Consumer Advocate Legal Update : Class Action Lawyers & Attorneys : Khorrami Pollard & Abir Law Firm : Mass Torts, Products Liability

The world’s largest drugmaker, Pfizer, indicated it would challenge the latest verdict and an earlier verdict that went against Wyeth. A Philidelphia court recently ordered Pfizer to pay $28 million in punitive damages to a woman who is a breast cancer survivor. She was a consumer of Pfizer’s hormone replacement drugs for 11 years.

The drug giant inherited numerous personal injury lawsuits involving the drugs Premarin and Prempro. These drugs are prescribed by doctors to alleviate the effects of menopause. Pfizer recently acquired Wyeth. Provera is also sold by Pharmacia & Upjohn, the latter acquired by Pfizer in 2003.

There was a $4 million compensatory damages award and $75 million in punitive damages. This came after $6.3 million award that Pfizer was ordered to pay in compensatory damages when the jury concluded that the drugmaker failed to warn the consumer about the risks of the durgs Premarin, Prempro and Provera, which contributed to the plaintiff’s cancer.

A jury concluded that Pfizer’s actions warranted punitive damages because its actions constituted a reckless disregard for plaintiff’s safety, health and welfare. Pfizer, of course, intends to appeal, if post trial motions are unsuccessful. The company believes that neither liability nor punitive damages were supported by the evidence presented at trial. Both Wyeth and Pharmacia & Upjohn argued at trial that the drugs were approved by the U.S. Food and Drug Administration and known risks were included on the labels.
 

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My Q&A with Bahar Dejban:

Q: What's on your ipod right now?  A: Everything from Cat Stevens to Rihanna or The Animals

Q: What is your TV character personality?  A: Monica from Friends

Q: What is the last blog you checked out? A: Bailey's Daily

Q: What's your work drink of choice? A: Iced Caramel Macchiato from Starbucks

Q: What's your favorite book? A: King of Torts. I read it in 2 days.

Q: Tell me about your involvement with CAOC? A: I was recently elected to be Secretary of the Women's Caucus and will be playing an active role in forming the New Lawyers Committee.

Q: Why did you chose to take on these roles?  A: I enjoy being involved with CAOC, the people in the organization are great and it is important to have a platform for attorneys to be heard.  This is one of the best ways for attorneys to stand out and create relationships they may not otherwise have had the chance to build. 

Q: What do you hope to walk away from these roles with? A: Long lasting relationships - personal and professional.

Q: What is your advice to new lawyers? A: Get involved.  The reason I want to be involved with the New Lawyers Committee is to provide new attorneys and students an opportunity to be involved earlier in their career.

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This past weekend the KPA attorneys attended the Consumer Attorneys of California (CAOC) Annual Convention in San Francisco, where they learned about the latest developments in consumer litigation. Highlights of the weekend included the Women’s Caucus Reception, Senator Barbara Boxer fundraiser, and Rick Friedman keynote lunch.

What’s the next CAOC event? The Hawaii Travel Seminar in Maui, Hawaii!

What can attendees expect at this seminar? A great line up of panels – Shawn Khorrami moderates Tuesday’s panel, and Wednesday he presents “How to Litigate Natural Disaster Cases – Handling Masses of Clients.”

For more information on how to attend these great events, visit the CAOC website.
 

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When can spoliation of evidence be actionable? Litigants can rejoice that a promise , once it is made, cannot be broken with impunity. In Cooper v. State Farm Mutual Auto Insurance Co. (2009, 4th Dist. , Div 2)) 177 Cal. App. 4th 876, an insurer promised its insured that it would preserve vital evidence that was required for the insured to prosecute a personal injury action against a tire manufacturer that was the alleged tortfeasor. The insurer failed to preserve the evidence.

The insured sued the insurer for the damages he could have recovered if the evidence had been preserved by the insurer, despite the fact that there is no tort for intentional spoliation of evidence in California. The claim is too speculative. See Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 74 Cal Rptr.2d 248 and Temple Community Hospital v. Superior Court (1999)20 Cal.4th 464, 84 Cal.Rptr.2d 852.  (Here's a good blog on the topic.)

However, the Court in Cooper determined that the insured may proceed with a suit against the insurer to recover damages that might have been recovered if the evidence had been preserved with the actionable claim being based on a theory of voluntary undertaking or promissory estoppel. The mere fact that the evidence wasn’t preserved did not, per se, render the plaintiff’s legal claims speculative.

Bryan Cooper was a State Farm insured who was involved in a single vehicular accident allegedly caused by tread separation. State Farm retained a tire expert who, after his inspection of the tire, opined that it had been defectively manufactured. State Farm informed its insured accordingly and settled Mr. Cooper’s claim for insurance benefits based on its expert’s conclusion.

Despite the fact that State Farm agreed to maintain the tire for Mr. Cooper, so that he could use it as evidence in his product liability case against the tire manufacturer, State Farm sold the vehicle for salvage inclusive of the tire. Mr. Cooper was prevented from pursuing his products liability case, and he sued State Farm on several theories. State Farm’s motion for a nonsuit after opening statement was granted and the Court of Appeal reversed.

In Temple, the Supreme Court extended the legal axiom of no tort action for intentional spoliation of evidence. However, the Court recognized that it was possible that a duty to preserve evidence could arise independently, either from statute or contract. In Cooper, the Court factually distinguished Cedars-Sinai and Temple on the basis that neither of those cases involved a defendant who had agreed to preserve the evidence at issue. The Cooper Court determined that State Farm owed a duty to Mr. Cooper based on its agreement with him, and not on general tort principles.

Since State Farm obtained an opinion from an expert that the tire was defectively manufactured, Cooper’s claim was not unduly speculative. Coupled with State Farm’s promise to preserve the evidence, there was a sufficient factual basis for the jury to rely on to rule in Cooper’s favor, and a nonsuit was improper.
 

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Taking the deposition of persons who have been designated to testify on behalf of a defendant are a critical component of a class action discovery plan. These “corporate designee” or “Person Most Knowledgeable” depositions under FRCP 30(b)(6) deposition or CCP section 2025.230 can make or break your case for class certification. These witnesses are your opportunity to get testimony that binds the corporate defendant and which, hopefully, proves that the policy, procedure or practice challenged in your class case uniformly affects the class.

Defendants know the importance of these depositions and usually prepare their witnesses well. It sometimes becomes almost comical how often they try to regurgitate the mantra drilled into them by defense attorneys by answering “that depends” or “it varies”. Because these witnesses can be slippery, you must prepare well before the deposition. First, be sure you know the law on how to prove the merits of your cases. This is critical because when moving to certify you need to show how liability can be determined through common proof. Often a corporate representative is unfamiliar with the legal theories permitting you to get good testimony.

You must also be armed with important documents obtained in a thorough document request sent prior to the deposition. If necessary, move to compel production because these key documents frequently are the only way to pin these witnesses down. I organize documents according to the particular subject matter identified in the deposition notice. The goal by the end of the deposition is to have all of the critical documents needed for class certification authenticated and attached as exhibits to the deposition transcript.
 

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The CAOC 48th Annual Convention is being held this week, November 12 - 15, at the Fairmont Hotel in San Francisco.  This is a great event to meet other CAOC members, hear presentations from top attorneys in the industry and attend spectacular events.

Shawn Khorrami is this year's Convention Chair, as well as moderator for the Class Actions and Mass Torts Session.  He will also be presenting during the Leaving Your Comfort Zone Session and Miracle Growth for Your Practice Session.  A clip of Shawn's presentation at the CAALA Las Vegas Convention can be seen below, or the entire presentation can be purchased through CAALA. 

KPA co-chair of the Class Action Practice Group, Robert Drexler, will also be presenting during the convention, during the Class Actions and Mass Torts Session.  His presentation will cover "Getting your Case Certified."

In addition to attending Shawn and Robert's presentations, check out these premier events sponsored by KPA:

- 11.12.09 Women's Caucus Reception

- 11.13.09 Senator Barbara Boxer Fundraiser

- 11.14.09 Keynote Speaker Lunch featuring Rick Friedman

- 11.14.09 Annual Installation and Awards Dinner

See you in San Francisco!

Please note: the video presentation above was originally recorded at the 2009 CAALA Las Vegas Convention. (C) 2009 Consumer Attorneys Association of Los Angeles.  All rights reserved.  Reprinted with permission.

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A little while ago, I was at an event where an informal question and answer session was being conducted between two candidates for Assembly. One of the topics that stirred up a lively conversation was California’s Malpractice Injury and Compensation Reform Act of 1975(MICRA). When asked whether there should remain a $250,000 cap on pain and suffering in medical malpractice claims, one of the candidates said yes but that the cap should be raised. This response made little sense to me. Besides the fact that a number of sources have reported, that the main purpose of MICRA, which was to reduce healthcare costs, has been unsuccessful for 30 years, I don’t understand how raising the cap would achieve that goal any faster. If this candidate believed that there needs to be caps in order to keep healthcare costs down, then I don’t see how raising the caps would help. In other words, if the costs are down, which they are not, then why fix what isn’t broken. If the costs are high and we still need the cap to lower healthcare costs, then how would raising the cap lower costs when the existing cap did nothing to lower the costs for over 30 years?

It worried me that someone, who was educated, intelligent, and running for office, did not see the flaws in their understanding of MICRA. That they believed that the answer to this ongoing debate was to simply “raise” the cap, with no real thought as to what exactly the implications of that may be, if any. The bottom line is that more and more attorneys are unable to take malpractice claims for financial reasons, insurers reap the benefits of less and less lawsuits, and healthcare costs continue to rise so it seems that the ones who continue to be hurt by this Act are the very people whom the Act was intended to protect, the injured consumers.
 

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On November 2, 2009, the California Supreme Court issued an opinion in Schachter v. Citigroup, Inc., __ Cal.4th __ (2009), holding that an employment incentive provision calling for the forfeiture of restricted company stock if the employment relationship was terminated before vesting did not run afoul California Labor Code sections 201, 202, and 219. The Court’s opinion turned largely on the conclusion that the employee had voluntarily entered into the Plan, which provided employees with shares of restricted company stock at a reduced price in lieu of a portion of the participating employee’s annual cash compensation. According to the Court, the employee was not entitled to return of monies paid into the Plan in exchange for the unvested company stock at the time of termination because the employee had renegotiated the terms of employment by entering into the Plan, and had received the benefits promised by the employer (i.e. the restricted company stock).

In light of the Court’s decision, an employee must be mindful in when agreeing to trade vested compensation (i.e. compensation already earned) for future unrealized compensation such as restricted stock.

Further discussion of this case may be found at the Bailey Class Action Daily.
 

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In a push to beat the new federal regulations, credit card companies across the nation are sending out notices to their customers that their interest rates will be increasing. The Credit Card Accountability, Responsibility and Disclosure Act, passed in May, takes full effect next year. One provision of this act prohibits credit card companies from increasing interest rates on fixed rate cards for reasons other than a cardholder being late 60 days or more on making a payment. To counter that restriction, many credit card companies are now sending out notices to their customers that their interest rates will be increased – often up to 30% - and without any late payments or negative history on the customer’s account. 

These interest rate increases directly contradict Congress’ explicit desire to end deceptive credit card practices. In a letter to the Chairman of the Senate Committee on Banking, Housing and Urban Affairs, Bank of America, pledged not to increase the interest rates of its customers prior to the effective date of the Act. Congress responded quickly, and issued a press release calling on all credit card companies to follow Bank of America’s example. “This Congress has made it clear that abusive credit card practices are no longer acceptable.” Clearly, not all credit card companies have heeded Congress’ request, as the Chairman recently introduced new legislature seeking to freeze rates on existing credit cards until the Act becomes effective. 

Under the Act, a consumer has the right to refuse such an increase, but exercising such a right may negatively impact their credit score. A portion of the Act went into effect in August, 2009, and requires the credit card companies to give 45 days notice of an increased rate, and provides the consumer the right to opt out of the rate increase. The problem with opting out of the interest rate increase, however, is that even though the consumer will be able to pay off the balance at the present interest rate, they are no longer able to use that credit card anymore for purchases or cash advances. This can affect the consumer’s credit score as they now appear to have more debt and less available credit. 

You can see a full discussion of the Credit Card Accountability, Responsibility and Disclosure Act.

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Co-head of the KPA Class Action Practice Group, Matt Bailey, has an article in this month's issue of California Lawyer.

The article, Class Notice in the Electronic Age, covers the intriguing debate of handling class notice in a near paperless society. 

More from Matt Bailey can be found on his blog, the Bailey Class Action Daily.

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