion the cleanup methods.As theproject became more expensive, insur-ers and contractors abandoned it, andthe McMahons sued. McMahon willreceive $5.05 million from AmericanEquity Insurance Co. and the otherinsurers; $750,000 from Benchmark;$500,000 from Alliance EnvironmentalGroup; $250,000 from Southern Cali-fornia Insurance Adjusters and Robertand Ken Koster; $250,000 from PacificHealth and Safety Consulting Inc.;$3,000 from California Power Vac; Con-trolled Environmental Solutions willpay $230,000; and Monteleone Interi-ors Inc. added $200,000 to the total set-tlement.

Other Notable Mold Cases

Melinda Ballard, had mold problemsin her home. She then established theAustin, Texas-based “Policyholders ofAmerica” last year “to empower policy-holders” in their dealings with insurersas her mold-suit lingered in the courtsystem. In a statement given to the LosAngeles Times, Ms. Ballard said thatalthough McMahon’s settlement is thelargest to date, she is not sure that $7million will cover all his losses and liti-gation expenses. Nor does it give her

hope for more out-of-court settlements.Ms. Ballard believes that McMahonspent several hundreds of thousands ofdollars on expert witnesses alone.

Darren and Marcie Mazza and their 8-year-old son won a $2.7 million verdictin November 2001 against the ownersand managers of their California apart-ment complex for personal injuries suf-fered from mold. A Texas jury awardedMelinda Ballard and her family a record$32.1 million in June 2002 for mold-related damage to their home. Thisaward was reduced to $4 million andthe case is now on appeal to the TexasSupreme Court. Erin Brockovich, theparalegal whose crusade against toxicpolluters was made into a movie, hasalso sued in a California court, allegingmold damage. She has settled with thebuilder and is still pursuing claimsagainst the seller. While there havebeen other settlements of mold cases, itdoesn’t appear that the flood of litiga-tion predicted by the insurance indus-try has occurred.

Falling Doors Kill Boy At TexasHome Depot

We discussed in previous issues howsome of the warehouse-type storeshave lots of hazards located on theirpremises. Home Depot Inc. is theworld’s largest home improvementretailer and the second largest retailerin the United States. It has expandedfrom its original 761 to more than1,500 stores today. The retailer has hada good number of injuries and deathson its premises. Home Depot couldnow face criminal charges from theMay 2nd death of a 6-year-old boy whowas crushed by falling doors in thecompany’s Pharr,Texas, store. Accord-ing to the chief felony supervisor in theHidalgo County District Attorney’sOffice, Home Depot has a lot ofexplaining to do about that child’sdeath. The child was in the HomeDepot store with his father and step-brother one evening when he wasstruck by large patio doors that fell

from a pallet on the floor of one of theaisles.The child was pronounced deadon arrival at a nearby hospital. Thischild was at least the fourth customerkilled in Home Depot stores since1999, according to our information. InFebruary, Atlanta Business Chroniclepublished a series of stories document-ing the deaths of three customers andfive workers at Home Depot storessince 1999. It is unfortunate that nogovernment agency collects informa-tion on customers killed in retail storesand Home Depot won’t release infor-mation about customer deaths in itsstores. Company records obtained in alawsuit against the company followingthe 1999 death of a 79-year-old womanwho was hit in the head by fallinglumber while shopping in a Californiastore revealed that Home Depotreceived 185 reports of injuries to cus-tomers each week in 1998. Unfortu-nately, no more recent statistics areavailable. Home Depot says it is con-ducting its own investigation of themost recent death.

Texas law allows the state to chargecorporations with criminal offenses ifthe crime is committed with theknowledge of the company’s top man-agement. A company can be chargedwith criminal negligence if its manage-ment allows unsafe conditions to existthat result in an injury. “The risk mustbe of such a nature and degree that thefailure to perceive it constitutes a grossdeviation from the standard of care thatan ordinary person would exerciseunder all the circumstances as viewedfrom the actor’s standpoint,” the lawstates. The law allows the state to filecriminal charges against Home Depotand the employee who left the pallet ofdoors unattended. However, mostcases are resolved with the companypaying a substantial fine, he said. Weunderstand that Home Depot hasordered a comprehensive review ofcompany safety procedures in thewindow and door departments of all itsstores. This came only days after thedeath of the child in Texas. The



company also issued a new ruledesigned to prevent the conditions thatcaused the death. However, HomeDepot denies that the companychanged any of its safety proceduresbecause of the accident.

On the night of the incident, anemployee had moved a pallet contain-ing several patio doors, each weighingmore than 100 pounds, from a shelf tothe floor. He removed the packaging,holding the doors upright on the palletto get one of the doors for a customer.The pallet was left unattended withoutanybody securing the remaining doors.Those doors fell the child. Thecompany’s new policy requiresemployees to remove all the doors andwindows from pallets if the packaging,which usually consists of shrink-wrapor bands that are installed by the manu-facturer, is removed. The new policyalso requires stores to post the instruc-tions on all four sides of packagesaffected by the change. The companyis paying the cost for local stores toimplement the new procedures andensure compliance with existing safetystandards instead of charging suchexpenses to each company’s operatingbudget, which is the company’s cus-tomary procedure. According to thestore manager, he was surprised thatthe changes came about so soon afterthe death. The manager told a localnewspaper,“It would be criminal not toreview our policies. It’s sad that some-body had to die for things to change.”

Wal-Mart’s Litigation Strategy

Over the years,we have had a consid-erable number of cases against Wal-Mart. Mike Crow and Julie Beasleyhave handled most of these cases forthe firm. The giant retailer made a bigto-do over its so-called new litigationstrategy a few months ago. In fact, thecompany announced the change in liti-gation policy to the public. However,we have seen little change in the waythis corporation conducts it litigationpractices. For years, Wal-Mart was

noted for it’s scorched-earth litigationstrategy and it’s frequent abuses of thediscovery process. Over the pastdecade,Wal-Mart developed a very badreputation with judges and lawyers asthe company was repeatedly sanc-tioned for discovery abuse. While wehave had fewer cases against Wal-Martover the past few months, otherlawyers who have dealt with thecompany tell us that they are experi-encing the same difficulties with thecompany as in the past. Hopefully, thegiant retailer has really turned over anew “litigation leaf”and we just haven’texperienced it yet.

XIII.WORKPLACE HAZARDS

Justice Department investigat-ing McWane Inc.

We have discussed the safety prob-lems at Birmingham-based McWaneInc. in prior issues. Now, the U.S.Justice Department is investigating theenvironmental and safety record of thecompany. McWane operates elevenfoundries across the country and hasbeen the subject of media reports thatdescribed safety and environmentallapses. The New York Times reportedin a series of articles that McWane hadmore safety violations than its competi-tors and endangered the lives ofworkers with safety policies thatresulted in the deaths of two employ-ees in 2000. The company employsabout 300 people at McWane Cast IronPipe in Birmingham. It also committedenvironmental violations including ille-gally discharging water contaminatedat its New Jersey plant into theDelaware River in 1999. McWane’sthree Alabama plants have been fined$535,000 in the past three years forenvironmental violations. Employershave a legal and moral obligation toprovide a safe place for their workers.

The government has the same obliga-tion to make sure that this happens. Itis unfortunate that some in CorporateAmerica don’t meet their obligation.When this occurs, working men andwomen are put at risk for serious injuryand even death.

Union Carbide To Pay $1.2 Million In Asbestos Case

Union Carbide Corp. must pay aFlorida man $1.2 million because hegot cancer working with a drywallcompound that contained asbestosfibers that the company made in the1970s. The jury, after three days ofdeliberations, found that the companywas negligent in not warning construc-tion workers about its joint compound.The company will likely appeal theverdict. Union Carbide told the PalmBeach Post that the company sympa-thizes with the Kavanaughs, and “it’sclear to us that the verdict was drivenby the sympathy for Mr. Kavanaugh’sillness.” That is a typical corporateresponse. Hundreds of thousands ofconstruction workers were exposed tothe wall joint compound before it wasbanned in 1977. Kavanaugh, a WestPalm Beach resident who worked as acarpenter, said he developed incurablemesothelioma, a cancer of the thinlinings of major organs caused byasbestos exposure, from inhaling theasbestos fiber while on the job. Thedisease was diagnosed two years ago.In December, a Broward Countydrywall worker received a $1.8 millionverdict against Union Carbide. Michi-gan-based Dow Chemical Co. pur-chased Union Carbide two years ago.

XIV.TRANSPORTATION

Should Automobile “BlackBoxes” Be Regulated?

Many people have heard of the“black boxes” that are found in aircraft


and used by investigators to help piecetogether what happened in the finalmoments of an airplane crash.However, many people are unawarethat many automobiles now contain“black boxes” that also provide certaininformation about the vehicle in themoments leading up to a car crash.These automobile “black boxes”are notrequired under any government regula-tions. The automobile industry hasbeen placing “black boxes” in automo-biles for a number of years in selectedmodels. These data-recording deviceswere first developed by automakers toassist in airbag deployments in frontalcollisions. As the years have passed, thedata-recording ability of these airbagenablers has increased. The informa-tion stored in vehicle “black boxes” hasbeen used to assist researchers instudying crashes as well as providingvehicle crash information in both civiland criminal litigation.

The most advanced “black boxes”used in automobiles today can recordinformation, such as seat belt use,vehicle speed prior to accident, brakeusage, and, in some cases, steeringinputs. Unfortunately, many of theautomobile manufacturers have beenvery reluctant to release informationabout what information is recorded bythese onboard computers and how toretrieve the data. Only GM has pro-vided detailed information aboutreading and retrieving the informationstored in its onboard computer “blackboxes.” Information from automobile“black boxes” has been showing up incourtrooms over the last several years.Prosecutors and defense attorneys alikehave used the information in criminalprosecutions to show driver inputs andspeeds during criminal prosecutions.Civil attorneys have also found greatuse for the information in prosecutingproduct liability cases. On severaloccasions, our firm has been able toprove that serious product defectsexisted in automobiles that wereinvolved in low-speed foreseeablecrashes, even when defense experts

claimed the accident involved exces-sive speeds.

The National Highway Traffic SafetyAdministration, the federal agencyresponsible for regulating automakers,has been reviewing “black box” tech-nology for some time and collectingpublic comments to determinewhether these devices should be regu-lated. Since this computer technologycan record sensitive information aboutvehicle use, the question ariseswhether the devices should be manda-tory and, if so, should they be regu-lated. In certain civil litigation, automanufacturers have been made awareof the accident and obtained down-loaded computer information from the“black boxes” without the owner’sconsent or knowledge. Some Courtshave addressed the issue and deter-mined that the content of the datarecorders is owned by the vehicleowner, and therefore third parties haveno right to the information without theconsent of the owners.

Since “black boxes” are often neces-sary to activate airbags in collisions, itappears that the technology is a neces-sary element of safe car design. If thesedevices are going to be present in auto-mobiles and collect data regarding thevehicle use, NHTSA should providesome guidance to manufacturers as towhat information the devices shouldrecord and how the information can beretrieved by consumers. Additionally,courts should make it clear that thedata on these recorders is the propertyof the vehicle owner, and manufactur-ers should not be allowed to unilater-ally collect the data without thepermission of the owner. Although thistechnology is not always 100% accu-rate, it is very helpful in helping indetermining what happened incrashes, and manufacturers should beencouraged to continue the develop-ment of “black boxes.”

NHTSA Releases PreliminaryEstimates Of 2002 HighwayFatalities

The National Highway Traffic SafetyAdministration has released prelimi-nary estimates concerning trafficdeaths during 2002. Alcohol-relatedhighway fatalities increased again in2002. With overall highway fatalitiesalso up slightly from 2001, the statisticsunderscore the need for better statelaws that address the causes of theproblem and stricter enforcement. In2002, an estimated 42,850 people diedon the nation’s highways, up from42,116 in 2001.The fatality rate per 100million vehicle miles traveled (VMT)remained unchanged at 1.51, accordingto preliminary estimates. This repre-sented the highest number of fatalitiessince 1990. Fatalities in rollovercrashes involving sport utility vehiclesand pickup trucks accounted for 53%of the increase in traffic deaths. In2002, 10,626 people died in rollovercrashes,up 4.9% from 10,130 in 2001.

The preliminary report also notessome significant progress. NHTSA saidthat deaths of children seven and underdropped to historic low levels. In 2002,980 children seven and under werekilled, down from 1,053 in 2001. Pedes-trian deaths also declined to 4,776, a2.2% drop from 2001.The number ofpersons injured in crashes alsodeclined from an estimated 3,033,000in 2001 to 2,914,000 in 2002, almost a4% drop. NHTSA earlier estimated thathighway crashes cost society $230.6billion a year, about $820 per person.The preliminary 2002 statistics alsocontinue to show the increased risk ofdeath and injury when drivers and pas-sengers do not wear safety belts: 59% ofthose killed in crashes last year werenot belted. NHTSA’s Fatality AnalysisReporting System (FARS) also showsthat, in 2002: Fatalities from large truckcrashes dropped from 5,082 in 2001 to4,902 in 2002, a 3.5% decline.

Motorcycle fatalities increased for



the fifth year in a row following yearsof steady improvement.A total of 3,276riders died, up 3% from 2001. Deathsamong riders fifty and over increased24%. Of the total, alcohol-relateddeaths in 2002 accounted for 42% —17,970 deaths — up from 41% (17,448)in 2001. Deaths in low alcohol crashes(.01–.07 blood alcohol content)dropped 7.2% to 2,335 deaths. Deathsof persons in high alcohol crashes (.08BAC and above) rose 4.7%. Alcohol-related fatalities have been risingsteadily since 1999. Young drivers(16–20) were involved in 7,722 fatalcrashes in 2002, up slightly from 7,598in 2001.The number of occupant fatali-ties for children ages eight to fifteenincreased by nearly 9%. In 2002,vehicle miles traveled increased slightlyto 2.83 trillion, up from 2.78 trillion in2001, according to the DOT’s FederalHighway Administration. Summaries ofthe preliminary report are available onthe NHTSA Website at:www.nhtsa.dot.gov.

$7.5 Million Jury Verdict InTurnpike Crash

Contractors that do work on busyhighways have a special obligation tomake the construction zones safe forthe traveling public. A federal courtjury has awarded $7.5 million to anOhio man who was permanently dis-abled when his car hit a dump truckstopped in a construction zone on thePennsylvania Turnpike in 1999. Thejury awarded the sum to AnthonyRavotti, 37, and his mother andguardian, Janet Ravotti, following a two-week trial. New Enterprise Stone &Lime Co., which had set up the con-struction zone, and contractor BilgerConcrete and truck driver Richard L.Sunderland were at fault in creating thedangerous condition. New Enterprisewas found to be at fault because itignored turnpike commission rules inestablishing its own traffic pattern onthe highway. The jury decided that theplaintiff was 25% responsible for the

crash because he was driving too fast.As a result, the award will be reducedby that percentage to about $5.6million. New Enterprise will be respon-sible for paying interest on the award,which will bring the total back up veryclose to the verdict amount. The plain-tiff, who suffered severe brain damagein the crash, was driving his PontiacGrand Prix from Cleveland to Marylandat about 12:30 a.m. when he entered aconstruction zone. New Enterprisehad set up the construction zone aboutan hour before the incident. Instead ofshutting down one eastbound lane ofthe turnpike, the company kept bothlanes open,but shifted them.

The truck driver,who had just startedon the job that night hauling stonemillings from the site, got lost andstopped his dump truck on what hethought was the berm while he calledfor directions on his radio. As the plain-tiff approached at about 50 mph in the40 mph zone, he saw the dump truckstopped in his lane. He tried to veerinto the adjacent lane, but clipped thetire of an 18-wheeler, spun around andstruck the parked truck. New Enter-prise took it upon itself to set up thedouble-lane traffic zone in violation ofturnpike procedure. The plaintiffremained in the intensive care unit fora month, is now dependent on othersfor care, and has a life expectancy ofabout 15 years. We handled a similarcase in Alabama a few years ago thatresulted in the death of a fine younglady who was on the way to her firstjob at the local church. The facts in thetwo cases were almost identical.

$10.5 Million Verdict In WestVirginia Airplane Crash

A jury has awarded $10.5 million tothe family of a pilot killed during a1996 crash in West Virginia. The jettook off from the airport before crash-ing near an apartment complex andbursting into flames. The airport wasfound 90% liable for the accident forhaving a ditch near the runway.The jet

was blown into the ditch duringtakeoff, resulting in damage to theplane’s landing gear, brakes, and wingflaps. The crash killed the two pilots, aflight attendant and one passenger. Thefamilies of the other three victims hadalready won verdicts or reached settle-ments related to the crash.

Government Settles With Families Of Plane Crash Victims

The federal government has agreedto pay a total of $4.75 million to thefamilies of three people killed in aMarch 2000 plane crash at the Sarasota-Bradenton International Airport. Thethree families had sued the Federal Avi-ation Administration in a federal districtcourt in Tampa,Florida.They blamed airtraffic controllers for a runway acci-dent that killed their loved ones and afourth flier. On the date of the inci-dent, air traffic controllers told a pilotto taxi his airplane down the runwayjust after they cleared another pilot fortakeoff on the same runway. The twoCessna planes collided and exploded inflames. Both the pilot and the passen-ger in the first plane were killed. Aflight instructor was riding in thesecond aircraft.

None of the four lawsuits filed onbehalf of the victims’ families ever wentto trial. One suit was settled for $1.4million last December. The threeremaining families reached separatesettlements in April of this year. Allwere awarded between $1.35 millionand $2 million. Awards in such casesare designed to address the “mentalpain and anguish of the survivors.” Anonbinding arbitration process, muchlike mediation, was involved andresulted in the last three settlements.The three-judge arbitration panel con-cluded that the pilots were not respon-sible in any way for the crash. Thejudges placed 70% of the blame for thecrash on the FAA’s air traffic con-trollers, a ruling consistent with thefindings of the National TransportationSafety Board.The board also faulted the


pilot of the first plane for failing tocheck the runway before moving ontoit. The arbitration panel awarded theflight instructor’s family $2.75 million,but because the arbitration was non-binding, the federal lawyers asked for atrial.The two sides then entered intofurther settlement negotiations anddecided on an award of $2 million.Thefamily had already received $675,000from the insurance companies thatcovered the pilot of the first aircraft.

A Charlotte Crash That Killed21 People

In January, US Airways Express Flight5481 crashed on takeoff from Char-lotte-Douglas International Airport inCharlotte, North Carolina. The planetook off with its nose pointed too farup, according to transcripts of thecockpit voice recorder released on May20th. The pilot apparently pushed thecontrol column that moves the tail flap,which was supposed to push the nosedown to the correct angle. Unfortu-nately, the tail flap, or elevator, did notrespond properly, according to theNational Transportation Safety Board’sinvestigator. The pilot then radioed thecontrol tower and reported,“We havean emergency.” Warning horns thensounded. The plane plunged to earth37 seconds into the flight from Char-lotte, North Carolina, to Greer, SouthCarolina. All 21 people aboard the 19-seat Beech 1900 turboprop were killed.Investigators have been looking at amechanical problem and the plane’sweight as potential causes of the crash.The plane was estimated to be within100 pounds of its maximum takeoffweight. In a preliminary report, theNTSB said turnbuckles that controltension on elevator control cables wereset improperly, leaving one cable nearly2 inches shorter than the other. If acable is too slack, the pilot does nothave full control of the elevator. Theplane’s tail assembly was adjusted twodays before the crash.The aircraft’s datarecorder showed an unusual up-and-

down motion of the elevator controlon all nine flights it took following themaintenance work. The NTSB hearingson the crash focused in part on over-sight of airplane maintenance per-formed by outside contractors.

XV.MASS TORTSUPDATE

Information On Serzone®

Our Mass Torts Section continues toinvestigate hundreds of claims involv-ing liver injury to persons resultingfrom ingesting the prescription antide-pressant Serzone® (nefazodonehydrochloride). Roger Smith is the leadlawyer assigned to these cases and hereports that medical records are beingcollected on our clients. Serzone®,manufactured by Bristol-Myers Squibb,has been marketed in the United Statessince 1995. On March 6, 2003, PublicCitizen, dedicated to protecting con-sumer interests, petitioned the FDA toban Serzone® in the United States.According to the Petition filed with theFDA,“Nefazodone (Serzone®) appearsto be one of the most dangerous anti-depressants marketed: nefazodone-induced liver toxicity cannot bepredicted in any individual, there is noway to safely monitor for it, nor is thereany way to guarantee that once diag-nosed,patients’ lives can be saved.”

In January 2003, Bristol-Myers Squibbwithdrew Serzone® from the Swedishmarket after the Swedish Medical Prod-ucts Agency announced that liverenzyme monitoring would be requiredin product labeling. After learning thatother European countries were consid-ering similar monitoring and labelingchanges, Bristol-Myers Squibb with-drew Serzone® from the entire Euro-pean market that same month.Concerns over liver toxicity andSerzone®, however, are not new.Reports of jaundice and drug-induced

hepatitis surfaced in 1998. Three casesof liver failure in early 1999 resulted intwo liver transplants and one death.Additionally, a group of independentSpanish researchers analyzing adverseevent data in Spain found that the inci-dence of hepatic injury in Serzone®users was 7 to 22 times more likelythan in users of other antidepressants.In January 2001, Bristol-Myers Squibbadvised Canadian physicians of “veryrare reports of severe liver injury tem-porarily associated with the use of nefa-zodone.” At that time, the Canadianadverse event database contained 38cases of liver injury associated withnefazodone, 31 of which were listed assevere. Three of those cases involvedhepatic failure, one case involvedhepatic degeneration, one caseinvolved necrosis, and one caseinvolved fulminant hepatitis.

Nearly one year later, in January2002, Bristol-Myers Squibb wasrequired to include a “black boxwarning” in its U.S. product labelingdue to increasing numbers of seriousadverse events related to liver toxicity.Unfortunately, although the black boxwarning suggests the need to monitorpatients’ liver enzymes while onSerzone®, other areas of the warninglabel downplay the benefits of suchmonitoring. In fact, the label providesthat there is no evidence to suggestthat liver enzyme testing can preventserious injury. According to Dr. SidneyWolfe of Public Citizen, Serzone®should be removed from the marketimmediately. At this time, Serzone®continues to be marketed by Bristol-Myers Squibb in the United States. Ifyou or someone you know is takingSerzone®, I recommend a contact withyour personal doctor to assess yourown situation.

The Insider Lands A Job

In the 1990’s, Daniel Troy became awell-known lawyer. He vigorouslydefended pharmaceutical drug manu-facturers and major tobacco companies



against the Food and Drug Administra-tion. You should not be surprised tolearn that a decade later, Troy wasappointed by the Bush Administrationto a key position with the FDA. He isnow the FDA’s chief legal counsel.Thisis a position, which over the past tenyears has been held by a civil servant,not a presidential appointee. For years,the lawyer sued the FDA, fighting theFDA on regulating tobacco and champi-oning causes such as allowing pharma-ceutical companies to promote“off-label” uses of their products. Now,thanks to the Rove-led Bush Administra-tion, Daniel Troy is in a position ofpower and fully armed to carry out theobjectives that he once pursued fromthe “outside.” He is now a powerful“insider” and perhaps can better takecare of his old clients in his currentposition.

One significant change already madeby Troy is a mandate that all FDAwarning letters be reviewed by hisoffice prior to issuance by the FDA.These warning letters are used tocaution companies for failure to givesufficient warnings about dangerousside effects and the use of false or mis-leading advertisements. According toRepresentative Henry Waxman of Cali-fornia, there has been a significantdecrease in the number of warningletters issued by the FDA in the pastyear. Waxman stated that the decline“may be a welcome development forthe drug industry, but it poses seriousdangers to public health.” In a letter toHealth and Human Services SecretaryTommy Thompson,Waxman writes,“Itappears that the FDA is now grantingmajor drug manufacturers virtually afree pass.” Troy states that he has nospecific agenda.“I never took a scienceclass, I’m just a lawyer,” he adds. Thefact that he is “just a lawyer” isn’t theproblem. However, it is the type lawyerthat he “just happened to be,” thatcreates the problem.

The “Troy agenda” seemed evident inJuly of 2002, when Pfizer Inc., was suedby a plaintiff alleging that Zoloft, anantidepressant, caused her husband to

commit suicide. Troy, who “coinci-dently”worked for Pfizer as an attorneyup until his appointment with the FDA,was asked by their legal team to file abrief supporting Pfizer. Troy waiteduntil just after his one-year mandatoryrecusal on matters involving formerclients had expired and agreed to assistPfizer.Troy stated that as long as he hadwaited the mandatory one-year afterperforming legal work for Pfizer, hesaw no problem with filing a support-ing brief that assisted Pfizer. Hedeclined to discuss the type of workperformed for Pfizer, or disclose theamount he was paid. Maybe a countrylawyer like me doesn’t understand con-flicts of interest, but when an FDAlawyer works for a drug company, itsurely doesn’t meet the “smell test.”

Bayer® Settles Baycol CaseSlated For Trial

A case scheduled to go to trial in Min-nesota this month was settled byBayer® AG, the German chemicals anddrugs group. Reuters news networkreported that the case had been settledfor several weeks.The amount paid isconfidential. The settlement means thenext case to be heard will be later thismonth in Texas.The Minneapolis settle-ment was included in Bayer’s lastupdate figure of 785 cases settled for$240 million, as reported by Bayer®earlier last month. Bayer® recalledBaycol, linked with more than 100deaths, in August 2001. The companyfaces some 8,800 cases over Baycol. Ihave to commend Bayer® – unlikeother drug companies – for theirefforts to settle the claims pendingagainst the company.

90,000 Folks Opt Out Of WyethSettlement

About 90,000 people who tookWyeth weight-loss drugs that were laterrecalled have opted out of thecompany’s class-action settlement. In adocument filed with the Securities andExchange Commission, Wyeth said

those who opted out by the May 3rddeadline included about 20,000 whosaid they suffered serious heart-valvedamage from taking its diet drugs.Those patients will most likely sue thecompany. Wyeth says it will vigorouslydefend cases filed by the persons whosaw fit to opt-out. Wyeth, formerlyknown as American Home Products,made Redux and Pondimin, chemicalsthat were the fenfluramine half of theonce immensely popular fen-phencombination.The drug was recalled inSeptember 1997, due to evidence itcaused heart-valve damage. Some usersdeveloped a lung condition calledprimary pulmonary hypertension.Phentermine, the other drug in the fen-phen combination, was not implicatedin the problems. Wyeth entered into aclass action settlement that includedabout 475,000 people when it becamefinal in October 1999.Wyeth set up atrust to review and administer claimsand settlements.Wyeth reserved a totalof $14.6 billion to cover the litigationcosts.According to Wyeth’s chief finan-cial officer, the company doesn’t knowwhether that amount will be adequateto cover all claims.

Football Player’s Widow ReachesSettlement In Wrongful DeathCase

Korey Stringer was a highly success-ful professional football player with theMinnesota Vikings. He died duringtraining camp last year. His widow hasreached a settlement with the Vikings’training camp physician and his clinic,the sole remaining defendants in thewrongful death lawsuit filed against theteam. Details of the settlement againstDr. David Knowles and the MankatoClinic were not disclosed, since thecase was settled on a confidential basis.The trial judge had earlier dismissed allclaims by Mrs. Stringer against theVikings, but allowed her $100 millionlawsuit to go forward against Dr.Knowles and the clinic where thedoctor worked.

Kelci Stringer contended her 27-year-old husband did not receive proper


medical care when he collapsed duringtraining camp on July 31, 2001. KoreyStringer, a 335-pound Pro Bowllineman, died early the next morning.The evidence was insufficient to deter-mine that the conduct of any of theVikings defendants or the two regularteam physicians constituted gross neg-ligence – the legal standard the plaintiffhad to meet to survive summary judg-ment and go on to trial. The caseagainst Dr. Knowles and the MankatoClinic had been scheduled to go to trialon June 9th.The remaining claims hadincluded gross negligence and medicalmalpractice.

XVI.INSURANCE ANDFINANCE UPDATE

Coastal Is Approved To SellMalpractice Policies

The Alabama Department of Insur-ance has granted permission to a newmedical malpractice insurer to beginselling policies in Alabama. Hopefully,this will help a number of Alabama hos-pitals that have been left without insur-ance.The action comes less than fourmonths after the Virginia-based medicalmalpractice insurer – Reciprocal ofAmerica – left policyholders, including46 hospitals and an estimated 800doctors in Alabama, at tremendous risk.The new Montgomery-based insurer,Coastal Insurance Risk RetentionGroup Inc., is owned by several of theaffected Alabama hospitals. The newcompany will file for two differenttypes of business, the hospital businessand the doctors’ business. Coastal’shospital policies and rates wereapproved on May 6th. Physician poli-cies and rates were also approved afew days later. Coastal should beginissuing policies very soon. Stateapproval in the form of a certificate ofauthority was granted on an expeditedbasis, in significantly less than the usualamount of time. Johnny Johnson, the

Insurance Department’s Deputy Com-missioner for Property and Casualty,heads the division under which Coastalis regulated. Johnny, a dedicated publicservant, is one of the most experiencedemployees in the Insurance Depart-ment and is extremely knowledgeable.That prompt action was prompted byReciprocal’s severe problems - thecompany, which is roughly $210million in debt, faces its first liquidationhearing June 19th. The web that wasspun by this company led to the Vir-ginia-based firm’s demise. Unfortu-nately, the policyholders were left in avery bad situation.

The new insurer will begin opera-tions with a capitalization of nearly$4.8 million after selling 500,000shares of Class A common stock with apar value of $1 and 188 shares of ClassB common stock with a par value of 1cent each. It will be hospital-owned atthe outset.The Insurance Departmentgranted Coastal permission to sell stockin March. The owner hospitals havecontributed more than $4.26 million ingross paid-in and contributed surplus.These four hospitals own 96% of thestock: DCH Health System ofTuscaloosa holds 43.5%; Birmingham-based Eastern Health System Inc. owns36.1%; Springhill Hospitals Inc. ofMobile holds 9.6%; and Russell MedicalCenter of Alexander City owns 6.9%.Coastal is targeting five market niches:Alabama hospitals previously insuredby Reciprocal of America (ROA);Alabama physicians previously coveredby a Reciprocal subsidiary,Tennessee-based Doctors Insurance Reciprocal(DIR), which is also in receivership;other doctors licensed in Alabama;members of the Alabama Hospital Asso-ciation; and other medical coveragerelated to insured hospitals anddoctors. In 2002, Reciprocal wasAlabama’s second-largest writer ofmedical malpractice policies. Last year,Birmingham-based ProAssurance Corp.subsidiary, Medical Associates, held 68%of the Alabama market. Reciprocal hada 13.5% share, and Georgia-based MAG

Mutual Insurance Co. had 5.3% of themarket. Several other companies,including one – St. Paul Cos. Inc. – thatno longer sells medical liability coverage– and another – Oregon-based FirstActual American Insurance Co. – whichthe Alabama Department of Insurancelate last month ordered to stop sellingpolicies here, had less than 4% of themarket.

I suspect all of the affected Alabamahospitals will seek coverage throughCoastal en masse. Coastal will makedirect contacts with the 800 or sophysicians affected by Reciprocal’s andDIR’s problems. The new insurer alsois set up as a risk-retention group,which will allow the company to writepolicies in other states. This will be adistinct advantage for the severalAlabama hospitals that have clinics andother provider facilities outside thestate. A risk-retention group can sellpolicies in other states with nothingmore than notification to those statesof its intentions. If you want moreinformation on what led to the prob-lems relating to ROA and DIR, take alook at the April and May issues of thisreport. What happened with thesecompanies is inexcusable. We are pur-suing the claims for the doctors, hospi-tals, and lawyers who were badlymistreated by the officers responsibleto run these companies. Hopefully, wewill be able to obtain a substantialrecovery in these cases to not only fullycompensate all victims who have suf-fered substantial losses, but also topunish some wrongdoers who inten-tionally violated the law with knowl-edge that innocent persons whotrusted them would be badly hurt ordamaged.

What Happened To The Homeowners-Insurance Crisis?

Just a few months ago, insurers werejacking up rates in the homeownerinsurance market and dumping policy-holders at an unprecedented pace.Now insurers have not only cut their



losses, but many companies are nowreporting tremendous profits. Theupheaval of the past year or so – whensome people saw their rates double ortriple, if they could get insurance at all– appears to be ending. While ratessurely haven’t come down, they areincreasing at a much slower pace. Forexample, rates in Texas soared 57% lastyear. So far this year, rates in the LoneStar State are up only 1.5%.Nationwide,the Consumer Federation of Americaprojects an average rate increase thisyear of 5%, down from last year’s 17%.According to an Associated Pressreport, what happens to your premiumnow depends largely on who yourinsurer is. According to the report,some companies, including AllstateCorp., Safeco Corp., and Travelers Prop-erty Casualty Corp., appear to havefixed their problems. On the otherhand, some insurers, including industrygiant State Farm Mutual AutomobileInsurance Co., appear to be primed topass along more rate increases.

Homeowners who shop around willbe able to save hundreds of dollars ayear. By contrast, last year, the best ahomeowner could generally do washang on and hope the rates didn’t goup too much. The current market is amixed bag. The rates offered varygreatly. As a result, getting the best ratecan take some work. If your insurer hitsyou with a big rate increase, make surethe company is using the right informa-tion. For example, insurers increasinglyare using credit information to deter-mine rates. This is clearly wrong andshould be challenged. What does yourcredit rate have to do with your insur-ance premiums? If your current carrierwon’t give you a break, find a betterprice from a reputable carrier and takeit. If you can’t get a better rate rightnow, try again in six months.The home-owners market is changing rapidly. Forthis reason, it is possible that rates willbecome more attractive later in theyear. I am convinced that insurancecompanies should have to justify allrate increases.

For years, insurers were willing to

break even or lose a little money onhomeowners in order to sell moreautomobile insurance, which is a highlylucrative market – but that haschanged. Even after increasing theirrates, insurance carriers say they lostmoney last year. When the stockmarket took a dive and interest ratesplunged, insurers could no longer relyon investment income to help fill thehole created by underwriting losses.Instead, the companies raised rates anddumped some of their policyholders. Itnow appears that the insurance indus-try’s fear of a wave of large moldpayouts appears to have been greatlyoverblown by the industry. Theresimply hasn’t been a tremendousnumber of large mold coverage payoutsby the insurance industry.

Consumer advocates say the insurersacted too quickly, and drastically, inraising rates to fix their home-insurancebusinesses.“It was all hype,”says RobertHunter, Director of Insurance for theConsumer Federation of America. TheTexas Insurance Department recentlycompleted a study that said some insur-ers should now be able to reduce ratesin that state as much as 25%. Accordingto Texas’ Insurance Commissioner,some companies are right where theyneed to be, while others’ rates areexcessive. The best way to counter theso-called insurance crisis is for thestates to do a better job of regulation.

AIG Criticizes Malpractice SuitsAnd Then Cashes In On Insurance Sales

American International Group, Inc.,the giant New York insurer, has made afinancial killing selling malpracticeinsurance policies. At the same time,the insurer has been “crying wolf” atevery opportunity, helping to “sell” tortreform to the politicians and thepublic. The self-inflicted crisis inmedical-malpractice insurance appearsnot to have slowed AIG down a bit.Insurance executives have blamed theirlargely manufactured crisis on

“rampant” class-action lawsuits and“excessive” jury awards. However,there has been little proof to back upthese claims. The proof generallyplaces the blame squarely on the insur-ance industry. Interestingly, AIG hasworked with the U.S. Chamber of Com-merce on a state-by-state grading of“tort”systems – or damages awarded byjuries – with the average grade a C-minus. This was all a part of thetrumped-up crisis and the effort to passsevere tort reform legislation. AIG, afew years ago a minor player in themedical-liability arena, has grown in thepast year to become one of the biggestwriters of medical-malpractice cover-age in the country.

AIG and a few other insurers that areboosting their medical-liability busi-nesses have consistently overstated theseverity of the problem. By doing this,with no independent scrutiny, the com-panies can “justify” passing along bigrate increases. “It’s classic AIG behav-ior,” says Robert Hunter, director ofinsurance for the Consumer Federationof America.“It bad-mouths the systemand says how awful everything is. Atthe same time, it sells massive numbersof policies. They win either way. Ifthere’s no tort reform,AIG still pulls inbig premiums. If there is tort reform,AIG gains market share in a line that’sgoing to be more profitable.” State reg-ulators and Legislators around thecountry need to look past the hype andfind out the real truth about the insur-ance crisis. I believe a good place tostart would be with the tremendousprofits being made by AIG in what issupposed to be a down market.

Jefferson Pilot Settles Vanishing Premium ClassAction

Jefferson Pilot Life InsuranceCompany has agreed to settle a classaction lawsuit filed against it by its ownpolicyholders who have alleged thatthe company engaged in fraudulentsales practices concerning policies


being sold on a representation of “van-ishing premium” or “disappearingpremium” sales presentations. Thereare numerous other issues alleging avariety of corporate conduct regardingthe dividends that were declared bythe company during the years 1982through 2000. The class action con-cerns four types of policies, currentassumption life, excess interest wholelife, whole life, and participating limitedpay life. Not all policies issued by thecompany during the time frame of1982 through 2002 are included in thisclass action. Specifically, universal lifepolicies are excluded from the class.The class,pending in the General Courtof Justice, Superior Court Division, inGuilford County, North Carolina, offerswhat some would consider to beminimal benefits to the class members,some may find them so minimal thatthey are unacceptable. In that case,policyholders are offered the opportu-nity to “exclude” themselves from theclass action, or what is commonlyreferred to as “opting out.” If youchoose to opt out, you must do so nolater than June 7, 2003. There are veryspecific instructions on how to opt outof this class action contained in theclass action notice that was received bythe policyholders who are potentialmembers of the class. There are some350,000 documents that were pro-duced in this class action, documentsthat can be reviewed by the policy-holders, or their attorneys if theychoose to do so before the exclusiondate of June 7, 2003. Our law firm hasalready had the opportunity to care-fully review some of these documents.We are advising a number of our clientsto exclude themselves from the classaction lawsuit. Anyone who is amember of this class should give con-siderable thought to their right ofexclusion before the June 7, 2003 optout deadline. After that time, it will betoo late to get out of the class.

Insurance companies all over thiscountry have faced a similar problemthat Jefferson Pilot Insurance Company

now faces, selling insurance based onfraudulent sales materials and salespractices, leading their policyholders tobelieve that they will only have to paypremiums for a fixed amount of time.With a weakened economy and lowinterest rates, these policies continue toperform poorly and have policyholdersin a virtual rage over the insuranceindustry’s empty promises when thesepolicies were sold. While companiesappear to be “stepping up to the plate”to settle these lawsuits, they continueto offer inadequate benefits to the poli-cyholders, causing policyholders toexclude themselves from these types ofclass actions. Policyholders have a con-stitutional right to address their griev-ances against the insurance companyin their own state, in their own countycourthouse, with their own lawyer. Byexcluding themselves from the classactions, they will have this opportunity.Until insurance companies and classaction lawyers offer benefits that aremeaningful to the policyholders, poli-cyholders excluding themselves fromthese class actions will continue to be aproblem for them in the future.

A Satisfied Client Reports In

We received an interesting thank youletter from one of our clients involvedin the American General settlement.This client, who has asked to remainanonymous, was an African-Americanfemale who had purchased life insur-ance policies from a company, whichhad racially discriminated against herby charging her a higher premium forthe same type of insurance than thatwhich a white female would have beencharged. This client had no knowledgewhatsoever that she was being over-charged for her insurance policy basedsolely on the color of her skin. In herletter to us, a letter just to say thankyou, she states,“May God bless you allthis year and all the years following.God works through men and womenand surely He’s working through youall to help others.” It is letters like thisthat rejuvenate the spirits of any triallawyer, and especially those at this firm.

We are blessed to have the ability tohelp folks who need help and whocome to us.

Insurance Companies SeekImmunity From Class Actions

Over the past several years, the pow-erful insurance industry has introducedlegislation on a regular basis that isdesigned to take away the rights ofordinary consumers. The last bill is asbad as they come. Clearly, the insur-ance industry had further erosion ofpolicyholder rights when they intro-duced these bills. The insurance indus-try introduced a bill in the State Senatethat actually attempted to give insur-ance companies immunity from classaction lawsuits that are filed against it.The bill would require a policyholderto first go to the Insurance Departmentto seek administrative remedies beforebeing allowed to file suit. An unin-formed consumer might not recognizethe repressive nature of such a bill atfirst, but when consumers learn thatthe Insurance Department has no more“fining authority” than a parking meterofficer, they are shocked.

Imagine a company that has over-charged policyholders for their premi-ums for a hidden charge that was neverdisclosed in a policy. The companythen collects millions of dollars inhidden fees that it was not entitled tocollect. An ordinary policyholder dis-covers this, files a class action lawsuitto protect all other policyholders whowere similarly situated and asks thecourt to award damages for thoseamounts of illegally collected hiddenfees from the insurance company.Under this bill introduced by the insuranceindustry, the insurer would be chargedno more than $5,000 for this violation.This bill would then prevent a lawsuit fromgoing forward to address the company’sconduct and determine how it shouldbe punished. Under this scenario, noone is adequately compensated, andthe insurance company gets away withtheft from its own policyholders.



This bill is yet another example ofhow the insurance industry continuesto take advantage of its own policy-holders. The insurance industry regu-larly lobbies against the State InsuranceDepartments in Alabama and otherstates. Their goal is to keep the depart-ments from being adequately fundedyear in and year out. As a result, thecompanies cannot be properly regu-lated. They have been very successfulin keeping the Alabama InsuranceDepartment’s fining authority at a verylow number. Then, they come to a Leg-islature and try to pass bills like thatdescribed above. It is no secret that theinsurance industry has played a leadingrole in villainizing consumers whobring lawsuits against them, as well asthe lawyers who represent them. Infact, the insurance industry may be asresponsible as any other group for thetort reform that has been passed, all ofwhich limits the rights of ordinary con-sumers in their access to the court-houses. We have attempted to pass oninformation like this so that consumerscan be informed. The type of abusepracticed by the insurance industryshould be addressed in Congress and inState Houses throughout this country.You can rest assured that if an insur-ance industry is behind a bill in a Legis-lature or in Congress, it is not good forconsumers!

XVII.HEALTHCAREISSUES

Court Decision Boosts StatePlans To Pressure Drug Companies To Lower Prices

Several states are trying to force drugcompanies to lower prices on prescrip-tion drugs for the elderly, the workingpoor, and others who have troublepaying for their medicine. More than20 states have considered programsthat would do what Maine is now free

to try – that is to use the power of theMedicaid program to leverage bulk dis-counts from drug makers. This comesabout because of a recent U.S. SupremeCourt ruling. Many of the people whoneed drug coverage are older Ameri-cans who rely on Medicare for healthcoverage. While promises are repeat-edly made to add drug coverage toMedicare, Congress still has not acted.Many state programs are geared specifi-cally to help low-income seniors. “Wehave been waiting a long time for Con-gress,” Sarah Lock, an attorney for AARP,the largest lobby group for older Ameri-cans, told the Associated Press.“Statescan’t afford to take a pass and wait forCongress yet again,”she added.

Drug prices have been rising aroundthe country by double-digit percent-ages annually. Poor people generallyget prescription drugs through Medic-aid. In Alabama, persons on Medicaidpay from $.50 to a maximum of $3.00co-pay on all drugs. Programs likeMaine’s use the Medicaid program topressure drug makers to bring downtheir prices for those without insur-ance. Drug makers are asked to negoti-ate discounts for the elderly and othersand if they won’t do it, the state makesit more difficult for them to sell thosedrugs to people on Medicaid. Oppo-nents, led by drug makers, argue thatthe program would hurt people onMedicaid, who could be forced to jumpthrough an extra hoop in order to getcertain prescriptions filled. In Maine,supporters say their “Maine RxProgram” would cut prices by 25% andhelp more than 300,000 residents.

Drug makers don’t like the Maineprogram because it would pressurethem to sell their medicines for lessmoney.Their trade group, the Pharma-ceutical Research and Manufacturers ofAmerica, filed suit to stop it. In its 6-3ruling, the U.S. Supreme Court reallydidn’t endorse Maine’s plan.The deci-sion said only that drug makers did notadequately show why the plan shouldbe blocked. The issue is far fromdecided and will continue to be liti-

gated in the lower courts. The Depart-ment of Health and Human Serviceshas yet to issue its own interpretationof the law, which could ultimatelyaffect the program’s fate. Maine plansto move forward with its plan, whichwas first approved in 2000. Otherstates may hold off until HHS providesclearer guidance. At least the victoryfor Maine is proof that the powerfuldrug industry can be defeated. Thelarge drug companies have a tremen-dous army of lobbyists who havetremendous influence and who havethe financial ability to generally “gettheir way.” Forcing these companies tolower their prices is a tough job. Nev-ertheless,government must make everyeffort to give the consuming publicsome price relief. I am not sure at thispoint how Alabama is affected by thecourt ruling. I have asked severalpersons in government, but thus farhaven’t been able to find out anythingof substance.

The Most Serious Long-TermHealthCare Crisis

According to the CongressionalBudget Office, the widely used estimatethat 41 million Americans lack healthinsurance year-round may actually bedouble the real figure. This is an esti-mate that could fuel the debate overreshaping the nation’s health caresystem. On May 12th, the nonpartisanbudget office issued a study estimatingthat 21 million to 31 million people arewithout insurance coverage all year.Overall, at least 59 million are unin-sured at least briefly in a given year, thereport revealed. This report will beexamined carefully by both politicalparties as they prepare to tackle theissue in Congress and on the 2004 cam-paign trail.

Republicans, who generally favor theinsurance industry, could cite thebudget office’s conclusion that thereare fewer people without coverage allyear than the 41.2 million estimated bythe Census Bureau. On the other hand,


Democrats, who are supposed to befrom the party more in tune withpeople, could use the 59 million esti-mate for Americans who lack insurancefor at least some period to argue thatthe need is even more widespread.There is no doubt that extending cover-age to more people would be veryexpensive. However, defining the mag-nitude of the problem is highly signifi-cant because it will affect whichpolicies lawmakers might design toaddress it. The issue has alreadyemerged as a major issue among thechief Democratic contenders for theirparty’s presidential nomination. Thusfar, the Bush Administration has prettymuch ignored the problem or at bestgiven the crisis lip service.

The budget office said nearly half the59 million uninsured in a given year arewithout insurance for less than fourmonths.An additional 30% are uncov-ered for more than a year, the reportestimated. Demographic groups likeli-est to face long periods without healthcare coverage include people withlower income, less education, and His-panics, according to the report. Theanalysis by the budget office was basedon data from the Census Bureau andother federal sources for 1998, whichthe report said is the most recent yearfor which there is reliable data. TheCensus Bureau’s estimate last Septem-ber that 41.2 million people were unin-sured for the entire year covered 2001.Almost all Americans age 65 and olderare covered by Medicare, the healthinsurance program for the elderly andhandicapped. The budget office andCensus estimates covered people tooyoung to qualify for Medicare coverage.Without question, healthcare issueswill be discussed until some real solu-tions are found and health insurancewill be a key part of the debate. NoAmerican citizen should have to livewithout health insurance.

Many Drugs Prescribed ToChildren Are Not AdequatelyTested

Most folks don’t realize that many ofthe drugs prescribed to children havenot been adequately tested for use bychildren. When they learn about this, itcomes as a shock to many parents. Weall were led to believe over the yearsthat the drug industry would never putan unsafe or untested drug on themarket. Today, that simply is not alwaysthe case. There are a number of drugsprescribed for children that haven’tbeen adequately tested. For example,since it was first marketed in 1989,Propofol has been prescribed to thou-sands of American children. In manypediatric intensive care units, it was thefirst choice for sedating children whowere seriously ill. However, it wasn’tuntil 2000 that researchers looked care-fully at the drug’s effects. While thedrug worked well in young patients,scientists discovered that 9% of thosewho received it, died. This is more thantwice the mortality rate of childrengiven a similar anesthetic. As a result,doctors now use the drug much lessoften. Unfortunately, what happenedwith Propofol – prescribing a drug thathad never been tested on children – iscommon. Most experts say that aboutthree quarters of the drugs prescribedto America’s children have not had ade-quate pediatric trials. Children havealmost certainly suffered harmful sideeffects, and some likely died, manypediatricians say. A group of doctors,children’s health advocates, and govern-ment officials are pushing hard formore pediatric drug testing.They wantthe Food and Drug Administration torequire drug companies to test all newdrugs likely to be commonly used forchildren. This bill is now in Congressand, if passed, would complement a1997 measure that gave drug compa-nies incentives to do more tests. Thereshouldn’t be two different classes inmedical care, according to JohnsHopkins University professor Dr.

Kwang Kim, a pediatric infectiousdisease specialist. It should be notedthat tests on adults often do not predicthow a drug will affect children. Chil-dren are not mini-adults.

Neither are newborn babies mini-children. Experts say that childrenmetabolize many drugs differently fromadults, and have distinct vulnerabilities.To treat children safely and effectively,doctors must see exactly how a givendrug works on children. The numberof pediatric trials is on the rise. In 1994,NIH created a drug-testing programaffiliated with top medical centers.Known as Pediatric PharmacologyResearch Units, these centers conduct alarge proportion of children’s drugtrials. The 1997 incentive law – whichgives a six-month patent extension forconducting a pediatric trial – triggeredthe increase in testing. Since then,morethan 37,000 children have taken part indrug tests, according to the FDA.

Recent research has underscoredhow fundamentally dissimilar childrenare from adults.With some drugs, chil-dren need a higher relative dose thanadults.Tests on the painkiller Neuron-tin, for example, revealed that the rec-ommended dose for patients youngerthan 12 was much too low, meaningthat children with severe chronic painwere likely suffering needlessly. I amtold that an enzyme system in chil-dren’s kidneys is more active than itwill be later in life, so the drug clearsfaster. With other medicines, childrenrequire lower-than-expected amounts.For example, livers of small babies arerelatively undeveloped. As a result, theymetabolize certain drugs much slowerthan babies a few months older. Hope-fully, Congress will take the necessarysteps to make sure when a prescriptiondrug is supplied to our children thatthe drug has been tested for childrenand is safe.



Public Citizen Believes CancerDrug Iressa Should Not BeApproved

As you may have suspected, I am astrong supporter of Public Citizen, thenational consumer advocacy group,andam convinced that they do great workfor American citizens. Some of theirbest work deals with problems in thepharmaceutical industry. Recently,Public Citizen released information ona new cancer drug. Data showing thatAstraZeneca’s new cancer drug Iressa(gefitinib) is likely ineffective and dan-gerous should dissuade the U.S. Foodand Drug Administration from approv-ing the drug for use in the UnitedStates, according to Public Citizen.AstraZeneca has sought an acceleratedapproval for gefitinib under a systemdeveloped by the FDA to approvedrugs more quickly if they treat seriousor life-threatening diseases for whichno other treatment is available. Thisfast-track approval process has beenwidely abused by the pharmaceuticalindustry.

Results of clinical trials suggest thatgefitinib will have to be removed fromthe market soon after approval. In twowell-designed studies of patients whohad not received prior therapy forcancer, there was no difference in theone-year survival in those taking gefi-tinib and those taking a placebo.A thirdstudy, which was submitted to the FDAas the basis for approval of the drug,was flagged as problematic bymembers of an FDA review team andthe team leader. The study tested anatypical group of patients with lessaggressive cancers, did not have acontrol group, and did not adequatelyseparate the effects of gefitinib fromthe effects of other medications thepatients were taking. “The FDA wouldbe putting patients in jeopardy byapproving a drug that is alreadyshowing itself to be ineffective anddangerous.The agency certainly shouldnot approve it on a faster timetable,”said Sidney Wolfe, M.D., director of

Public Citizen’s Health ResearchGroup. Dr.Wolfe added: “The severityof adverse events, both in the clinicaltrials and in Japanese patients, shouldbe a red alert to the agency.” In thestudy AstraZeneca submitted tosupport the drug’s approval, 25% ofpatients suffered from pneumonia oracute respiratory disease. One patientdied from each condition.

Japan approved gefitinib in July2002. In February 2003, AstraZenecaJapan announced that of about 23,500patients who had been prescribed thedrug, 473 had developed serious lungdisease or pneumonia and 173 haddied. It is likely, however, that manymore patients became sick or died aftertaking the drug because only a smallproportion of cases are both properlydiagnosed and reported, according toPublic Citizen’s research. Under theFDA’s accelerated approval process,drugs are often approved on the basisof a clinical finding, such as shrinkageof a tumor. However, this does not nec-essarily mean the patient will be curedor live longer. The company is thenrequired to conduct post-marketingstudies to determine if the approvalwas appropriate and whether the drugprovides a true benefit to patients.Thetwo studies that have already been con-ducted would normally have beendone and submitted during the post-marketing period. Because the studiesalready have been conducted and showno benefit associated with the drug, theFDA cannot justify approving the drug,according to Public Citizen.The FDA’smedical officer has expressed gravereservations about the studies thatAstraZeneca is relying on to push thisapproval – with good reason.There isno way that a drug that shows a highlikelihood of causing deadly lungdisease, in addition to doing next tonothing to stop cancer, should beapproved for patients. Public Citizenhas written a very strong letter to theFDA outlining its case against this drug.We appreciate Public Citizen furnish-ing this information to us.

The Drug Industry MisleadsThe Public

In today’s world, it’s difficult towatch television or flip through a mag-azine or newspaper without seeing anadvertisement for prescription medica-tions.Whether it’s Dorothy Hamil pro-moting Vioxx® or Atlanta Falcon’sCoach Dan Reeves talking about Zocor,celebrities are pushing pharmaceuti-cals and being paid well to do so. Phar-maceutical companies pay big bucksfor celebrities to endorse their product.While pharmaceutical companies pourmillions into advertising each year, theyare no longer relying on traditionalcommercial spots, which started tosoar after the FDA relaxed advertisingrestrictions in 1997. Instead, drug com-panies are now running “public aware-ness campaigns” and “video newsbreaks,” which are designed to simulatevalid news reports from seeminglycredible journalists.The real objectiveof the pharmaceutical manufacturers isto deceive and trick consumers bymasking a drug commercial as a legiti-mate informational news report.

The journalists associated with thesereports are placed in a traditional newssetting and comment on news andvideos, which highlight pharmaceuticalcompanies and their products. Otherdrug companies have also hired jour-nalists to appear on videos interview-ing doctors and patients about specificmedications. Newsmen who have con-sidered filming these “infomercials”include CNN’s Aaron Brown, formerCBS anchorman Walter Cronkite and“60 Minutes” reporter Morley Safer.Even though all three men are nowbacking away from these endorse-ments, the Associated Press stated that,“Safer was reportedly paid $100,000for one day of filming.” According toReuters News Network, “Celebritiescan make from tens of thousands ofdollars to six figures a day for their rolein industry-sponsored public awarenesscampaigns.”


XVIII.PREDATORYLENDING UPDATE

The Pay Day Loan Bill

I sincerely hope that the State Senatewill amend the House-passed pay dayloan bill and make it more consumer-friendly. Certainly, I believe there ismuch room for improvement. Forexample, I believe the interest ratesproposed are still too high. Themaximum interest rates allowed for payday loans should be placed at no morethan 36%. There also should bestronger regulatory measures added tothe House bill. Mandatory,binding arbi-tration should also be restricted in allpay day loans. No person dealing withthe pay day lenders can bargain withthe lenders as to whether or not theywill accept an arbitration agreement.They simply are on an unequal eco-nomic footing. All of these changes canbe added by Senate Amendments. TheHouse bill received a second reading inthe Senate on May 15th, which meansthe bill will be on the Senate calendarwhen the regular session reconveneson June 9th. I understand the pay dayloan bill is one of Senate Pro TemLowell Barron’s top priorities, alongwith the passage of the nursing homeimmunity bills, and that is not goodnews for folks who have to borrowmoney from the pay day loan sharks.Hopefully, a majority of the Senate willmake some needed changes to the billand return it to the House for concur-rence. Clearly, there is a real need forregulation of this industry. With a fewadded changes, the Senate could makethis legislation very effective.

Tom Methvin Speaks ToLouisiana Legislature AboutPredatory Lending

We have been extremely active in thefight against the evils of predatory

lending. Tom Methvin traveled to BatonRouge last month to testify before theLouisiana State Senate in support of abill that proposes regulation and moni-toring of lending practices for minori-ties. Tom, who is our ManagingShareholder, spoke to the Legislatureabout the evils of predatory lending,including the practices of stripping,flipping, insurance packing, and bal-looning. The committee voted toconvert the badly needed bill into a“study resolution,” which is not goodfor consumers. Our firm is committedto stopping predatory lenders wher-ever they are located and we believethat we have an obligation to speak outon the evils of predatory lending atevery opportunity. Tom appeared atthe request of State Senator Cleo Fields,the sponsor of the bill in the LouisianaSenate.

XIX.MONSANTO

Pfizer Acquires Pharmacia

The involvement of Pfizer, Inc. in theAnniston PCB cases may well lead to anearly settlement of the almost 18,000cases being handled by our firm. Pfizeris now the owner of Pharmacia, whichassumed the liability of Monsanto andSolutia. While the court has refused toallow Pfizer to be added as a defendantat this point, the company should havean interest in seeing this matterresolved. I believe that after discoveryon the issue is completed, we will beallowed to put Pfizer in the case. Westarted court-ordered mediation inAtlanta before Eric Green, the Boston-based mediator, on May 14th. ProfessorGreen has handled a number of suc-cessful mediations in some high profilecases, and is most impressive. Hope-fully, he will be able to bring the partiestogether. We will resume the mediationprocess in Atlanta on June 5th andhopefully will be able to resolve all ofour cases. However, if the mediation is

unsuccessful, trial will begin inOctober. Chief Judge U.W. Clemon,who has our cases, has told all sidesthat the case will not be continued. Wewill be ready to go as scheduled.

Jury Awards In Anniston PCBsCase Still Coming In

A jury deciding monetary damages inthe Anniston-area PCB pollution casehas awarded $35 million in damages forplaintiffs against Monsanto and Solutiato date. Property damage and emo-tional distress claims have beenawarded to about 200 plaintiffs sincethe trial resumed in mid-March. Theclaims of about 700 plaintiffs awaitdeliberation. Plaintiffs’ attorneys havebeen asking the jury to award damagescovering, among other things, the costof cleaning up contaminated proper-ties. The cleanup process involvesdigging up the contaminated dirt to acertain level and replacing it with cleansoil. As previously reported, Monsantomade PCBs, or polychlorinatedbiphenyls, at its plant in western Annis-ton from the 1930s to the early 1970s.About 3,500 people in the state casebeing heard in Gadsden claim thatMonsanto and Solutia, which nowowns the plant, polluted their proper-ties and bodies with the chemicals. Thejury has already decided the liabilityissues and is now working on damages.PCBs were used to insulate electricalequipment, but are now banned in theUnited States. As people have learned,PCBs have been linked to a range ofhealth effects, from cancer to learningdisorders. This is now confirmed byfederal health agencies.

XX.ENVIRONMENTALCONCERNS

Polluters Make Gains

The tide appears to have turned infavor of industry on environmental



concerns, now that the Bush Adminis-tration is in power. According toreports, the Environmental ProtectionAgency is not referring as many newcases to the Justice Department forfederal prosecution these days. Clearly,the number of new cases referred hasdropped drastically during the BushAdministration. New figures werereleased by Public Employees for Envi-ronmental Responsibility that verifiedthe drop off in new cases. According toa study of the problem area, the follow-ing information was discovered:

New criminal pollution casesreferred by the EPA for federal prosecu-tion are down more than 30% since thestart of the Bush Administration;

New civil pollution referrals aredown by more than 25% under theBush Administration;

With the reduction in new referrals,the number of environmental prosecu-tions is also beginning to fall;

New criminal prosecutions are offnearly one-third; and

Civil filings are more than a quarterof the levels during the Clinton Admin-istration.

I was never real sure whetherChristie Whitman was failing to do verymuch to protect the environment andto prosecute corporate crime on herown or whether she was simply follow-ing orders from the White House.However, she was appearing to be“enjoying” her position. I became sus-picious that something was going onwhen somebody started to leak insideinformation to certain members of thenews media. Ms. Whitman was criti-cized for building up a “protective secu-rity detail” that often requires acontingent of as many as ten specialagents – plus permanently attachedsupervisory positions – to “protect” heron a 24-hour-per-day basis. These insid-ers identified as “knowledgeablesources” contrasted Ms. Whitman’spredecessor, Carol Browner, who useda one-agent escort from the InspectorGeneral’s office to accompany herwhile she was on official business. We

will never know if everything reportedby the media on Ms.Whitman’s securityuse was true. She unexpectedlyresigned from her high position on May21st, ending her 2-1/2 year tenure. USAToday reported that Ms.Whitman hadseveral “conflicts” with the President’spolicies. As Governor of New Jersey,Ms. Whitman was labeled as an “envi-ronmental moderate.” According toUSA Today, there had been numeroustimes when the White House overruledMs. Whitman on key environmentalissues. I now suspect that Ms.Whitmantired of the White House interferencewith her job. It will be interesting tosee who is appointed to head the EPA.If nothing else, the former New JerseyGovernor learned the hard way thatsome in the Bush camp play real “hardball.” Would you venture a guess as towhom that man from Texas might be?

$43 Million Award To ColoradoUranium Mill NeighborsReversed

A federal appeals court has over-turned a $43 million jury award won in2001 by dozens of residents allegedlysickened by radiation near a uraniummill in Canon City, Colorado. A three-judge panel ruled in April that a lowercourt failed to assure expert testimonyin the case was relevant and reliable.The court also said evidence support-ing and opposing the experts’ reliabilitywas improperly limited. The trial courtwas ordered to schedule a new trial forthe claims against Cotter Corp. on alle-gations of negligence and trespass. Anew trial also was ordered for anothergroup of plaintiffs who were awarded$300,000 in 2000. The plaintiffsincluded residents and businesseslocated around the mill. During thejury trials, expert testimony alleged thatradioactive dust drifted across the resi-dents’ properties and poisoned them.The Cotter mill was declared a Super-fund site in 1984 and closed threeyears later. It will be interesting to seewhat happens on the retrial.

XXI.ARBITRATIONUPDATE

Nursing Home Arbitration Ruling

In a recent lawsuit, the AlabamaSupreme Court upheld an arbitrationagreement in a nursing home caseadmission form. Since the court didnot mention the most significantfederal issue, I assume the issue wasn’tproperly before the court. If so, Iwould have expected it to have beenraised on appeal and arbitrationdenied. As reported last month, theTennessee Court of Appeals had ruledin a similar case that a nursing homethat accepts federal money could notrequire an arbitration agreement to besigned as a condition of being admittedto the facility. The Tennessee Courtproperly voided the arbitration agree-ment. I will try to find out why thisissue wasn’t addressed in the recentAlabama case. If the court is sayingthat nursing homes can force elderlycitizens to sign away a constitutionalright before they can get a bed in anursing home, there will never beanother nursing home lawsuit filed. Idon’t believe the Alabama court hassaid that at all. This case was decidedon whether there was sufficient evi-dence to put the nursing homes ininterstate commerce.

Should Buyers Have ToBeware?

Almost every time we buy somethingthese days there are hidden terms andconditions that we miss completely.Even when fully disclosed and appar-ent, for a number of reasons, these self-serving for the drafter terms andconditions are easy to ignore.The printis often small and the language hard tounderstand. Most consumers seldomread a long document before signing it

and the “drafters” of the contractsknow this. In fact, most folks don’texpect to ever have a problem and arenot looking for such things. Some-times, you just want to make your pur-chase and get out of the store. If youdon’t read carefully, however, and youdo later have a problem, you may findyou’ve given up many or all of the con-sumer protections guaranteed to youby state and federal law.That’s because,as you know, most companies are nowinserting mandatory, binding arbitra-tion clauses into their purchase agree-ments, service contracts, and telephonecalling plans. Clearly, binding arbitra-tion is a private, alternate dispute reso-lution system where an arbitratorreceives total and complete authorityto resolve any dispute that may arise.The arbitrator is not required to followexisting laws and only in rare circum-stances can a decision be appealed tocourt. Both the process and the resultsfrequently are kept secret. This is nevergood for consumers in any respect.

A State Representative in Wisconsinhas introduced legislation that wouldprohibit credit card companies fromrequiring binding arbitration. Signifi-cantly, U.S. Senators Russ Feingold (D-Wis.) and Patrick Leahy (D-Vt.) say theywill introduce similar federal legisla-tion. Senator Feingold told the AARP,“Itis not surprising that more and morecredit card companies are addingmandatory arbitration clauses to theiragreements since consumers have nopower to resist these provisions thatdeprive them of the option of takingdisputes to court.” What happens isthat most people don’t read all thesmall print when they sign up for acredit card. People shouldn’t be auto-matically forced to give up their consti-tutional rights in such a fashion. Witharbitration, the little guy always gets theshort end of the stick. Surely, Congressmust have realized the dangers andunfairness of mandatory arbitration lastyear when it passed a new law to pro-hibit such provisions in contractsbetween auto dealers and auto manu-

facturers. You will recall the justifica-tion for that law prohibiting arbitrationin dealer contracts was that the automanufacturers were “too powerful,”resulting in an “unlevel playing field.” Ihave to wonder, however, why Con-gress thus far has not extended this rea-soning to consumer contracts.Hopefully, this latest development is astart in that direction.

Realistically, these bills in Congressprobably won’t be approved any timesoon. Heavy special interest lobbyingfor deregulation of the financial serviceindustry will likely see to that. Theissue of whether a binding arbitrationclause preempts existing state con-sumer protection laws also is beingargued in courtrooms in states that giveconsumers that type protection. Unfor-tunately,Alabama doesn’t have such alaw. In California, a challenge to AT&T’slong distance service agreement wasdecided in favor of consumers bringingthe challenge when the court ruledthat the binding arbitration clause wasinserted into the agreement in a legallyunconscionable manner. The U.S.Supreme Court will eventually face theissue of whether the federal law per-mitting binding arbitration preemptsstate laws protecting consumers. Whenyou consider how the Federal Arbitra-tion Act came into being and factorinto the equation the basic constitu-tional right to a jury trial in civil claims,it is extremely difficult to see how arbi-tration can be forced on consumers.The legislative history of the FAAclearly proves that Congress neverintended for the Act to apply to con-sumer transactions. I have to believethat in the near future the constitu-tional rights of consumers will be rec-ognized and preserved by the U.S.Supreme Court.

The EEOC Position On Arbitration Shouldn’t BeChanged

Employer and employee groups havebeen waging a behind-the-scenes battle

at the Equal Employment OpportunityCommission (EEOC) as the agencyreconsiders a Clinton-era policy oppos-ing the use of mandatory arbitrationagreements as a condition of employ-ment.The 1997 policy statement is themost comprehensive, written state-ment documenting how mandatoryarbitration agreements undermine civilrights laws. Nothing has changed sincethe policy was adopted by the Commis-sion. Employer groups say the policy’sviability is questionable because ofrecent Supreme Court decisions. The1997 policy is being examined in lightof subsequent case law, according tothe agency. The policy says agreementsthat mandate binding arbitration of dis-crimination claims as a condition ofemployment are inconsistent with anti-discrimination laws. Among thereasons: Private arbitration does notallow for development of the lawthrough precedent; mandatory arbitra-tion systems are biased against plain-tiffs; and they threaten the enforcementof discrimination laws because workersmay be discouraged from coming tothe EEOC since they can’t litigateclaims.

The EEOC’s action probably will bemore important for the arbitrationdebate than its legal effect. There’s evi-dence that the EEOC’s concerns aboutmandatory arbitration in 1997 are accu-rate, said my friend Paul Bland, head ofthe mandatory-arbitration project forTrial Lawyers for Public Justice. Paulsays that “the EEOC can’t litigatecounter to direct Supreme Court deci-sions, but it has an obligation to speakthe truth as it understands it. If they’rejust going to cave in to businesses whosay it would make our lives easier if yousaid we could do this, that would beunfortunate. It would be a terriblesignal of a reduced commitment tomeaningful civil rights enforcement.” Icertainly agree with Paul. There is nojustification for allowing any employerto force a person to accept arbitrationas a condition of getting or keeping ajob.




Bill Barring Pre-Dispute Arbitration In Consumer Contracts

The U.S. House of Representatives isagain considering legislation thatwould prohibit the use of pre-disputebinding arbitration clauses in consumercontracts, classifying their use as adeceptive trade practice. The proposedConsumer Fairness Act of 2003 (H.R.1887), introduced April 30th by Repre-sentative Luis Gutierrez (D-IL), wouldamend the Consumer Credit ProtectionAct to bar the use of mandatory pre-dispute arbitration clauses in most con-sumer contracts.This ban would applyto any written or standard form con-tract between parties to a consumertransaction, including contracts for thesale or rental of goods, services, realproperty, and financial products orservices contracts. Similar legislationwas introduced in the last Congress byRepresentative Gutierrez.That bill wasreferred to the Committee on FinancialServices, but no further action wastaken on the bill.

Congress also is considering anumber of bills designed to prohibitthe use of mandatory arbitration invarious contracts or situations, includ-ing high cost home loans (H.R. 1663,H.R. 1865 and H.R. 833, and employ-ment, H.R. 540), which would amendthe Federal Arbitration Act to allowemployees to accept or reject the useof arbitration. To date none of thosebills have been approved in committee.Most of the bills addressing mandatoryarbitration and its use allow parties toagree after a dispute arises to use arbi-tration to resolve disputes. H.R. 1887authorizes parties to consumer transac-tions to enter into written arbitrationagreements post-dispute. There isabsolutely nothing wrong when bothparties agree after a dispute arises toallow arbitration to resolve the parties’differences. It is quite different,however,when a dominant party forcesa party with no power to sign away theconstitutional right to a jury trial before

a dispute even arises. This is themanner in which Corporate Americashuts the courthouse door to con-sumers by putting arbitration clauses inall purchase and employment con-tracts. Credit card companies simplyplace the arbitration clauses in amonthly bill envelope as a “bill stuffer.”The latest bill also says it is notintended to annul, alter or affect otherfederal or state laws dealing with arbi-tration of consumer disputes unless theprovisions of those laws are inconsis-tent with the provisions of H.R. 1887.It would be great to have a Presidentwho recognized that consumers haverights guaranteed under the U.S.Consti-tution. Unfortunately, that is not thecase with the current occupant of theOval Office.

Circuit City’s Arbitration PolicyIs “Oppressive”

The Ninth Circuit Court of Appealsbelieves the arbitration policy used byCircuit City Stores is so one-sided thatit’s illegal in California. The court heldthat the Circuit City arbitration agree-ment is oppressive, stating: “CircuitCity, which possesses considerablymore bargaining power than nearly allof its employees or applicants, draftedthe contract and uses it as its standardarbitration agreement for all of its newemployees.The agreement is a prereq-uisite to employment, and job appli-cants are not permitted to modify theagreement’s terms – they must take thecontract or leave it.” The ruling maywell apply to similar mandatory arbitra-tion agreements affecting hundreds ofthousands of workers in California.Theproponents of arbitration tell thepublic that the process is both cheaperand faster. That is simply not true.Critics say arbitration is secretive andlacks an appellate process. The courtdidn’t buy Circuit City’s claims andfound its argument exceedingly disin-genuous because the agreement is one-sided. Among other things, to have avalid contract, an employer’s arbitration

policy must apply equally to grievancesby both sides, must not assess onerouslegal costs against the employee orapplicant and must be fair in its otherprovisions, the appeals court says. It isimpossible to justify mandatory,binding arbitration in the employmentsetting. No American citizen shouldhave to agree to arbitration in order toget or keep a job.

In this case, the plaintiff had signedthe mandatory arbitration agreementwhen she was hired as a sales person ina San Diego Circuit City store. Follow-ing several alleged on-the-job incidents,involving sexual harassment and dis-crimination based on sex and disability,she tried to sue. Circuit City challengedthe lawsuit, saying the employee hadagreed when she was hired, that suchdisputes would be put before arbitra-tors, not the courts. In this case, thecourt noted,“Circuit City does not evenconsider the applications from jobapplicants who elect not to enter intothe arbitration agreement.” Thisemployee had no meaningful option –she either had to walk away from theemployer altogether or sign the arbitra-tion agreement for fear of automaticrejection or termination at the outset ofher employment.

Some Recent Alabama Cases

In addition to the nursing home casementioned previously, the AlabamaSupreme Court continues to crank outdecisions dealing with the arbitrationissue. There are two recent cases thatdeserve mentioning. One is the case ofAnderson v.Ashby, 2003 WL 21125998(Ala. May 16, 2003), which involved anarbitration agreement between illiter-ate consumers and American GeneralFinance, a credit life insurer. Both con-sumers were on disability and theinsurance salesperson admitted that heknew they were illiterate. The arbitrationagreement here is incredibly compre-hensive and covers everyone and every-thing imaginable. The Alabama SupremeCourt struck down the arbitration

agreement. The court reiterated itsholding in American General Finance v.Branch, that just because the arbitrationagreement says that questions of arbi-trability are decided by an arbitrator, itdoesn’t mean that the court can’texamine the question of uncon-scionability of the arbitration clause.Where the attack is addressed to thearbitration clause itself, as opposed tothe contract as a whole, the trial court,and not the arbitrator, resolves theissue. Thus, the threshold issue ofunconscionability of an arbitrationclause is a question for the court andnot the arbitrator.

The Court then found this agreementunconscionable for the same reasons asin the Branch case, i.e., uncon-scionable, grossly favorable terms(including the term sending questionsof arbitrability to the arbitrator), andthe overwhelming bargaining poweron the part of American GeneralFinance. Because the court found theentire arbitration agreement uncon-scionable, the Court refused to severany part of it, despite a severability pro-vision in the arbitration agreement.Finally, and most important, the Courtfinds that any question of fraud — inthe inducement or in the factum — insigning the agreement is a question forthe jury.

The second case, decided by theAlabama Supreme Court, used statecontract law to resolve an ambiguity inthe contract. In ex parte MountainHeating and Cooling, Inc., 2003 WL2007810 (Ala. May 02, 2003), the con-tract was between a contractor and asub-contractor and contained the con-fusing language that “the parties agreeto settle the dispute by arbitrationunder the Construction Industry Medi-ation Rules of the American ArbitrationAssociation.” The simultaneous refer-ences to mediation and arbitration, aswell as the fact that the contract con-tained other language about litigation,and that the subcontractor hadrequired the contractor to strike a sen-tence waiving his right to a jury trial,

led the Court to conclude that the issueof arbitrability was a question for a jury.

The Right To Trial By Jury

Our Supreme Court continues tostruggle with the arbitration issue.Eventually, the court will have to facethe constitutional issue head-on. Ofcourse, it is absolutely necessary forlawyers appealing cases to the court tohave laid the proper foundation for theappeal in the trial court. I sincerelybelieve that when faced with the issue,a majority of the court will honor theConstitution and refuse to allow theforcing of ordinary citizens, on unequalfooting – for whatever reason – to giveup a cherished constitutional right. Thebest argument for consumers can befound in what Congress did for the cardealers because the car manufacturerswere too powerful. In any event, wewill wait for the proper case to comebefore the court. When that happens,consumers should finally get someneeded relief.

XXII.THE CONSUMERCORNER

The Dangers Of Online Pharmacy

With the high prices of prescriptiondrugs, folks are constantly looking forlower prices. With this comes somereal dangers. There are a number ofcompanies that are now selling pre-scription drugs online. In my opinion,this is extremely risky and can beextremely hazardous to a purchaser’shealth. One such Website advertisesthat,“our U.S. physicians will write anFDA approved prescription for you andthe product will be filled and shippedby U.S. licensed pharmacists direct toyour doorstep, immediately and dis-creetly. We make it easier and fasterthan ever to get the prescriptions you

need.” The Website goes on to pointout “that no prior prescription isrequired.” Not only is this risky from ahealth perspective, I checked theprices on this Website advertised as a“limited time special offer,” and foundtheir listed prices were higher than Ican buy the same prescriptions cur-rently in Montgomery or at one of mybrother’s three drugstores in BarbourCounty. My advice is to do businesswith your local pharmacist and not runthe risk that comes with buying online.In my opinion, the Internet is no placeto buy prescription drugs. Your owndoctor and local pharmacist should beinvolved in any healthcare decisionthat requires the filling of a prescrip-tion drug. The costs of prescriptiondrugs should be addressed by the Presi-dent and Congress. The Internet is cer-tainly not the answer when it comes tohealth issues and product safety.

Summer Tire Checklist

The Department of Transportationhas issued a number of tire safety tipsfor consumers during the summertimevacation season. As you may alreadyknow, tire care is especially critical inwarm weather. Long trips, heavy loads,higher speeds, and higher temperaturesall put additional stress on tires. Youshould check your tires regularly tomake sure there are no visible signs ofwear, damage, bulges, or tread separa-tion. Be sure your tires are properlyinflated. Check your tire pressure often– with an accurate gauge – for routinedriving and before and during any longtrips.Always measure the tire when thetires are cold, before you drive onthem. Make sure you understand therecommended inflation pressure foryour tires. This can be found in yourowner’s manual or on a label fre-quently found in the glove box, nearthe door latch on the driver’s side, orother locations on your vehicle. Therecommended inflation pressure is notto be confused with the maximuminflation pressure that is shown on the


side of the tire. At the recommendedinflation pressure, tires will last longerand be less likely to fail, and the car willuse less fuel. Serious injury can resultfrom tire failure because of under infla-tion or overloading.

You should never overload yourvehicle.Your car and tires are designedto operate safely only up to their loadlimits.These limits should be found inyour owner’s manual and on the certifi-cation plate on the edge of the driver’sdoor. Make sure there is enough treadon the tire to operate safely and thatthe tires are wearing normally. Allgrooves should be visible and deepenough to at least touch the top ofLincoln’s head on a penny insertedhead first in the tread. Low tread orbald tires are unsafe and must bereplaced. If some spots on the tireseem to be wearing faster than others,see your tire dealer, a mechanic, or areal service station. Misaligned wheelsand worn shock absorbers can causeserious problems. Make sure all tiresare aligned and balanced properly. It isnot a good idea to drive at a high rateof speed for a long time. This is espe-cially true in hot weather. Posted speedlimits should always be obeyed. Finally,always make sure that all persons inyour vehicle are properly restrained ina seat belt. Children should use childsafety seats on every trip. It shouldbecome routine for passengers tobuckle up before your vehicle iscranked up. Parents should make seatbelt use a habit in the family.

Paint Companies Agree ToWarn Consumers Of Lead RisksFollowing Agreement

Paint companies will have to putwarning labels on their products alert-ing consumers to the danger of leadexposure during home renovations.This results from an agreement withdozens of Attorneys General across thecountry. The agreement between theNational Paint & Coating Associationand 45 states was announced on May

12th. The District of Columbia, Guam,Northern Mariana Islands, VirginIslands, and Puerto Rico also wereincluded in the agreement. While paintmanufacturers haven’t made housepaint with lead since 1978, it is stillfound in many older homes and build-ings. The danger is that children willingest or inhale lead paint dust stirredup during repainting and renovation ofolder homes.

In addition to new labels on paintcans, paint manufacturers also agreedto provide brochures to consumers andtraining courses on lead-safe renovationand repainting to homeowners, con-tractors, landlords and housingworkers. According to national figuresfrom the Environmental ProtectionAgency, about 900,000 children underthe age of five have elevated blood-leadlevels. If not detected early, high levelsof lead can cause damage to the brainand nervous system. MassachusettsAttorney General Tom Reilly, who ledthe states’ negotiations with top paintmanufacturers, said the settlement is “alandmark agreement with the paintindustry and it addresses a seriousproblem.” Lead exposure continues tobe a health hazard to children and thatincludes lead dust. “There’s a properway to remove it. If you don’t do itproperly, it presents a serious healthrisk,”he said.

Interestingly, the Rhode Island Attor-ney General, the first state to sueformer lead paint manufacturers forlead poisoning in children, called theagreement an “empty gesture.” “It’s toolittle, too late,”Attorney General PatrickLynch told the Associated Press.“Thisagreement fails to address the fullextent of the dangers of lead paint and,perhaps purposefully, it comes as weare taking steps to retry our caseagainst the lead pigment manufactur-ers.” The agreement includes a 19-month interim product sticker program– beginning September 30, 2003 – andpermanent product labeling that wouldwarn consumers of possible exposureto lead dust during the renovation of

older buildings. Only time will tell ifthe Attorney General’s agreement isadequate. The Rhode Island lawsuitwill be watched carefully.

States Can Now Sue Lying Charity Telemarketers

The U.S. Supreme Court has ruledthat states can sue professional telemar-keters for misleading donors abouthow much of their contributions actu-ally go to the charity. This appears tobe a victory for consumers. The unani-mous decision overturned an IllinoisSupreme Court ruling that dismissed,on free speech grounds, a fraud lawsuitbrought by state prosecutors against acompany that kept the vast majority ofthe money contributed by donors.“TheFirst Amendment protects the right toengage in charitable solicitation butdoes not shield fraud,” Justice RuthBader Ginsburg wrote for the HighCourt.The court’s decision will allowthe state of Illinois to bring a lawsuitagainst Telemarketing Associates, aChicago company that was under con-tract with the veterans support groupVietNow, to solicit donations for thecharity.

Over a period of eight years, thiscompany raised $7.1 million in dona-tions. What the donors did not knowwas that Telemarketing Associates kept$6 million of the money, with theremaining $1.1 million going toVietNow. In 1991, the Illinois AttorneyGeneral’s office sued TelemarketingAssociates for fraud, claiming thecompany misled consumers by failingto tell donors during the solicitationcall that most of their donations wentto the telemarketing company. In 2001,the Illinois Supreme Court dismissedthe suit against Telemarketing Associ-ates, ruling that it would violate thecompany’s right to communicate freelywith the public. Lawyers for the stateappealed the ruling, saying the decisionwould deal a “crippling blow to one ofthe state’s principal weapons againsttelemarketing fraud.”



Fortunately, the High Court held thatthe Constitution does not protect busi-nesses that knowingly mislead thepublic.This decision is clearly a “victoryfor consumers.” Donors deserve toknow that most of their money will bespent for charitable work and not givento telemarketers. The ruling won’taffect telemarketers who deal honestlywith potential donors. On the otherhand, telemarketers who are makingmisrepresentations about how moneyis being used will be stopped. Whenyou consider that each year Americansgive an estimated $200 billion to chari-ties through telemarketers, the impor-tance of this decision is quite apparent.People fed up with unwanted telemar-keting can sign up in July for a nationaldo-not-call list that will block manysales calls.The Federal Trade Commis-sion will launch a Website on July 1st soconsumers can register online for thefree service. In addition, the Commis-sion will begin an eight-week rollout ofa toll-free phone number by whichpeople also can register for the list.Thenumber should be available nationwideby the end of August.

May Was National ElectricalSafety Month

While the month of May wasNational Electrical Safety Month, unfor-tunately, few people even knew it. Ifthere was any mention in the media, Imust confess that I missed it. However,anytime is a good time to check forhazards. So, now is a good time tocheck our homes and workplaces forhazardous conditions related to the useof electricity. Few people really under-stand electricity and most of us don’tfully comprehend the risks and hazardsfound at home or at work. The U.S.Consumer Product Safety Commissionrecently announced that Tyco Electron-ics Corp., of Harrisburg, Pennsylvania,has agreed to continue offering theCOPALUM connector repair systemuntil at least 2005 for homes with alu-minum wiring. According to the CPSC,

the COPALUM repair system has bene-fited tens of thousands of consumersby reducing the risks of dangerousoverheating and fire that can be causedby failing aluminum wiring connec-tions. It is estimated that 2 million homeswere built with aluminum wire between1965 and 1973. Warning signs, such aswarm-to-the-touch faceplates on outletsor switches, flickering lights, circuitsthat don’t work,or the smell of burningplastics, can indicate a fire hazardwithin 15- and 20-ampere aluminumwiring circuits.A failure in the circuitscan lead to electrical arcing and aserious fire, which can spread withinthe walls of a home before being detected.

The COPALUM crimp connector,which has been available for more than20 years, is the only system recognizedby CPSC that provides a complete andpermanent repair and reduces the firehazard in aluminum wire circuits.TheCOPALUM connector system attaches acopper wire to the old aluminum wiresand is then crimped together with apower tool, achieving a “cold weld”between the conductors. The “coldweld” creates a permanent bond thateliminates electrical arcing or glowingconnections and creates a safer electri-cal connection at outlets, switches,lights, circuit breakers, and panel boardterminals. The COPALUM connectorrepair materials and power crimpingtools are only available to electricianswho receive training from the manufac-turer, to ensure that repairs are prop-erly made. Without the TycoElectronics system, the only method forsafely upgrading aluminum wiringsystems would be to install newcopper circuits, which is often imprac-tical for consumers. The CPSC believesthat “twist-on” connectors, receptaclesand switches and other devices thatconnect directly to aluminum wires,are an inadequate solution. TheCOPALUM crimp connector systemprovides a safe,permanent fix.

If homeowners are not certainwhether their home has aluminumbranch circuit wiring, they can look at

the markings on the surface of the elec-tric cables which may be visible inunfinished basements, attics or garages.Aluminum wiring will have “Al” or “Alu-minum” marked every few feet alongthe cable. A home inspector or quali-fied electrician also can assist in identi-fying aluminum wiring. CPSC advisesthat consumers should not open theinterior of the panel board or circuitbreaker compartment – this canexpose live wires and pose an electro-cution hazard. COPALUM connectorsare available from Tyco Electronicsunder the AMP brand. Consumers cancheck to see if the COPALUM connec-tor system is available in their area bycalling the company at 1-800-522-6752.To order a list of authorized electri-cians in their area,consumers can writeto: Tyco Electronics Corp., Attn: Alu-minum Wire Repair Program, P.O. Box3608, Harrisburg, PA 17105-3608. If noauthorized electrician is currentlylocated nearby, consumers can have anelectrician interested in repairing theirhome contact the nearest supplier ofAMP- brand COPALUM connectors fortraining and other repair information.For more information about aluminumwiring and the crimp connectorsystem, see “Repairing AluminumWiring” (pdf). Consumers can alsoobtain a free copy of this booklet bywriting to CPSC, Washington, DC20207. We appreciate very much theCPSC furnishing this information.

Jury Awards $16 Million In ACandy-Related Death

A jury awarded $16.7 million to acouple whose daughter died afterchoking on a gel candy that’s nowbanned in the United States. Theparents sued Taiwan-based ShengHsiang Jen Foods Co.after their 11-year-old daughter choked in April 1999 onsticky candy containing a dangerousgel.The little girl remained in a comauntil her death in July 2001. The candycontained a substance called conjacgel, which is derived from a type of


yam. Unlike the gels found in mostchewy candies, conjac does not dis-solve in the mouth and must bechewed. The jury awarded $16.7million to the parents and their tworemaining daughters.

The company in this case has neveracknowledged fault. In fact, it took anFDA ban to stop the selling of the dan-gerous candy. The U.S. Food and DrugAdministration banned the gel inOctober 2001.The candies were soldunder the names Fruit Poppers, Gel-lyDrop and Jelly Yum. The candies arepacked in small, soft plastic cups andsold in bulk in plastic jars.They usuallyinclude a piece of fruit surrounded bythe gel. Around the world, more than adozen deaths are tied to the candy.Most are in Asia, where the candy origi-nated in 1995. We reported on thehazards created by this type candyseveral months ago. It is most disturb-ing that a company would put aproduct on the market that is highlydangerous for children and then resistefforts to have the product taken offthe market.

XXIII.TOBACCO UPDATE

WHO Approves Anti-TobaccoAccord

The World Health Organization(WHO) has adopted a sweeping anti-tobacco treaty in an unprecedentedglobal push to regulate a product itsays kills half of its regular users. Therehave been four years of turbulent nego-tiations between WHO and the tobaccoindustry. Last month, WHO’s policy-making annual assembly unanimouslyadopted the accord. WHO says it isacting to save “billions of lives” and“protect people’s health for genera-tions to come.”The anti-smoking drivehas been the top priority for WHO forthe past several years. It is a tragedythat about 20 million people have diedsince the debate began. The treaty enti-

tled the “Framework Convention onTobacco Control”provides for a generalban on tobacco advertising and promo-tion in many countries. However, itonly provides restrictions in countrieslike the United States, where a totalprohibition some believe would violatetheir constitutions.

The accord says that health warnings– including pictures such as diseasedgums and lungs – should ideally coverat least half the package and encour-ages governments to clamp down onterms like “low-tar” and “mild” on ciga-rette packs. Specifically, it aims to stophard-sell tactics aimed at children.Tobacco’s image as being glamorousand cool would be curtailed. It alsoprovides for tougher internationalmeasures against second-hand smokeand cigarette smuggling, and espousesmanufacturer liability. The treaty willtake effect when 40 countries have rati-fied it. The European Union, China, andJapan are expected to ratify in shortorder. You will be interested to learnthat the one notable exception at themeeting was the United States. U.S.Health and Human Services SecretaryTommy Thompson reported that Wash-ington was “reviewing the text of theconvention.” I have to wonder ifanybody back in the United States wassurprised at that development. JudithWilkenfeld of the Campaign forTobacco Free Kids had this to say:

The United States is not making com-mitment to sign or ratify. They recog-nized that the rest of world wanted togo forward but didn’t say they wouldjoin the rest of the world in ratification.It’s an incredible missed opportunity.

For months, anti-smoking activistshave accused the representatives of ourcountry of trying to undermine thetreaty. Hopefully, this opposition hasn’tcome about because of the tremendouspower and influence of the tobaccoindustry. As we know, the world’sbiggest exporter, Philip Morris, islocated here. The text was agreed to inspite of U.S. objections that it did notallow countries to opt out of individualclauses. Much work now lies ahead in

trying to put the terms of the conven-tion into practice. The developingcountries are expected to account for70% of the forecast 10 million annualdeaths by 2030. These developingcountries took the lead in pushing forthe convention, saying they need pro-tection from tobacco multinationalswho have switched their sales drivesfrom saturated Western markets to Asiaand Africa. WHO estimates that nearly5 million people die each year fromsmoking-related diseases.

A Very Large Victory For TheTobacco Industry

On May 21st, a Florida appellatecourt threw out the record-setting$145 billion verdict for thousands ofFlorida smokers against the tobaccoindustry. The court said the caseshould not have been tried as a class-action lawsuit. The Third District Courtof Appeals said smokers could notgroup themselves together in a singlelawsuit against the nation’s five biggestcigarette makers. By eliminating classaction status, the appeals court kickedout the award a Miami-Dade Countyjury had awarded to sick Floridasmokers in 2000. After a two-year trial,that jury had decided that cigarettesare deadly, addictive, and defectivebecause they make people sick whenused as directed. Punitive damageswere set for an estimated 300,000 to700,000 smokers. The jury hadawarded compensatory damages tothree people with cancer who servedas class representatives of the group ofsmokers. Stanley and Susan Rosenblatt,who are very good lawyers, repre-sented the smokers. They have spent atremendous amount of time andmoney in this case. I know that theselawyers are totally dedicated to thecause and will not give up their fight.Over time,public policy has been movingagainst Big Tobacco. However, this pow-erful industry has been able to survivein the courts and I frankly don’t have agood explanation as to how or why.



List Of Large Awards In Tobacco Lawsuits LaterReduced

Despite how bad the tobacco indus-try has been, the companies have beengenerally successful in the courts. Foryears, it was difficult to even get a caseto trial. The companies utilized a litiga-tion strategy that literally attempted to“break” any law firm that sued them.When people began to learn of howbad the industry was and how the com-panies operated, the outcome of trialsbegan to shift to the victims. However,the outcome of their victories at trialhasn’t been that good on appeal. Therehave been a number of large awards intobacco lawsuits that were laterreduced. Some of these were:

December 2002:A Los Angeles Supe-rior Court judge reduced a $28 billionpunitive damages award to $28 millionin a case against Philip Morris. Thevictim, Betty Bullock, 64, of NewportBeach, California, had been diagnosedwith lung cancer in 2001.

August 2002:A Los Angeles SuperiorCourt judge reduced the $3 billionpunitive damages award to $100million in a case against Philip Morris.The victim, Richard Boeken, 56, ofTopanga, California, died of lung cancerin January 2002.

May 2002: A Multnomah County(Oregon) Circuit Court judge reducedthe $150 million punitive damagesaward to $100 million in a case againstPhilip Morris. The family of MicheleSchwarz, 53, of Salem, Oregon, suedafter Ms. Schwarz died from lungcancer in July 1999.

April 1999:A San Francisco SuperiorCourt judge reduced the $50 millionpunitive damages award to $25 millionin a case against Philip Morris. Thevictim, Patricia Henley, 52, of LosAngeles,had been diagnosed with inop-erable lung cancer in February 1998.

Key Tobacco-Case Ruling OnAd-Fraud Is Expected

We have been watching the govern-

ment’s lawsuit against the tobaccoindustry with interest. A federal judgeis expected to rule any day on a motionwith major implications for the largestgovernment lawsuit ever filed againstthe tobacco companies. The Judge inthe U.S. District Court in Washingtonwill decide whether to discard claimsof advertising fraud and deceptionfrom the suit, filed by the JusticeDepartment and accusing the cigaretteindustry of conspiring to deceive con-sumers about the dangers of tobaccoand cigarettes. The suit seeks $289billion in damages, as well as toughrestrictions on the marketing, manufac-ture, and sale of tobacco products.Thisamount would top the $246 billion thetobacco companies agreed to pay statesin settlement agreements of the late 1990s.

The tobacco companies have askedfor partial summary judgment on theadvertising-fraud claims in the currentsuit, which would cut the case down,but not kill it. The government is stillpursuing other claims under the Racke-teer Influenced and Corrupt Organiza-tions Act against all nine major tobaccocompanies and two nonprofit groupsthat did joint industry research andpublic relations. In court filings, thecompanies argue advertising and mar-keting are regulated by the FederalTrade Commission, and thereforeshouldn’t be a part of the suit. Thelegal question presented is: Does theFTC’s rule-making authority preventthe government from making its claimson advertising fraud? The federal judgewas expected to rule by early May. The$289 billion represents what the indus-try has earned since 1971 from the 33million people who became addictedto cigarettes as minors.

The lawsuit was filed more thanthree years ago under former PresidentClinton.While the Bush Administrationhas publicly raised questions aboutwhether it will pursue the case, it con-tinues to fund a Justice Departmentteam preparing for trial. Unless there isa change, the trial is scheduled to beginon September 15, 2004. Hopefully, thegovernment will aggressively pursue its

case to a conclusion. The tobaccoindustry, often referred to as the “evilempire,” kills over 400,000 peopleevery year and has done so for years.Their vast influence and political cloutshouldn’t be a factor in a lawsuit.Hopefully, it won’t be in this one. TheBush Administration should put its fullforce behind this lawsuit – on the sideof the government – and make thedefendants pay for all the hurt andmisery they have caused.

The Alabama Scene

Everything in Alabama is on holduntil the Alabama Supreme Court rulesin two pending cases. Hopefully, thecourt will rule soon and allow the law-suits to continue. When you considerhow the tobacco industry has inten-tionally caused so much misery andharm to so many innocent people whoget hooked on this drug calledtobacco, it is difficult to understandhow they have continued to exerciseundue influence over our politicians.Causing over 400,000 deaths per yearby a manufacturer when a product isused by consumers as expected, shouldnever be tolerated in a civilized society.

XXIV.RECALLS UPDATE

CPSC Warns Consumers

Despite recall notices and warnings,many consumers continue to use prod-ucts that have the potential to seriouslyinjure or kill. The Consumer ProductSafety Commission has unveiled a listof many common hazardous consumerproducts and has urged consumers touse the list to check their homes anddestroy or fix unsafe products. Con-sumers can read the current list of dan-gerous products by going to theirWebsite www.cpsc.gov or can receivethe list by mail. If you use the latterroute, simply mail a postcard to “RecallRound-Up List,” CPSC,Washington, D.C.20207. In any event, find out if you


have products in use or stored aroundyour homes that are on the recall list.

NHTSA Upgrades Probe Of GMMinivans

The National Highway Traffic SafetyAdministration has stepped up aninvestigation that may lead to a recall of507,016 General Motors minivansbecause a rear axle part can break. TheNHTSA inquiry involves 1997 through1999 models of the Chevrolet Venture,Pontiac Transport, and Oldsmobile Sil-houette.Two crashes and fifteen inci-dents were reported after a part calledthe rear-axle trailing arm broke. Thisobviously involves a serious defect.Hopefully, NHTSA will do its job andrequire a recall.

KIA Recalls The 2003 Sedona

NHTSA has released the followinginformation concerning the 2003 KIASedona,which has been recalled. Thereare approximately 3,434 units affected.On certain passenger vehicles, therewas a programming error in the anti-lock braking system (ABS) electroniccontrol module logic. The program-ming error could cause reducedbraking force at speeds below 25 mph,which could result in increased stop-ping distances. Such increased stop-ping distances could result in a crash.Dealers will reprogram the controlmodule.At press time, KIA had not yetprovided an owner notification sched-ule. Owners who take their vehicles toan authorized dealer on an agreedupon service date and do not receivethe free remedy within a reasonabletime should contact KIA at 1-800-222-5500.

Subaru Recalls 170,000 Vehicles In U.S.

Subaru has recalled about 170,000vehicles in a number of Northern andMidwestern states, the so-called “saltbelt” region, due to possible rusting of

the rear suspension.The automaker, aunit of Japan’s Fuji Heavy IndustriesLtd. 7270.T, said that the rear suspen-sion components could rust afterseveral years of exposure to road salts,used to clear ice during the winter.Thecorrosion could cause the subframe tobreak, which if it occurred during oper-ation of the vehicle, resulting in loss ofcontrol.The recall covers some of theLegacy, Outback, and Baja vehicles fromthe 2000 to 2003 model years.Vehiclessold in or currently registered in 22states and the District of Columbia areincluded in the recall. The companysaid it knew of no accidents resultingfrom the rusting. This recall doesn’taffect our region directly, but vehiclesdon’t always stay in the state of pur-chase. We included this notice just incase some find a way to the South.

Toyota Recalls The 2002-2003Celica For Fuel System Problems

Toyota has recalled the 2002-2003Celica. There are 15,048 units involved.The dates of manufacture are Marchthrough November 2002. On certainpassenger vehicles, the fuel tank checkvalve, located in the fuel tank inletpipe, may become separated from theinlet pipe and fall into the fuel tank. Ifthe check valve falls into the tank, fuelmay spill from the fuel inlet pipe whenthe fuel pump automatically shuts offduring fueling. This condition mayresult a fire in the presence of an igni-tion source. Dealers will inspect and, ifnecessary, repair the fuel tank checkvalve. The manufacturer has reportedthat owner notification began in May2003. Owners may contact Toyota at 1-800-331-4331.

Toyota Recalls The 2003 LexusGX470 For Problems With RearSeat Latch

Toyota has recalled the 2003 LexusGX470. There are 3,666 units involved.

The dates of manufacture are Marchthrough November 2002. On certainsport utility vehicles equipped with theLexus Link System (LLS), it may be diffi-cult to lock one of the two latches onthe bottom of the middle row left rearseat (larger side of the bench seatdirectly behind the driver). Due to thethickness of the Lexus Link Systemstorage case, the stopper on the bottomof the seat is slightly elevated.This ele-vated position misaligns the latch tothe striker. If the vehicle is operatedwith only one latch locked, the occu-pant of the seat may be improperlyrestrained in the event of a crash,increasing the risk of personal injury.Dealers will remove the LLS casepanels around the seat stopper. Themanufacturer has reported that ownernotification began during April 2003.Owners may contact Lexus at 1-888-333-9376

Nissan Recalls Altima And Sentra Cars

Nissan Motor Co. Ltd. will recall268,000 vehicles to fix an engine partthat could cause a fire and has beenworking to fix another problem thatcould also lead to a fire. NHTSA saidNissan’s recall covered 2002 and 2003Nissan Altima and Sentra cars sold with2.5-liter four-cylinder engines.A pin onthe exhaust pipe hanger can catch roaddebris, which could catch fire from theheat of the engine. Dealers will removethe protruding part of the pin. NHTSAsaid Nissan was also trying to solve aproblem with the catalyst that couldeventually lead to the engine burningoil and possibly a fire.

GM Has Recalled The 2003Trailblazer, Envoy And Bravada

GM has issued recalls on the 2003Chevrolet Trailblazer, 2003 GMC Envoy,and the 2003 Oldsmobile Bravada.There are 44,653 units affected.Certain sport utility vehicles were builtwith a left-front brake pipe with a



circumferential score at a random loca-tion along the length of the pipe as theresult of the manufacturing process. Ifthe brake pipe at the scoring locationcorroded to the point that the brakepipe wall became very thin, and appli-cation of the brake developed enoughpressure to partially or fully fracturethe brake pipe, brake pedal travelwould immediately increase and frontbrake performance would be reduced.Or, if the brake pipe wall at the scoringlocation partially or fully fractured dueto a combination of pressure, vibration,or temperature induced fatigue, thebrake pedal travel would immediatelyincrease and front brake performancewould be reduced. In these instances,braking would be limited to that avail-able with the remaining half system(rear brakes). If this occurs when stop-ping distance is limited, a crash couldoccur. Dealers will replace the left-front brake pipe.At press time, GM hadnot provided an owner notificationschedule. Owners who take their vehi-cles to an authorized dealer on anagreed upon service date and do notreceive the free remedy within a rea-sonable time should contact Chevroletat 1-800-222-1020, GMC at 1-800-462-8782,or Oldsmobile at 1-800-442-8006.

Ford Has Recalled The 1999-2000 Lincoln Continental

Ford has recalled approximately43,459 Lincoln Continentals withmodel years 1999-2000. The dates ofmanufacture are May 1998 throughFebruary 2002. On certain passengervehicles, the driver and/or passengerside airbag could deploy as a result ofunderbody impacts near the sensors.These would include those occurringfrom pieces of gravel or debris thrownfrom the wheels while the vehicle isbeing operated at moderate to highspeed or being accelerated. Dealerswill recalibrate the airbag sensors. Fordhas reported that owner notificationbegan March 31, 2003. This action isdeemed a “safety improvement cam-paign” and is not being conducted

under the Safety Act.The company hasinformed NHTSA that it will providethe modifications described above freeof charge. Owners may contact Ford at1-800-392-3673.

Ford Has Recalled The 2003Lincoln LS

2003 Lincoln LS models, manufac-tured from November 2002 February2003 have been recalled. There arepotentially 1,736 units involved. Oncertain passenger vehicles equippedwith 17-inch chrome wheels, thewheels were not heat-treated. Thesewheels may crack at the lug-nut holes,which could result in the loss of thelug-nut torque. If this condition occurs,the driver may experience noise and/orvibration while driving the vehicle.Continued operation of the vehiclecould result in the wheel separatingfrom the hub, increasing the risk of acrash. Dealers will inspect the wheelsto ensure that all the wheels have beenheat-treated. Any wheel that has notbeen heat-treated will be replaced.Themanufacturer has reported that ownernotification began April 14,2003.Ownersmay contact Ford at 1-800-392-3673.

Toyota Has Recalled The 2003Toyota 4 Runner

Approximately 29,482 – 2003 Toyota4 Runner vehicles have been recalled.These vehicles were manufacturedfrom October 2002 through March2003. On certain sport utility vehicleswith V6 engines, the fuel pulsationdamper, located on the fuel rail, mayhave been improperly assembled,causing a diaphragm in the pulsationdamper to be damaged. If thediaphragm fails, fuel may leak. Thiscould result in an engine compartmentfire if a heat source or an ignitionsource is present. Dealers will replacethe pulsation damper. The manufac-turer has reported that owner notifica-tion began during May 2003. Ownersmay contact Toyota at 1-800-331-4331.

Nissan Has Recalled The 1994-1995 Altima

Nisssan has recalled some 1994-1995Nissan Altimas. There are potentially190,000 units involved. These vehicleswere manufactured from September1993 through March 1995. Nissan isrecalling certain passenger vehicles fol-lowing reports that passenger airbagdeployments in these vehicles hadcaused a number of moderate-to-severeeye injuries. Nissan has developed anew passenger airbag that is less pow-erful when it inflates in a crash toreduce the risk of airbag inflation-related injuries. Nissan dealers willreplace the passenger airbag at nocharge to the consumer.The manufac-turer has reported that owner notifica-tion began during May 2003. Thisaction is deemed a safety improvementcampaign and is not being conductedunder the Safety Act. Owners maycontact Nissan at 1-800-647-7261.

Kia Motors Has Recalled The2002 Kia Sedona

On certain 2002 Kia Sedona passen-ger vehicles, manufactured from Maythrough June 2002, some of the secondand third row seat strikers installed onthe vehicle floor pan have beenimproperly heat treated and couldbreak in a crash, resulting in injuries tooccupants of these seats. There areapproximately 4,276 involved. Dealerswill replace the seat strikers.The manu-facturer has reported that owner notifi-cation began April 25, 2003. Ownersmay contact Kia at 1-800-222-5500.

Ferrari Has Recalled The 1995512M, 1991-1995 512TR AndTestarossa 1987-1991

Approximately 2,008 – 1995 Ferrarimodels 512M, 1991-1995 Ferrari512TR, and 1987-1991 Ferrari Tes-tarossa have been recalled. These vehi-cles were manufactured from October


1986 through December 1995. Oncertain passenger vehicles, the passiverestraint system may not function cor-rectly. Inconsistent electrical operationof the automatic track assembly hasbeen experienced. If the passiverestraint system experiences an electri-cal or mechanical failure, the seat occu-pant would not be fully protected.Dealers will replace all the main com-ponents of the passive seat belt System.This includes the electronic controlunits, the retractor mechanism, andboth the right and left motor driventrack assemblies.The manufacturer hasreported that owner notification beganApril 24, 2003. Owners may contactFerrari at 1-201-816-2651.

BMW Has Recalled The 2003325i, 325Ci And M3

BMW has recalled the following vehi-cles: the 2003 BMW 325i, the 2003BMW 325Ci, the 2003 BMW 330i, andthe 2003 BMW M3. Approximately13,100 units, manufactured fromAugust through November 2002 areinvolved in the recall. On certain pas-senger vehicles, the window lifting anti-pinching device might not functionproperly, and occupants could bepinched by a window that is beingclosed. Dealers will inspect, and if nec-essary, replace the electronic controlunit for the window lifting anti-pinch-ing device. The manufacturer hasreported that owner notificationduring May 2003. Owners may contactBMW at 1-800-831-1117.

Other Recalls Announced ByNHTSA

There were several other significantmotor vehicle recalls that will be men-tioned below:

Ford will replace the windshields on67,894 Ford Taurus and Mercury Sablesedans that don’t meet federal stan-dards. A Ford spokesman said NHTSAfound a problem with the windshieldson some 2002 and 2003 models, which

Ford traced to an assembly problem.GM will recall about 52,000 of its

Cadillac CTS luxury sedans to fix a bolton the steering shaft that could loosen.This could cause drivers to lose controlof their vehicles.The automaker said itwas aware of two instances where thebolt loosened, but no crashes resulted.Cadillac dealers will inspect the steer-ing shaft and ensure that the bolt istightened.

Chrysler will recall 287,725 – 2002Dodge Ram pickups to fix a wiringproblem that could cause the heaterfan to shut off.

BMW AG will recall 5,110 of its MiniCooper cars to fix a screw on the rearsuspension struts that could break.

Firestone Has Recalled TheSTEELTEX A/T LT235/75R15

The National Highway Traffic SafetyAdministration has released informa-tion concerning the recall by Firestoneof a small number of STEELTEX RadialA/T LT235/75R15 tires. The tires werebuilt from March 9, 2003 throughMarch 15, 2003. Due to an insufficientcure in the tread shoulder area, the tiremay develop irregular wear, noise, orvibrations and with extended use, thetires with this condition may experi-ence a tread separation. Tread separa-tion of the tire can possibly lead to avehicle crash, resulting in serious injuryor death. BFS will notify its customersand replace the tires free of charge.Owner notification began in May 2003.Owners who take their vehicles to anauthorized dealer on an agreed uponservice date and do not receive the freeremedy within a reasonable timeshould contact firestone customerservice at 1-800-367-3872.

Disetronic D-TRON InsulinInfusion Pump Recalled

The Food and Drug Administration(FDA) has announced the Class I recallof the Disetronic D-TRON Insulin Infu-sion Pump, Models 8100001 D-TRON

(blue) and 8100005 D-TRON(anthracite). Class I represents thehighest level of risk and is reserved forproducts that could likely cause serioushealth problems or death. The reasonfor the recall is that some pumpsstarted programming a bolus (fast injec-tion) of insulin that was not initiated bythe pump user and the delivery of anunintended bolus was made unless itwas stopped by the device user. Thepumps are being recalled by DisetronicMedical Systems, Inc. St. Paul, Min-nesota.The recall involves 3,357 insulininfusion pumps nationwide. A recallnotice was originally issued in April2002 for these pumps. After the receiptof new information, the health risk wasreevaluated and upgraded to a Class Irecall due to the potentially life threat-ening danger of the problem. The fol-lowing recommendations were made:Contact your physician immediatelybefore doing anything to your pump.Your physician can also help you deter-mine if you are using one of the twomodels of Disetronic that have beenrecalled.

American Household, (FormerlySunbeam) Has Recalled StarME-1 Dry Fire Sprinklers

American Household Inc., formerlyknown as Sunbeam Corporation hasrecalled about 60,000 Star ME-1 dry firesprinklers. Chemetron Corporation, aninactive subsidiary of AHI, manufac-tured these sprinklers from 1977through 1982. This recall announce-ment follows the resolution of anadministrative proceeding filed byCPSC on October 9, 2001, in whichCPSC alleged these sprinklers aredefective and are likely to fail tooperate in a fire, thereby exposing con-sumers to the risk of death or seriousinjury. CPSC reports that samples ofStar ME-1 sprinklers removed fromseveral locations and tested by inde-pendent testing laboratories did notoperate as intended. Although therehave been no reports that Star ME-1 dry



sprinklers manufactured by ChemetronCorporation have failed to operatewhile in use, CPSC has received reportsof two failures involving Star ME-1 drysprinklers manufactured by other com-panies. One report involved a 1976sprinkler, and the other, sprinklersinstalled in 1990.

Chemetron’s Star ME-1 sprinklershave the following information moldedonto the sprinkler: the name “Star,” thedesignation “ME-1,”and the year of man-ufacture, starting with 1977 and endingwith 1982.These sprinklers were typi-cally installed in areas of buildingswhere the sprinklers or water supplypipes may be subject to freezing. Exam-ples of such areas include unheatedattics, freezers and coolers, porches,and parking garages.The types of facili-ties in which the sprinklers wereinstalled include nursing homes, conva-lescent and long-term care facilities,supermarkets and other stores, ware-houses,hospitals, and office buildings.

Sunbeam Corporation filed for bank-ruptcy protection in February 2001.However,AHI has agreed to pay up to$1 million to assist in the replacementof the Star ME-1 dry sprinklers thatChemetron manufactured from 1977through 1982. To receive payment forsprinkler replacement, consumers mustfollow specific procedures and mustsubmit claims by September 29, 2005.For more information, consumersshould call 1-888-551-5014 toll-freeanytime or visit the recall Website atwww.starme1recall.com. CPSC previ-ously announced that Mealane Corpo-ration voluntarily agreed to recall StarME-1 sprinklers manufactured from1961 through 1976 and Central Sprin-kler Company voluntarily agreed toreplace Star ME-1 fire sprinklers manu-factured from 1996 through 1998.TheSprinkler Corporation of Milwaukee,which manufactured Star ME-1 sprin-klers from 1983 through 1995, has noassets with which to fund a recall, butis issuing a safety notice warning build-ing owners to replace these sprinklers.

Homelite Recalls Chainsaws

Homelite has a recall of some 6,900chainsaws. Consumers should stopusing the recalled products immedi-ately unless otherwise instructed.Homelite Consumer Products, Inc., ofAnderson, South Carolina, the distribu-tor, announced the recall. These sawscan operate while the engine is at the“idle” setting, posing a risk of seriouslacerations to the operator andbystanders. These Homelite brandchainsaws have model numberUT10946 and manufacture dates ofNovember 2002 or December 2002.The model numbers and manufacturedates are printed on the lower cornersof a black data label located on backside of the chainsaw’s engine housing,opposite the on/off trigger.They have ared housing with black trim and aresold in a rectangular black plastic case.The units were sold at home and hard-ware stores nationwide from Decem-ber 2002 through February 2003 forabout $200. The chainsaws were manu-factured in China,which may come as asurprise to some of our readers. Youshould contact Homelite to find thenearest Homelite-authorized servicecenter for a free throttle adjustment.The stores where these chainsawswere purchased will not provide thisservice. You can call Homelite at 1-800-776-5191 or visit the firm’s Website atwww.homelite.com.

XXV.ALABAMA WATCHUPDATE

Alabama Watch Is Making ItsMark

Alabama Watch is gaining a strongfoothold in Alabama and is doing a verygood job on consumer issues forAlabama citizens. I read the newsletterfrom Alabama Watch, dated May 14,2003, which contains a good deal of

pertinent information. This consumeradvocacy group has established credi-bility with the news media and hasdone a great job of working for con-sumers in the Legislature. In itsnewsletter, Alabama Watch correctlyreports that 2003 has been a toughyear so far for consumers in the Legisla-ture. I totally agree with that assess-ment, but that’s nothing new.Consumers have been second-class citi-zens for the past 25 years. A primeexample is the hog farm bill passed theHouse on May 13th, which is nothingmore than excessive protection forlarge corporate farming operations.The worst offender of all time,however, may be the nursing homeimmunity bills, which make elderly citi-zens worse than second-class citizens.In any event,Alabama Watch has a lot ofwork to do on educating consumersabout bills like the hog farm and thenursing home bills that erode con-sumer rights. In fact, both of these bills“smell” to high heaven and the odormay attack permanently to the spon-sors of the bills.

The Special Session will do little tocool off a very long and hot summerfor consumers. The emergence of thenursing home bills in the Senate duringthis “emergency” session should tellconsumers in our state where theSenate leadership’s priorities lie. Thismeans groups like Alabama Watch andAARP will have to become involved inthe fight again. In any event,AlabamaWatch needs more volunteers to assistthem in their fight to protect con-sumers in Alabama. A number ofgroups, including AARP, have pitched into help Barbara Evans and her staff.Hopefully, others will join their efforts.An example of what groups can doinvolves UAW Local 1413 in Huntsville.The labor group hosted a news confer-ence for Ms. Evans and has gottenactively involved in other areas. Anumber of committed people from thatlocal will help Alabama Watch get con-sumer news out in their area. The com-bination of AARP members, union


people, families of nursing home resi-dents, and lawyers are a great base formore work in all parts of the state. JoanCarter, State Director of AARP, has beena real friend of Alabama Watch. TheAARP members have been especiallyactive in leading efforts in the fightagainst the nursing home bills in theState Senate. The work of AARP andAlabama Watch has really kept the pres-sure on the small number of Senatorswho are carrying water for the nursinghome owners. It is hard to ignore400,000 members of AARP in Alabamaand members of the Senate understandtheir influence back home. I hope allof you believe there is a need for astrong consumer advocacy organiza-tion in Alabama. If you want moreinformation on Alabama Watch,visit theirWebsite at www.alabamawatch.org orcall them at 1-800-449-7515 or (334)263-3022. If you are interested inmaking a donation to their cause,which involves consumer research,education, and protection, you cansend a check to Alabama Watch, 400South Union Street, Suite 245-B, Mont-gomery,Alabama 36104.

XXVI.FIRM ACTIVITIES

Beasley Allen Radio Shows

Our radio show, entitled “The JereBeasley Show”on WACV – 1170 AM,hasmoved to a new day.The show can nowbe heard each Thursday from 5:00 p.m.until 6:00 p.m.The show will continueto simulcast with WRJM 93.7 The Rose,in Ozark. The show, which will behosted by Temple Adams, can be heardin the Montgomery listening area andthroughout South Alabama and theFlorida Panhandle. It will continue tobe a consumer news program with call-ins from the audience. We haveenjoyed doing the Saturday show, butare told the new time slot will reach amuch larger audience. I will do most of

the shows with help from our otherlawyers.

We now have a second show entitled“The Jere Beasley Hour” on WLWI 1440AM. It will air each Friday from 7:00a.m. until 8:00 a.m. The host will beKevin Elkins, a card-carrying Republi-can, who will keep me on my toes.Don’t forget to also tune into this newshow. I will do the majority of theseshows during the year with help fromother lawyers. Our goal is to informAlabama citizens on consumer issuesand to get input from callers.

Thus far, we have been unsuccessfulin locating a station in Birmingham orNorth Alabama to carry our shows.This has been our fault due to thedemands of a heavy trial schedule andthe Legislature being in session. Never-theless,we will continue to look for sta-tions. If you have a suggestion, it wouldbe appreciated. We believe a con-sumer-friendly talk show in all areas ofAlabama is most important. The right-wingers have dominated the radio talkshows for years and we believe abalance is badly needed.

Beasley Allen Attorneys Admitted in Other States

Recently, our firm announced thatTed Meadows, Roger Smith, and NavanWard were admitted to the MississippiBar. They were sworn in on April 29thand are admitted to practice before allState and Federal Courts in Mississippias well as the Fifth Circuit Court ofAppeals. Paul Sizemore has been admit-ted to the Georgia Bar and was swornin on November 25th. Paul was alsoadmitted to the Tennessee Bar inJanuary. J. P. Sawyer was admitted to theOhio Bar and was sworn in on Novem-ber 13th before the Ohio SupremeCourt in Columbus, Ohio. Rick Morri-son was admitted to the Mississippi Barin September of 2002 and is also admit-ted to practice before all State andFederal Courts in Mississippi as well asthe Fifth Circuit Court of Appeals. Theability to practice in other states has

given our firm the opportunity to helppersons in those states. We appreciateour lawyers being willing to take thebar exam in these states – that is hardwork.

Jerry Taylor – An ImportantMember Of The Firm

Jerry Taylor came to the firm in Aprilof 2001 from Birmingham. In Octoberof 2001, Jerry organized the NursingHome Section of the firm. This newsection was divided into pre-suit andlitigation areas to allow thoroughreview of all cases prior to filing. Sincebecoming the Nursing Home SectionHead, Jerry has helped the firm expandits nursing home practice into numer-ous states throughout the southeastand into other areas of the country. Hehas been involved in numerous nursinghome cases that have resulted in sub-stantial verdicts and settlements for ourclients. Recently, he was lead counsel ina case against a Beverly Enterprisesfacility in Mobile,Alabama that resultedin a $7 million dollar verdict.This casewas featured in The National LawJournal, the Nursing Home Law Letter,and the Andrews Nursing Home Litiga-tion Reporter, as well as numerousother publications and newspapers. Inaddition, Jerry has had numerousseven-figure settlements againstnursing homes. In the last few yearsalone, he has been involved in approxi-mately $60 million worth of verdictsand settlements in cases filed againstnursing home corporations in Alabamaand other states.

Jerry is a frequent lecturer of legalseminars locally and nationally onissues relating to nursing home litiga-tion. He has authored numerous papersincluding “Nursing Home Malpracticein Alabama: Pre-Suit Preparation” and“Nursing Home Litigation: Taking aCase to Trial.” He is a member of theExecutive Committee of the AlabamaTrial Lawyers Association and isinvolved in the Association of TrialLawyers of America’s Nursing HomeLitigation Group. He is married to the



former Lisa Whigham of Louisville,Alabama, and they have three sons,Boyd, Christopher, and Rob. JerryTaylor is a most important member ofour firm.His section serves a significantsegment of our state’s population. OurNursing Home Section is dedicated tobringing about real change in hownursing home residents are treated inAlabama.

Our Spiritual Leader

Willa Carpenter is the HumanResources Liaison for our firm. She hasbeen with the firm for ten years and isregarded as the firm’s spiritual leader.Willa provides guidance and support tothe staff by listening, counseling andpraying with them whenever they arein need. She oversees the firm’s weeklydevotions that have become a wonder-ful testament to the firm’s spirit ofChristian fellowship and also adminis-ters weekly prayer meetings withseveral of the shareholders’ wives.Willa also supervises the firm’s fourreceptionists and helps them carry outtheir important roles for our firm. Willaand her husband Sam have beenmarried for 49 years and have threechildren and six grandchildren. Theyare elders at Christian Life Church inMontgomery. They love to entertainand work in their yard. We are mostfortunate to have Willa Carpenterworking for God and our firm – in thatorder – and hope she is around formany more years.

A Legal Assistant Who IsImportant To The Firm

Our firm handles a high volume ofcases and many of them are complexand extremely technical in nature. Wedepend on a mix of lawyers and non-lawyer personnel to handle our case-load. The position of legal assistant isan important part of a litigation team inour firm. The persons who fill thesejobs have to be highly competent andwell trained. We are fortunate to have avery good group of legal assistants. We

have 38 legal assistants currentlyemployed in the firm. Carol Thomp-son, one of our most experienced legalassistants, works for Greg Allen in ourProduct Liability Section. Carol, whohas been with the firm since 1990, hasbeen involved in some of our mostimportant cases. Her work product isalways of an excellent nature. Whilehaving good support staff is criticallyimportant to the success of any case, itis especially critical in the productsfield. The work in product liabilitycases is hard, demanding, and intensefor a number of reasons. These caseswill always involve either a death orserious injury that permanently dis-ables the victim, which requires a greatdeal of medical knowledge and expert-ise. Discovery is always intense andrequires a good deal of plain old hardwork. Our legal assistants are highlytrained and proficient and Carol is asgood as they come. One of her besttraits is her ability to “bond” with ourclients.

Carol is married to Mark Thompson,who is a veteran with the MontgomeryCounty Sheriff’s Department. Theyhave three children, with a grandchildon the way. Carol’s twin boys are out-standing football players at PrattvilleHigh School. The boys will be seniorsnext fall and are looking forward to agreat year. Carol is a tremendousperson and is a loyal member of ourfirm.

An Award That Is SincerelyAppreciated

I was honored and humbled to havebeen selected by the Alabama Democ-ratic Conference as this year’s recipientof the Martin Luther King, Jr.AmericanDream Award. This prestigious award isgiven annually to persons who servetheir fellow citizens. I consider thishonor to be one of the most rewardingthings that has ever happened to me inmy public life. I sincerely appreciatethis recognition. When I realize thatthere are many persons much moredeserving than I am, it makes me appre-

ciate and cherish this award evenmore. My firm is dedicated to servingvictims of corporate wrongdoing and Iam blessed to be a part of what we dofor folks. I have never apologized forbeing a trial lawyer and I never will. Iam proud to carry that label. Withouttrial lawyers who are both willing andable to fight for consumers and peoplegenerally, our country would be in asad state of affairs. When it gets to thepoint in my life that I apologize fortrying to help folks and rightingwrongs, I will retire to the farm. Ithank God for giving me the opportu-nity to serve people who need anddeserve help.

XXVII.A TRIBUTE TO MYFRIEND – JIMFYFFE

The State Loses A Good Man

The State of Alabama suffered a lossof one of its best ambassadors whenJim Fyffe died suddenly on May 15th.While most folks identify Jim withAuburn University sports, in reality hewas a salesman for all Alabamians. Jimwas well known and well respectedthroughout the country as the voice ofthe Auburn Tigers. He came to Auburnwith Pat Dye in 1981 and never left. Ifirst met Jim in about 1975 when myson Jere, Jr. was playing peewee foot-ball on the old WCOV field. Jim wasannouncing those games at the timeand went about it in the same mannerand with the same enthusiasm as hedid later when he hit the big time. Webecame friends at that time and ourfriendship lasted. I realized Saturdaywhen I was reflecting back on the past20 years or so that Jim never called meby my first name – it was always “Coun-selor.” I attended Jim’s funeral and a fullhouse came from all over the state topay their last respects to a good manwho not only loved Auburn University


but also loved the State of Alabama andit’s people. Perhaps, Karl Stegall, Jim’spastor, said it best when he describedJim’s priorities to be his Lord, hisfamily, and Auburn University. Onecommon thread amongst all the folkswho talked at the funeral about Jim’slife and work was that he never forgotwhere he came from in the hills ofnortheastern Kentucky. Any personwho ever heard Jim wind up one of hisbroadcasts or radio shows has heardhis signature signoff, “my time’s up, Ithank you for yours.” I would add atthis juncture that we all are thankful forJim’s time with us. He will be missed.If you want to make a donation in Jim’shonor, send a check to the AmericanDiabetes Association. You can also con-tribute to an education trust fund forJim’s grandchildren. Colonial Banklocations can be contacted for detailson the fund. It is also real important forus to keep Rose and the family in ourprayers.

XXVIII.CLOSINGREMARKS

The special session of the Legislaturewas in progress as we sent this issue tothe printer. I hope and pray that theGovernor and members of the Houseand Senate will get the job done thatmust be done. In my opinion, there hasnot been a more important session ofthe Alabama Legislature in my lifetime.Our state’s future is hanging in thebalance. We are truly at a crossroads inour history. There will have to beenough members of the House andSenate who have the courage to takeon the powerful special interestgroups, which will do their best toderail the Governor’s package. Cer-tainly, to move our state forward byraising taxes will take a great deal ofcourage. It would have been easy forBob Riley to say “no more taxes” andinstead utilize the customary “band-aid”set of solutions for the critical fiscal

problems facing our state. I thank theLord he didn’t do that. The Governor istaking a bold step in the right directionand has put his political career at greatrisk. Without sounding “corny,” Ibelieve that sort of thing is calledstatesmanship. The future of our stateand the welfare of generations in yearsto come depend on what happens inthe next few weeks. We can’t afford tolet this opportunity pass withoutgetting the job done. However, noteven an extremely popular Governorcan do the job alone. He will needtremendous support from the Legisla-tors, other public officials, and from thepeople of Alabama. The BirminghamNews said it best in a recent editorial:“Alabama has the choice betweenrepeating the failures of our past or onethat leads to a better future.” Hopefully,we will make the second choice,whichI sincerely believe is the only course totake. For the good of our state and thewelfare of our people, this session ofthe Legislature can’t end in failure. Inany event, the Governor and the Legis-lature will need our prayers andsupport.



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the jere beasley report jun. 2003

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