THE NOVEMBER 2006

Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., Attorneys at Law

A NATIONAL LAW FIRM LOCATED IN MONTGOMERY,ALABAMA

Helping those who need it most for over twenty-five years

BeasleyAllen.com I. to Congress revealed that there have COLLEGE DESEGREGATION CASE WILL COME CAPITOL been 16 school-related violent deaths, TO AN END OBSERVATIONS 44 non-fatal school shootings, and over 115 high-profile violence incidents I am hopeful the state’s college deseg- since the opening of school in August. regation case is very close to coming to That should be enough to get the atten- an end.This case has been in the courts SCHOOL VIOLENCE MUST BE STOPPED tion of all of the politicians in Washing- for decades—so long that many Alabama citizens had forgotten all about The senseless killings that have ton, including the President, and prompt it. U.S. District Judge Harold Murphy occurred in our nation’s schools in them to take immediate action. You ordered the parties to present the pro- recent years have parents all over the can get more information about the posed settlement to him by October country greatly concerned for the safety school violence crisis at www.school 13th.A fairness hearing was to be set by and welfare of their children. Their security.org. the judge.As I understand it, the settle- concern is certainly justified and that ment—as proposed—will be good for concern is shared by all persons who all concerned. Under the settlement, have responsibility for the case of chil- LAW ENFORCEMENT DESERVES THE SUPPORT OF ALL AMERICANS Alabama students will be able to receive dren.The most recent incidents in Penn- sylvania and Colorado have brought the A Montgomery police officer was IN THIS ISSUE school violence issue to the attention of killed recently during a routine traffic all Americans. Similar tragedies must be stop, a tragic event that left our commu- I. Capitol Observations ...... 2 averted in the future if at all possible. nity in shock. This death of a brave These latest incidents—as horribly bad young man made all of us realize how II. My Observations on Election...... 5 as they were—aren’t the worst in U.S. dangerous it is for law enforcement per- history. Many Americans don’t realize sonnel on the streets today as they go III. Court Watch ...... 7 that the worst school attack in our about doing their most important work. IV. The National Scene ...... 11 nation’s history was in 1927, when a We depend on the men and women man blew up a school in Bath,Michigan, who work in law enforcement to V. The Corporate World ...... 15 killing 45 adults and children. There protect the public. Unfortunately, we have been many other incidents over don’t always appreciate all that they do VI. Congressional Update ...... 16 the years involving violence in our for us until a tragedy occurs.A friend of VII. Product Liability Update ...... 19 schools that resulted in multiple deaths. mine who serves as chief of police in a In recent years, however, things have major Alabama city says that over 90% of VIII. Mass Torts Update...... 23 gotten much worse. Obviously, steps the crime that occurs in his city is drug- IX. Business Litigation ...... 26 must be taken to make our schools as related. I have heard similar comments safe as possible. from district attorneys from several X. Insurance and Finance Update . . . 26 I have to wonder why our political Alabama counties.Without a doubt, the leaders in Washington hadn’t made the drug culture, which is like a cancer in XI. Predatory Lending...... 30 curbing of school violence a top prior- our country, causes a great percentage XII. Premises Liability Update ...... 30 ity for Congress long ago. President of the criminal activity that affects every Bush has indicated that he will finally community in the U.S. XIII. Workplace Hazards...... 31 get things moving. He called a summit It’s essential that we support law meeting to make plans. But Congress, at enforcement at every level of govern- XIV. Transportation ...... 33 the request of the Bush Administration, ment.The obvious place to start is by XV. Arbitration Update ...... 35 had cut the safety funding for schools, increasing the funding. Salaries for offi- which is absolutely incomprehensible.A cers must be increased, the numbers of XVI. Healthcare Issues ...... 35 congressional conference committee officers increased—the officers must be cut the budget for federal school safety properly equipped—all of which XVII. Environmental Concerns...... 36 funding by more than $90 million.That requires adequate funding. I believe that XVIII. The Consumer Corner...... 38 came at a time when school security a fitting tribute to the fallen officer— measures needed to be greatly Keith Houts—would be to make the XIX. Recalls Update ...... 39 increased and certainly not ignored.We adequate funding of law enforcement XX. Firm Activities ...... 40 spend hundreds of billions of dollars needs a top priority at the federal, state, rebuilding Iraq, but for some reason, and local levels of government. XXI. Some Closing Observations ...... 42 can’t find the funds needed to protect our school children.A report available XXII. Some Parting Words ...... 42

2 BeasleyAllen.com financial aid from a $10 million needs- MANY FACTORS WILL DETERMINE WINNERS cally which party’s candidates would based program included in the settle- ON NOVEMBER 7 TH get their vote in Congressional races. ment.Also included in the settlement is Democrats had a 23-point lead over $25.8 million to Alabama State Univer- The national political picture seems Republicans in every group of people sity for repairs and new programs and to be undergoing a major shift, as the questioned in the poll. This included $7.3 million to Alabama A&M for repairs public is beginning to fully realize how voters, registered voters, and adults. It’s at that campus. Judge Murphy issued an badly the failed policies of the Bush highly significant that it shows the lead Administration have hurt our country. order on September 28th saying $45.5 Republicans had a month before they million in surplus education budget When you factor in all of the corruption took control of Congress in 1994 was funds should be used to settle major and scandals involving public officials less than half that number. It represents issues in the case.As you may recall, the and lobbyists in Washington, the terrific the largest margin among registered lawsuit stemmed from the U.S. Depart- toll related to the occupation of Iraq, voters the Democrats have had since ment of Education’s 1979 finding that and the huge budget deficit, things 1978.This poll was run before the Foley there were still traces of segregation in couldn’t be going much worse for the scandal and the perceived cover-up by Alabama’s college system. Obviously, GOP.All national polls show that Ameri- the Republican leadership surfaced. I that was over 26 years ago. It’s difficult cans still rank the Iraq War and terror- suspect that margin is much wider to understand why this case has hung ism as the biggest problems facing the today. around so long. country. Normally, the economy is a Nevertheless, Republican strategists The federal government sued the major factor in congressional races are working hard trying to paint State of Alabama in 1981 after university and in many instances it determines Democrats as being weak on national leaders failed to agree on a plan to winners and losers.The polls reveal that security. So far, those efforts have fallen correct the problem.According to the Republican efforts to capitalize on what on deaf ears. Since the polls referred to lawyers involved, the case should be they claim to be good economic news above were run-before the latest book resolved in a maximum of two months. will run up against strong voter pes- by Bob Woodruff came out and prior to Lawyers for the parties to the suit are simism on the issue.They simply don’t the Foley scandal—things have defi- presently working out a final version of believe the spin that the President and nitely become much worse for the GOP. the settlement. The settlement, if others are trying to put on the state of When a party runs on family values, approved, will provide a five-year imple- the economy. Most folks I talk with voters expect men and women elected mentation period for changes to be about the economy in my state tell me under their banner to really understand made. I hope none of the proposed they certainly don’t believe it’s as good what family values are all about. I terms will need that much time. A as some of the national politicians say it believe most folks have had enough and is. A recent New York Times-CBS poll fourth trial in the case had been set to will vote for change on November 7th. found that 36% of respondents in the start on October 10th. Source: Forbes and Associated Press Frankly, it’s high time for this case to U.S. think the economy is getting worse, come to an end. The lawsuit was a versus only 17% who see it improving. prime example of a state not facing up Several factors could be causing the VOTERS FIRST PLEDGE IS A GOOD THING to an obvious problem and then gloom over the economy—pessimism More than a dozen national and state working out a satisfactory solution. related to the war in Iraq, exploding organizations have sent out messages to Judge Murphy, who is based in Rome, health care costs, a moral decline that is their members about the “Voters First” Georgia, has been traveling to Birming- becoming more dangerous than ever, pledge asking them to contact their ham for years to preside over the case. and concern over threats of terrorist federal representatives. These e-mails He was the judge in two of the three attacks. The sharp division between went out to millions of potential voters. major higher education trials in the suit workers’ pay and big boss salaries also The “Voters First” pledge and the Voters- and has issued a number of significant contributes to the feelings. Voters are FirstPledge.org Web site are the result of rulings in the case. It’s very clear that blaming Republicans for most of the a joint effort by Public Campaign Action the judge wants this lawsuit to be over. problems. Even before the recent Fund, Common Cause, Public Citizen, Improvements have been made in scandal involving Rep. Mark Foley, and other national and state organiza- increasing the number of black students Democrats had a 14-point edge over tions. in higher education and the number of Republicans on handling the economy. Earlier this year, Public Citizen, black faculty members at white univer- This comes from a recent poll done by Common Cause and Public Campaign sities over the past ten years. Hopefully, the Pew Research Center. Another Action Fund asked all candidates regis- this settlement will allow our state to survey was done just before the full tered with the Federal Elections Com- move forward in the field of higher edu- impact of the Foley scandal began to mission to sign a pledge that, if adhered cation. sink in with folks. A recent survey of potential voters nationally asked specifi- to, will go a long way toward removing

BeasleyAllen.com 3 the corrosive influence of money in pol- reform measures constitute a necessary sexual situations pleaded guilty to itics. Once this happens, we can clean first step in restoring faith and integrity charges of failing to document the ages up Congress. The pledge is called in our democracy. Hopefully, all candi- of the young girls engaging in sexual “Voters First” because by signing it, can- dates will break the shackles that the acts in the videos. As part of the plea didates promise to put the interests of special interests have on them and deal, Joe Francis, who is 33 years old, voters ahead of corporate moneyed become free to represent all Americans. agreed to pay a $500,000 fine.A judge interests.As we all know, these are the For more information about the pledge will decide whether to accept or reject interests that now pay huge sums of and which candidates have signed on, the deal at a sentencing hearing sched- money to help congressional candidates visit VotersFirstPledge.org. uled for December 18th. In my opinion, get—or keep—their elected seats and Source: Public Citizen the judge should require jail time—if pretty well control elections. Over 300 that’s possible—for this scoundrel. candidates have signed the pledge thus Apparently, it’s undisputed that under- far.Their names can be found on a Web THE PEOPLE RESPONSIBLE FOR “GIRLS age girls had appeared in the videos. GONE WILD”SHOULD BE PUT UNDER THE site, VotersFirstPledge.org. By signing Santa Monica-based Mantra Films Inc., JAIL the “Voters First” pledge, the candidates pleaded guilty earlier this month in U.S. agreed to support legislation that Without a great deal of fanfare, the District Court in Florida on similar accomplishes three critical goals: sleazy outfit that produces “Girls Gone charges. Mantra Films admitted to violat- Wild” brought its traveling road show to ing record keeping and labeling laws • First, to make elections fair through Montgomery in late September. The while producing and distributing the campaign spending limits and public group set up shop in a local bar, but for videos during all of 2002 and part of funding for all candidates who agree some reason there wasn’t a great deal of 2003. A second company owned by to take no private contributions. media coverage of whatever went on Mantra’s founder, MRA Holdings LLC, • Second, to restore accountability by while they were in town.That part was entered into a deferred prosecution passing and enforcing meaningful good because it meant they received no agreement on charges of improper new restrictions on gifts and travel help selling their products.Apparently, labeling. Under the agreement with from lobbyists and other powerful few public officials even knew that this prosecutors, the charges will be dis- interests for members of Congress; show was coming to town. But, the missed after three years if MRA Hold- and word went out in some fashion to a ings cooperates with future government good number of people in this area.This prosecutions, admits wrongdoing, and • Third, to require full disclosure on the type of show is certainly not something pays fines. It must also hire an outside Internet of all lobbyists’ contributions that parents should want their children company to monitor its records and and any fundraising help members of exposed to or involved in. Fortunately, production facilities to ensure compli- Congress receive from lobbyists. some public officials have been willing ance with federal law. • These three actions are critical to to be “politically incorrect” and have Separate state charges in Florida alleg- putting democracy back in the hands taken these folks on. Before the show, ing that two 17-year-old girls were of all citizens. the mayor of Montgomery and our city videotaped by a “Girls Gone Wild” cam- council said they intended for all local eraman in sexual situations remain Ordinary citizens should be able to laws to be enforced. I’m not sure that pending against Francis and Mantra run for office without having to sell out many people even realize what goes on Films. The courts should deal harshly to big moneyed interests in order to get when this traveling road show comes to with these defendants, and in my elected. Leveling the playing field is crit- a city.The videotapes that are made and opinion a maximum jail term for Francis ical to holding elected officials account- then sold worldwide are pure fifth and is clearly needed and appropriate.While able to all citizens and not just to the disgusting. stiff money fines should be imposed, giants in Corporate America. People We learned a great deal about this that alone is not enough. Any person who share these views were urged to sorry outfit when our firm represented who would profit by producing and contact candidates who have not signed a family a few years ago whose teenage selling this sort of filth has no place in the pledge and ask them to do so. Hope- daughter had been victimized while on our society. It’s a sad commentary on fully,many people did just that. spring break in Florida. Based on what our times when profit-making by ped- The Web site contains an interactive we learned, I can tell you that the com- dlers of pornographic materials pushes map that allows interested citizens to panies involved shouldn’t be allowed to morality into a corner.Where have the search by state and party affiliation to do what they are doing.They are taking churches been over the past few years learn which candidates have signed the advantage of young girls and making big on this disturbing moral issue? In my pledge. The site also has information bucks in the process.The founder of the opinion, it’s time for church leaders to about each candidate. Signing the company that produces and sells these come forward and join this fight! pledge and supporting these crucial videos of young girls appearing in

4 BeasleyAllen.com COMMISSIONER SPARKS ELECTED TO ing imports to the devastating affect voter turnout, but I don’t believe NATIONAL OFFICE storm events we have seen the last that even a low voter total will signifi- two years. These experiences will cantly affect the outcome. Commissioner Ron Sparks, who is enable him to bring a unique per- seeking a well-deserved second term, spective to the NASDA Board of has been elected Secretary-Treasurer of Directors. He will represent our A MAN OF THE PEOPLE FACES A the National Association of State Depart- region of the country well within WASHINGTON LOBBYIST ments of Agriculture (NASDA) for 2006- this association. 2007.This is quite an honor for Ron and It appears that Jim Folsom and Luther is great exposure for Alabama. Our state Ron will eventually be President of Strange will take the race for the has a strong voice in Ron Sparks when NASDA. The officers of NASDA first number two spot down to the wire. it comes to improving and protecting serve the organization as Secretary-Trea- Based on what I hear from around the the agriculture industry. There are surer and then move up in position state, I believe that Jim will edge Luther many exciting opportunities ahead in each year. This gives officers an oppor- by a razor–thin margin. While I don’t agriculture such as alternative fuels, tunity to learn more about agriculture in believe the people of Alabama are ready improving nutrition for our children, other states and build relationships to elect a Washington lobbyist to the and making sure there is adequate disas- across the country.This type of partner- position of lieutenant governor, Luther ter relief for farmers and producers. Ron ship is invaluable for our state. Ron will has been able to haul in huge amounts is being recognized again by his peers serve as President of NASDA in 2009- of campaign money. I believe that his as a real leader, and that’s good. But, the 2010. He served as President of the fund-raising ability will keep the race people of Alabama already knew that SASDA for 2005-2006. Alabama citizens close. I was really surprised to see and appreciate Ron’s outstanding work are most fortunate to have a man like Luther’s campaign go so negative for our state. Ron Sparks speaking for and standing against Jim so early. One of his anti- West Virginia’s Agriculture Commis- up for agricultural interests. He has Folsom ads will rank as perhaps the sioner Gus R. Douglass, a veteran done an outstanding job as Commis- worst ever used in an Alabama political member of NASDA and the Southern sioner and will do even more over the race. It was downright mean-spirited Association of State Departments of next few years. and dirty and is very much like the Agriculture (SASDA) since 1964, had “skunk ad” that was created by another this to say: out-of-state and highly paid political II. consultant. Several folks who told me I am very proud to see Ron’s lead- My observations they had intended to vote for Luther ership and abilities recognized have changed their mind after seeing nationally. I have had the oppor- On The General this ad and are now working hard for tunity to see firsthand his service Election Folsom. to his region in its time of distress Because the office these two men to preserve the agriculture indus- seek has virtually no power over the try in the Gulf Coast and Southern BOB RILEY WILL WIN A SECOND TERM activities of the Senate, and no duties states. He is now in line to assume outside the Senate, it’s difficult to under- In my opinion, Bob Riley will be more responsibility on the stand why the GOP and others have reelected to a second term by a very national level. spent so much money in this race. Some large margin, which could be as much political observers believe that it’s tied Florida Commissioner of Agriculture as an 18% difference. The Riley folks to the presidential race in 2008 and that and Consumer Services Charles have run an almost perfect campaign some of Luther’s donors expect Gover- Bronson added these comments: and have been extremely well financed. nor Riley to be moving to Washington in All of the statewide polls done to date I am pleased that Commissioner 2009. Of course, that’s pure speculation predict a healthy margin of victory for Ron Sparks has been elected as Sec- at this point. Nevertheless, it’s the only Governor Riley. While I can’t see that retary-Treasurer of the National reason that I can see to justify the mil- changing, I must admit that I have never Association of State Departments lions that have been spent on Luther’s seen a race for governor in Alabama of Agriculture. Commissioner Sparks campaign. It may also explain why where voter interest has been so low. I has been a true friend to Florida Luther is trying so hard to hang onto have to believe that’s because most agriculture. He understands the the Riley coattails! folks had made up their minds early in unique challenges that agricul- the race. It may also mean that folks are tural producers face in the south tired of all the negative television ads. In from pest and disease incursions any event, this lack of interest could to competition from ever increas-

BeasleyAllen.com 5 THE ATTORNEY GENERAL’SRACE With the exception of the race for Court Of Appeals Races Chief Justice of the Alabama Both courts at this level—the Court From all accounts, Attorney General Supreme Court, all of the cam- of Civil Appeals and the Court of Troy King should win reelection.Troy paigns have been very quiet. In a Criminal Appeals—are very impor- has done an excellent job as Attorney big surprise to most political tant.The races for these courts have General and has widespread support observers, the Nabers campaign some very good candidates, but so around the state. He is a good family went negative very early. Many felt far no candidate has attracted much man and that’s important to most that the American Taxpayers attention. I recommend that our Alabamians.The good part about that is Alliance would do the dirty work Alabama readers check into the Troy really has legitimate family values for the GOP candidate in that candidates’ prior experience and and doesn’t have to rely on a campaign race—as it did in the primary race qualifications to sit out these courts consultant to mold his image. That’s against Tom Parker—but for some and then decide who to vote for. very much refreshing in the era of reason it came directly from the modern political races. Troy’s tough candidate himself this time. It may stand on crime is absolutely needed be that this group is afraid its OTHERS RACES OF INTEREST during the times in which we live. If my funding sources if disclosed could information from around the state is be a big problem in that race. In any correct, I predict a win for Troy by a event, it will be interesting to see The Race For State Treasurer margin of about 54% to 46%. how voters react to that type cam- One lower level race that has paigning from a sitting Supreme gotten more attention than any of Court Chief Justice. THE JUDICIAL RACES AT THE APPELLATE the others is that for State Treasurer. LEVEL There are some very good candi- In my opinion, that’s because of the dates running for the other four slots tremendous job that Kay Ivey, the The judicial races in Alabama at the whose names will be on the ballot incumbent, has done during her appellate level have attracted a great first term. Kay and my wife Sara on November 7th. Obviously, based deal of money,but very little voter inter- on the polls, the Nabers-Cobb have been very good friends for est thus far, and that is usually bad news contest will be very close and many years. Sara tells me that Kay is a for ordinary citizens. In fact, the political observers believe that Judge good person and a dedicated public Brennan Center for Justice at the New Cobb will take that race. Champ servant. For that reason, I have kept York University School of Law and the Lyons, who is a very good example up with Kay’s work as Treasurer. In Justice at Stake Campaign, a nonparti- of what a good judge should be— my opinion, this lady is a “winner” san,Washington, D.C.-based group that fair, impartial, and honest—has no in every respect. I believe she will has been tracking spending in state opposition and will return to the be reelected by a very large margin. Supreme Court races since 1993, court. Justice Woodall, who fits the project the race for Alabama chief Ron Sparks Will Be Reelected By A Lyons mold, deserves to be reelected justice as likely to be the most expen- Large Margin and I believe he will be.Al Johnson,a sive court election in the nation this well-respected circuit judge from Ron Sparks has done a tremendous year. Obviously, the negative tone of the Russell County,has run a very good job as Commissioner of Agriculture Nabers-Parker race in the GOP primary race on a very limited budget. Many and Industries. He is one of the has left a bad taste with the public. In pollsters believe he has a good most popular officeholders in the my opinion, that carry-over has had an chance to win. Both Glenn Murdock state.This race won’t even be close effect on all of the judicial races on the and Judge John England have run for a number of reasons. A major general election ballot to some extent. I very positive campaigns and have factor is Ron’s ability to draw GOP am convinced that folks are sick and made a most favorable impression voters into his camp. tired of negative ads and mud-slinging on folks I have talked with.However, by the candidates and really want to Legislative Races Around The neither of these candidates has been hear something positive for a change. State able to raise very much money to The campaigns of the candidates who run on.There is no black person on A record amount of money is being take that approach will likely be the the Supreme Court. Most Alabama spent by the candidates in Ala- winners. I am going to mention below a citizens believe this lack of diversity bama’s legislative races this year. In few of the races that will be on the is wrong and actually hurts our fact, some of the individual Senate November 7th ballot. state’s image.That belief may tip the races will see well over one million Supreme Court Races outcome of this race to Judge dollars spent by both candidates. England. After November 7th, the public

6 BeasleyAllen.com should start demanding the early AMENDMENT 2 IS IMPORTANT FOR ALABAMA’S races are now being run just like cam- passage of strong campaign finance PUBLIC SCHOOLS paigns for regular political office, and reform in 2007.That would be very that’s bad news for ordinary citizens good for the people of Alabama. Amendment 2, which is on the and good news for the bad companies There is absolutely no way to justify November ballot, is a constitutional in Corporate America. The conduct of the wild spending that takes place amendment to require local govern- judicial elections in a number of states, in Alabama political races. ments to collect at least 10 mills in including Alabama, point to the serious- property taxes for every school system ness of the problem and its threat to I will mention one Senate race that in the state.This stable floor for school judicial integrity, independence, and may have the worst negative ads funding already exists in 101 Alabama impartiality. Big money can’t be allowed that I have seen—other than those School systems. A yes vote on Amend- to dictate which candidates wind up by the Strange campaign—and ment 2 will bring the other 30 systems serving as judges, but that’s exactly interestingly, they come from a up to this bare minimum.A 10-mill tax what is happening now in a number of female candidate who is challeng- amounts to $10 for every $1,000 in states. ing Senator Wendall Mitchell.Those property value. Because of the way our Thirty-nine states still choose at least ads are not only false in several state sets property value, a 10-mill tax some of their judges by election, instead aspects, but they are a little too amounts to only $60 on a house with a of by some form of nonelective merit dirty to suit me.Wendall has a con- market value of $100,000. This is a selection system. Ethical boundaries servative voting record in the good investment for the education of needed to preserve public trust and the Senate and has been a champion for yes our children. I recommend a vote special role of a court as a neutral education and agricultural interests. on Amendment 2 to help our schools. arbiter must be set and enforced. In It will be interesting to see if the Our children deserve our support and I 2004, spending on campaigns for state tactics used against him work. I hope most Alabamians agree. supreme courts increased to $42 believe too many folks know and million nationwide, up from $29 million like the Senator from Luverne to be just two years earlier.The spending in fooled. But this type campaigning is III. Supreme Court races for the general said to work wonders for a well- COURT WATCH election will be even higher.The activi- financed candidate—we will see. ties of the special interest groups Based on what I am hearing, and seeking firm commitments on contro- JUDICIAL RACES MUST BE TAKEN OUT OF information from the polls, I don’t versial issues from candidates who want POLITICS believe there will be many wins by to be judges have greatly intensified. For the GOP legislative candidates Folks who are interested in politics example, the sole purpose of the ques- unless they are already in office. probably don’t pay as much attention to tionnaires being sent out to judicial can- After November 7th, there should still judicial races as they do to regular polit- didates in Alabama the Christian be a Democratic majority in both ical races.There is one thing for certain Coalition of Alabama is to get those the House and Senate.Although the when it comes to judicial races, commitments. I suspect that’s happen- campaigns have been very negative however, and that is, contests for state ing in all of the other states where in some of the races, people in the judgeships around the country are judges are elected. legislative districts know the incum- getting more partisan, much nastier, and Judges around the country have bents and are knowledgeable about much more expensive. In most states become so concerned that the national their accomplishments as well as where judges are still elected, big Conference of Chief Justices, composed their shortcomings. The 30-second moneyed interests seeking to influence of the top jurists from all 50 states, sound bites on TV that cost the can- court decisions are spending tremen- voted recently to start an initiative didates huge sums of money just dous sums this year to elect the candi- aimed at changing the deteriorating don’t have the effect in local races dates that they like and that they want culture of judicial elections. Obviously, that television ads have in statewide to hear their cases. In fact, judicial races there is no perfect way to choose a races. Legislative politics are still have become the most important politi- judge. But to undermine the whole local in the scheme of things. In any cal races for some of the large corpora- purpose of the court system by allow- event, it’s difficult to justify the mil- tions whose conduct keeps them in our ing special interests to literally buy lions of dollars being spent in legisla- courts.Alabama is a prime example of judgeships, or at least try to do so, is the tive races by both political parties. I that sort of thing. If there is ever a worst system of all. Personally, I favor hope strong campaign reform legis- system of electing judges that needed to the election of judges, but with restric- lation will be one of the good things be changed, it’s in Alabama. tions both on campaign donations and coming out of this political season. It’s most unfortunate that judicial on spending by candidates.To make the

BeasleyAllen.com 7 system work, however, third-party funds came on average, they voted in against ExxonMobil, which has been involvement of groups such as Ameri- favor of contributors 70% of the time, pending in the Alabama Supreme Court can Taxpayers Alliance must also be con- according to the Times. In the 12 years since April 27, 2004. Because our firm, trolled.Those groups can give millions that were studied, the Ohio justices along with the Cunningham Bounds to benefit a candidate and never have to almost never disqualified themselves firm in Mobile, tried this case in the fall report it. from hearing their contributors’ cases. of 2003, I know firsthand that liability in Source: New York Times In the 215 cases with the most direct the case was very clear and the proof at potential conflicts of interest, justices trial that Exxon intentionally cheated recused themselves just 9 times.If this is the state was extremely strong. If our CAMPAIGN DONATIONS SHOULD NEVER accurate, and I believe it is, the people high court follows the law and eviden- INFLUENCE A HIGH COURT’S RULINGS of Ohio are getting a bad deal. tiary proof presented during the lengthy There has been a great deal of specu- The Times article concluded that after trial, the jury’s verdict and the judgment lation in Alabama over whether justices a series of big-money judicial contests in favor of the state will have to be on the Supreme Court are influenced around the nation, the balance of power affirmed. Here’s what Dr.Bronner had to by their large campaign donors once in several state high courts has shifted say about the current state of affairs: in recent years in favor of corporations they are elected. Recently, the New York I personally believe the Alabama and insurance companies. Judges are Times ran an excellent investigative Supreme Court should be placed required by codes of judicial ethics to piece written by Adam Liptak and Janet on a pedestal—beyond reproach. It disqualify themselves whenever their Roberts that looked into judicial races, must be “The Institution” that impartiality might reasonably be ques- campaign money, and how that money Alabama’s citizens have total con- tioned over financial or other conflicts. affects court rulings. The reporters fidence in for fairness and justice. Apparently, there is an exception to this zeroed in on the state of Ohio. I would The Alabama Supreme Court must strict rule, and that involves campaign recommend that all of our readers simply be above politics.Alabami- contributions. obtain a copy of that story if at all possi- ans understand that elections Most legal experts believe that recusal ble and read it carefully before going to make good people do and say th over campaign donations should be the the polls on November 7 .There was a almost anything to become rule and not the exception. In 1999, the great deal of investigative work done by elected. It is for this reason that American Bar Association revised its these reporters, tracking campaign most states do not elect their Model Code of Judicial Conduct to money and later judicial actions in the appellate court judges and jus- require judges to disqualify themselves form of court rulings. Some of their find- tices.Alabamians should not want if they received campaign contributions ings were shocking, to say the least. their judges and justices to receive of a certain amount from a party or its Because 30 states are holding elec- campaign funds; that practice only lawyer. But the bar association did not tions for seats on their highest courts fosters the image of “politics” as name an amount, leaving that decision this year, it’s a good time to consider usual. Maybe someday Alabama to the states in the event they adopted why so much money is being spent in will correct that shortcoming, but the code.The Times article says no state these judicial races. The Times article perhaps not. gives us a good idea of how money has adopted it. Personally, I believe that given to candidates can affect court campaign finance reform affecting judi- Remember the Exxon Valdez oil rulings. Spending in these judicial cial races would solve the recusal tanker spill in Alaska in 1989? races is skyrocketing, with some judges problem.That would limit the need for Exxon is a pro at stalling, and has raising millions of dollars for a judges to have to recuse in cases yet to pay one penny of that jury single campaign. Alabama’s race for because parties had given their cam- award. ExxonMobil (they merged chief justice is a prime example.As the paigns money. Simply put, it would dry in 1998) tried to take advantage amounts increase, questions about up the special interest money that now of our state too and got caught. In whether money is corrupting the inde- controls all judicial races in states like November 2003, a Montgomery pendence of the judiciary are being Ohio and Alabama. jury awarded the state of raised across the nation. Source: New York Times Alabama $103 million in compen- An examination of the Ohio Supreme satory damages and $11.8 billion Court by the Times reporters found that in punitive damages.The case was DR.BRONNER SPEAKS OUT ON EXXON CASE its justices routinely sat on cases after appealed and the punitive receiving campaign contributions from Dr. David Bronner, one of the most damages were reduced to $3.5 parties who were actually involved in a respected men in Alabama, made some billion. ExxonMobil appealed the pending case and from groups that filed rather interesting comments recently case again to the Alabama briefs in support of a party. Some of the concerning the State of Alabama’s case Supreme Court which sent the

8 BeasleyAllen.com case to mediation. ExxonMobil state filed suit against ExxonMobil appointed court have dealt with walked out of the mediation and claiming the company had the matter by now? It’s hard to say, for two years the Alabama cheated the state out of $1 billion but appointed justices would not Supreme Court has done nothing! in natural-gas royalties. Once the have had election-day worries. case was tried, the state won, They could have concentrated It is past time for the Alabama and the jury awarded it $11.9 entirely on the gravity of the case Supreme Court to resolve this billion— that’s right, billion. The and the serious issues it raises. abuse of the people of Alabama. judge who heard the case decided None of this is to suggest which Dr.David G.Bronner the amount was excessive and way the court should rule.But rule October 2006 reduced it to $3.6 billion. Exxon- it should. That’s the court’s role. Mobil said it was still excessive While the day may never come Dr. Bronner’s comments have caused and pursued its appeal anyway. when Alabamians will accept an a great deal of media interest around the (Even at $3.6 billion, it was the appointed rather than elected state. Many persons thought that the highest award in state history.) case had already been decided and that court, they should expect the nine Exxon had paid what it owed the state. The case ended up in the Alabama justices not to shirk their duty for Unfortunately, that is not the case. We Supreme Court three years ago, fear of political fallout. Once the are still waiting for the court to set a with the last brief filed more than election is over, this case should date for oral arguments. a year ago. And still there is no move to the top of the docket, and word if the high court will even the court should take steps to order oral arguments in the case. ensure that every case is handled NEWSPAPERS SEE A PROBLEM as quickly as the circumstances With five of the nine justices up for and issues allow. Several newspapers have commented election in November, it’s not on the Exxon case.The first to comment unreasonable to conclude that the was the Montgomery Independent court is in no hurry to deal with EXXON BACK IN COURT OVER 1989 VALDEZ whose editor had a conversation with the matter before the election. SPILL Jim Martin concerning the Exxon Indeed, whatever the court decides matter. Since then Phil Rawls of Associ- will bring down harsh criticism. If As we all know, and as Dr. Bronner ated Press wrote a very good piece on the court upholds the verdict and pointed out in his article, it’s been over the case. The following is an editorial the $3.6 billion award, it will be 15 years since the Exxon Valdez spilled which appeared in the Huntsville accused of knuckling under to 11 million gallons of crude oil along the Times. trial lawyers and people who Alaska coast in one of the country’s would hurt the state’s business worst environmental disasters. It’s diffi- Silence From The Court climate. If the court overturns the cult to believe that a jury’s $5 billion The ExxonMobil case is one more verdict, it will be called a tool of judgment against the company is still argument for appointed justices. big-business Republicans and an tied up in the courts. But, having dealt Intelligent people can disagree enemy of a state government that with this politically powerful company, over whether Alabama’s appellate could do a lot of things with $3.6 I’m not too surprised. ExxonMobil courts ought to be elected, as they billion. Corp.’s appeal of the Valdez verdict was are now, or appointed, as they are to be heard for the third time recently Such criticism will be the same in some other states - and as they in a federal appeals court in San Fran- before or after election, but that are at the federal level. For the cisco. As we all know, the case stems shouldn’t matter.What gives? The latest evidence supporting the from a 1994 decision by an Anchorage justices themselves are not talking. appointed-judge-and-justice argu- jury to award punitive damages to It would be improper for them to ment, one need look no further 34,000 fishermen and other Alaskans. do so. Candidates for the court are than the status in the Alabama The residents claimed they were also saying little. The canons of Supreme Court of the state’s harmed when the Valdez struck a judicial ethics apply to them as lawsuit against ExxonMobil.Actu- charted reef and spilled crude oil along well as to sitting justices and ally, the situation is better about 1,500 miles of coastline. The judges. At a time when the described as a lack of status. First, captain of the Valdez was drunk and Supreme Court has properly been some background. Exxon knew that he had a drinking lauded for its efficient and expedi- problem.The jury found Exxon and the Back during the Administration of tious handling of cases, the Exxon Valdez captain reckless in the accident. Republican Governor Fob James, Mobil delay stands out as a Exxon argues it should have to pay no who served from 1995-1999, the notable exception. Would an more than $25 million in punitive

BeasleyAllen.com 9 damages. The corporation, which U.S. SUPREME COURT TO HEAR SEVERAL In the case before the Supreme Court, reported third-quarter earnings of $10 IMPORTANT BUSINESS CASES brought by Rockwell International billion, says it has spent more than $3 Corp. and Boeing North American, Inc., billion to settle federal and state law- The U.S. Supreme Court will consider the High Court agreed to clarify the def- suits and to clean the Prince William several business cases during its upcom- inition of an “original source” in the Sound area. In two previous appeals, the ing term, including a case that could False Claims Act.A person must be the U.S. Court of Appeals for the Ninth make it easier for consumers to hold original source of information about Circuit ordered U.S. District Judge H. insurers, banks, and other businesses misspent funds to bring a claim under Russel Holland of Anchorage, who was liable for not notifying them when their the Act.It will be interesting to see how the trial judge, to reduce the judgment credit rating changes.The case involves this case winds up. against Exxon, saying it was unconstitu- conflicting interpretations of the Fair The Court will also hear a case that tionally excessive. Judge Holland com- Credit Reporting Act by lower federal deals with the question of punitive plied in 2002, reducing the verdict to $4 courts in class action lawsuits against damages. I suspect that issue will be billion. Exxon appealed that decision. Geico General Insurance Co., Safeco widely written about before the court The trial judge was then ordered by the Insurance Co. of America and others. makes any ruling.The case before the appeals court to revisit the decision. The Act requires companies to notify Court, involving a verdict against Philip Judge Holland called Exxon’s actions consumers about rate increases that are Morris, is extremely important and is “reprehensible,” and set the figure at based on information in their consumer being watched closely by the real vil- $4.5 billion plus the accrued interest. credit reports. lians in Corporate America.These com- The appeals court has twice questioned There is a split of authority on this panies want to take away the rights of a the award, sending it back each time to issue in the circuit courts of appeal. In jury to punish a wrongdoer who has the trial judge to reduce the verdict. most federal courts, consumers alleging done an act that badly hurts its victim. Accrued interest could bring the total business violations of the disclosure They see placing a limitation of the amount to around $9 billion. requirements must show that busi- ability of a jury to punish a wrongdoer In the region itself, pockets of rela- nesses knew they had violated the law as their main line of defense. These tively fresh Exxon Valdez oil remain on when they failed to tell consumers that wrongdoers will pay compensatory shorelines as distant as Katmai National a change in their credit rating prompted damages, consider it a low cost of doing Park, about 300 miles from the site a rate hike.The U.S. Court of Appeals for business, and keep on hurting folks where the supertanker disgorged 11 the Ninth Circuit ruled last year that without any slowdown. The case was million gallons of crude oil, according to consumers don’t have to show the com- set for argument before the Court on panies realized they were breaking the government scientists who presented October 31st. their studies at a conference last month law. Instead, consumers need only to in Anchorage. Jeff Short, a National prove that companies ignored the law’s Oceanic and Atmospheric Administra- requirements.That was the ruling by the CALIFORNIA JUDGE REDUCES $61 MILLION FEDEX VERDICT tion researcher,says: Ninth Circuit in a series of class action lawsuits involving four insurance com- This stuff isn’t changing at all. It’s panies. The California state court jury award just the same kind of goo that got The Court also agreed to hear a case against Federal Express, the national deposited there in 1989. involving the False Claims Act that could shipping company, was reduced by the clarify the ability of whistleblowers to trial judge to $12.4 million. This case According to the group that adminis- sue private contractors for the misuse of involved employment discrimination. In ters the settlement money paid by federal funds. The Court declined, his opinion, the judge stated concern Exxon to the governments, only seven however, to address the constitutional that the evidence failed to support the of thirty marine species, resources, or concerns about that Act raised by some size of the initial verdict in a case, services have recovered to pre-spill business groups. Some provisions of the finding the jury’s award to be excessive. levels.Whether the spill is to blame and False Claims Act allow citizens to file suit The jury had ruled in favor of two whether remnant oil is causing harm on behalf of the government against Lebanese-American FedEx drivers who remains unsettled. Prince William Sound contractors who make false claims for accused a manager of racial discrimina- residents are convinced that the spill payment. For instance, the provision was tion and harassment.The verdict of $61 triggered a cascade of environmental recently used by a former employee of million was the largest single civil rights ills. As subsistence fishermen and Halliburton Co. subsidiary Kellogg, judgment to date under California’s Fair hunters, they still see the effects of that Brown & Root in an unrelated lawsuit Employment and Housing Act.The trial oil spill on a daily basis. claiming that KBR had charged the gov- judge’s handling of the issue was ernment for recreational services to U.S. described as “deliberate and thoughtful,” troops that it never provided. by the lawyer representing the employ-

10 BeasleyAllen.com ees. It appears from his comments that but face more limited charges for such Capitol Hill that the FBI has had to the trial judge “exercised what he long-term “remediation” of the area. triple the number of squads investigat- thought to be in the best interest of Grace argued that much of the agency’s ing lobbyists, lawmakers, and influence justice.” work was actually remedial. Fortunately, peddlers, according to a report in the the federal courts disagreed and ruled New York Daily News. For decades, only for the EPA.This obviously is a public one squad in Washington handled cor- W.R. GRACE GETS WHAT IT DESERVES health crisis that requires ongoing ruption cases because the crimes were action.The U.S. Court of Appeals for the seen as local offenses handled by FBI On October 11th, the U.S. Supreme Ninth Circuit had stated in its ruling in field offices in lawmakers’ home dis- Court let stand lower court rulings that December: tricts. But in recent years, the massive require W.R. Grace & Co. to pay a $54.5 Jack Abramoff lobbying scandal and million judgment for asbestos cleanup The situation confronting the EPA other abuses of power and privilege in a Montana mining town described by in Libby is truly extraordinary. have prompted the FBI to assign 37 federal regulators as one of the nation’s About 12,000 residents of Libby agents full-time to three new squads in most contaminated Superfund sites.The and nearby communities face an office near Capitol Hill. Environmental Protection Agency had ongoing, pervasive exposure to Based on information that I have read, sued Grace five years ago to recover the asbestos particles being released I am not sure only 37 agents can handle cleanup costs at a vermiculite mine in through documented exposure this job.The FBI wants enough agents in the town of Libby. Grace had appealed pathways. We cannot escape the the Washington field office for a fourth from an adverse ruling.The government fact that people are sick and dying corruption squad “because so much is also pursuing a criminal case involv- as a result of this continuing expo- wrongdoing is being uncovered.” FBI ing several former executives or man- sure. Assistant Director Chip Burrus, who agers of the mining company for heads the FBI’s criminal division, says allegedly concealing health risks at the The appeals court, based in San Fran- that the typical crimes involve lawmak- mine.That trial will not begin until next cisco, had upheld the trial judge’s order ers’ illegal interactions with lobbyists year at the earliest. requiring Grace to repay the EPA’s cost and “people who have a lot of savvy The asbestos-laden vermiculite, laced for the emergency cleanup. During its about how the congressional process into the mountains around Libby, was cleanup over the last several years, the works and appropriations.” used as insulation in hundreds of thou- EPA has used vacuum trucks and other According to the report, two years sands of U.S. homes and office build- equipment to remove vermiculate-laced ago only 400 agents worked on public ings.The mine, which opened in 1939, soil.According to an EPA toxicologist, corruption cases. Now, 615 agents was purchased by Grace in 1963. It pro- people in the Libby area experienced nationwide are trying to nail public ser- duced about 80% of the world’s supply “the most severe residential exposure to vants for betraying the public trust in of the mineral at one time. Grace oper- a hazardous material this country has 2,200 ongoing cases.That is highly sig- ated the mine until 1992, unleashing a ever seen.”The criminal case involves nificant and tells us that a crackdown “human and environmental tragedy” in the question of whether company offi- on corruption is badly needed. I don’t the town. Nearly two-thirds of employ- cials knowingly failed to warn workers believe the American people will put up ees with more than 10 years of service of the dangers of prolonged exposure to much longer with all of the corruption tested positive for lung ailments, accord- vermiculite.The 2005 indictments said that is being uncovered in Washington. ing to a company memorandum written the officials were criminally negligent. Source: Washington Daily News in 1976 by one of the indicted men.The Source: Los Angeles Times cleanup of the town continues, and some residents said the matter would IV. REPORT FINDS ABRAMOFF AND ROVE HAVE wind up in court again because the ulti- BEEN PRETTY FRIENDLY mate cost of remediation would be THE NATIONAL much higher than the $54.5 million at SCENE I understand that the ramifications issue in this case. and fall-out from the Jack Abramoff In its appeals, the company argued scandal are far from over. There are a that the EPA’s efforts in Libby amounted THE MASSIVE CORRUPTION IN OUR NATION’S number of persons in Washington who to a long-term rehabilitation of the area CAPITAL AFFECTS ALL AMERICANS probably wish that it was over.The Bush rather than an emergency cleanup. White House—and even the President Under the law, toxic polluters can be The widespread corruption in Wash- himself—claimed not to know very forced to repay the EPA the full cost of ington that seems to be at record levels much about Abramoff. They said the cleaning up hazardous substances that should be of concern to all of us. In fact, man had limited contacts at the White pose an immediate risk to the public there is so much political corruption on House.A bipartisan congressional report

BeasleyAllen.com 11 has now documented hundreds of con- Disclosure of the report’s findings not even responded to the govern- tacts between White House officials and came as a federal judge in Miami agreed ment’s requests. According to Ms. this corrupt lobbyist and his partners. in late September to delay Abramoff’s Burton, the government told the compa- Interestingly, there were a number of imprisonment, but not for as long as the nies that the Department “would really direct contacts between Abramoff and Justice Department wanted.The Depart- appreciate it”if they would change their Karl Rove, the man who runs the Bush ment asked that Abramoff, who has contracts. Frankly, that weak approach political operations.The House Govern- been sentenced to nearly six years in by the federal government is impossible ment Reform Committee report, based prison, not have to surrender for three to comprehend. Even if the companies on e-mail messages and other records months because of the need for his con- do agree to change their leases, Ms. subpoenaed from Abramoff’s lobbying tinued cooperation in the influence- Burton said that the government would firm, found over 500 contacts between peddling investigation in Washington. not try to recapture the $1.3 billion in Abramoff’s lobbying team and White Judge Paul C. Huck agreed to allow royalty payments that the companies House officials from 2001 to 2004. Abramoff to remain free only until have already been able to escape. At Eighty-two of these contracts were with November 15th, saying “there comes a issue are hundreds of offshore drilling Rove’s office. time when people have to pay the leases for the Gulf of Mexico that were The report suggests that Abramoff’s piper.” You will probably recall that signed in 1998 and 1999 and that allow lobbying resulted in actions by the Bush Abramoff pleaded guilty in Miami as companies to extract up to 87.5 million Administration that benefited Abramoff part of an agreement with the Justice barrels of oil per lease without paying clients. Included were decisions to dis- Department in which he confessed to royalties to the government. In what tribute millions of dollars in federal corruption charges in Washington, and investigators believe was an uninten- money to Indian tribes with large gam- to fraud charges in Florida involving his tional error, the leases omitted a clause bling operations. As the result of an purchase of a casino-boat fleet there. that would normally require companies aggressive lobbying campaign in 2001 Since that time a number of powerful to pay the full 12.5% royalty if oil prices and 2002 involving 73 contacts with men have fallen, and sources in Wash- climbed above about $36 a barrel. I White House officials, Abramoff took ington say there will be lots more guarantee you that the oil companies credit for an Administration decision to before it’s over. My guess is that those involved knew exactly what they were release $16.3 million to a Mississippi who are sweating it out were glad to doing. tribe for jail construction. This came hear that Abramoff would be sentenced A group of federal auditors have despite strong opposition from the this month. charged that the Interior Department Justice Department, according to the Source: New York Times blocked them from recovering under- report. Frankly, I really wasn’t at all sur- payments by more than two dozen com- prised that Rove and Abramoff were panies. In May, the House passed a friends. Nor was I surprised that the FEDERAL GOVERNMENT PROTECTS THE proposal that would pressure compa- POWERFUL OIL COMPANIES corrupt lobbyist would attempt to curry nies to change their leases by prohibit- favor with Rove. In an e-mail message to We all know how powerful the giant ing those that refuse to do so from a colleague, here is how Abramoff oil companies are and how much politi- acquiring additional federal leases in the described Rove: cal clout they wield. It now appears that future. But the measure has stalled because Republican leaders in both the He’s a great guy.Told me anytime the federal government has no plans to House and Senate are opposed to it. we need something just let him try to recover $1.3 billion in royalties Democratic lawmakers called for inves- know through Susan. that the government lost as a result of flawed oil and gas leases it signed in the tigations into new allegations by three The message was referring to Susan late 1990s. Ms. Johnnie M. Burton, direc- current federal auditors and one former Ralson, Abramoff’s former secretary, tor of the Minerals Management Service federal auditor that the Interior Depart- who joined the White House in Febru- of the Interior Department, made this ment had stopped them from trying to ary 2001 as Rove’s executive assistant. shocking announcement at a forum recover $30 million in deliberate under- Ms. Ralson was lobbied scores of times held by Platt’s, an oil industry newslet- payments by oil companies.The allega- by Abramoff and his partners, the report ter.The Director said she did not want tions, disclosed by The New York Times, found, and she was instrumental in to force more than 50 companies to were made in lawsuits that the auditors passing messages between Abramoff renegotiate offshore drilling leases that filed under the federal whistleblowers and senior officials at the White House, will allow them to escape as much as act. including Rove and Ken Mehlman. $10 billion in royalty payments over the The four government auditors, whose Mehlman, now chairman of the Republi- next decade. job it is to monitor leases for oil and gas can National Committee, was then a Interestingly, more than half of the on federal property, say the Interior senior White House political strategist. companies that hold these leases have Department stopped their efforts to

12 BeasleyAllen.com recover millions of dollars from compa- vided lawmakers last May, those collec- THE FOLKS WHO RUN MERCK ARE A TRICKY nies that were cheating the govern- tions averaged only $46 million. BUNCH ment. The auditors contend in the Source: New York Times lawsuits that their bosses stopped them Zocor and Mevacor have been used from pursuing more than $30 million in by millions of people to help lower fraudulent underpayments of royalties MURPHY OIL TO PAY $330 MILLION IN their cholesterol. But Merck & Co., the KATRINA CLASS ACTION SUIT for oil produced in publicly owned manufacturer and seller of these drugs, waters in the Gulf of Mexico. Bobby L. also used the drugs to lower something Murphy Oil Corp. will pay $330 else—its income tax bill.Thirteen years Maxwell, who was formerly in charge of million to settle the class action lawsuit Gulf of Mexico auditing, stated: ago, Merck set up a subsidiary with an filed by Hurricane Katrina victims address in Bermuda, which is a tax- The agency has lost its sense of whose homes and businesses were friendly haven for Corporate America, mission, which is to protect Ameri- damaged by floodwaters that carried and has used this ploy to avoid paying can taxpayers. These are assets over one million gallons of crude oil taxes. A British bank was Merck’s that belong to the American from a company storage tank.The refin- partner in this deal. Merck quietly trans- public, and they are supposed to ery-tank spill in Meraux, La., a suburb of ferred patents underlying the block- be used for things like education, New Orleans, caused some of the worst buster drugs to the new subsidiary, and public infrastructure and road- environmental damage from the hurri- then Merck paid the subsidiary for use ways. cane. Owners of about 6,200 homes and of the patents. businesses in Meraux and adjacent Chal- The arrangement in effect allowed a The lawsuits came to light as lawmak- mette were involved in the suit against portion of the profits to disappear and ers, Democrats and Republicans alike, the company’s Murphy Oil USA Inc. allowed Merck to cut $1.5 billion off its were questioning the Bush Administra- Terms of the settlement call for Murphy, federal tax bills over roughly the next tion’s refusal to challenge the oil and based in El Dorado,Ark., to compensate 10 years. Now, the complicated transac- gas industry.The Interior Department’s affected home and business owners for tion — never publicly disclosed — has inspector general, Earl E. Devaney, made property damage, the diminished value sparked one of the largest tax disputes a shocking statement to a House sub- of properties damaged by the spill, and ever involving a U.S. corporation. The committee. He said that “short of crime, “mental anguish and inconvenience” Internal Revenue Service has challenged anything goes” at the top levels of the resulting from the incident. In addition, the tax benefits from the arrangement. Interior Department. Regardless of how Murphy will offer to purchase “at fair Merck will most likely be ordered to pay you might feel about these lawsuits, it’s market value”as many as 600 homes and the IRS over $2.3 billion in back taxes, certainly appears that the Interior businesses in an area next to the refin- interest and penalties. The Merck Department during the Bush Adminis- ery that was heavily affected by the spill. arrangement, according to federal tax tration has been much too friendly with A company-funded clean-up, which authorities, wasn’t a real partnership the oil and gas companies. Under its was already under way and is being with a foreign bank, but instead was just business-friendly agenda, the Depart- supervised by federal and state regula- a well-disguised loan agreement, ment has increased incentives for tors, will continue as part of the settle- designed to avoid taxes by maneuvering drilling in risky areas, has speeded ment.The settlement must be approved between the tax laws of different coun- approvals for drilling applications, and by a federal judge in New Orleans.Insur- tries, with no economic substance. has campaigned to open more coastal ance will cover all settlement costs Merck is not the only corporation that areas for oil exploration. except for the purchase and remedia- is using this arrangement to dodge Now it appears that the government tion of damaged properties. That will taxes. There are other partnerships is willing to allow the giant and politi- cost an estimated $55 million and will involving Dow Chemical Co., General cally powerful oil companies to avoid be incurred as a capital expenditure by Electric, and others doing the very same paying needed revenues at a time when the company. The oil came from a thing that the IRS is challenging with the oil giants are making record profits. storage tank that floated off its founda- Merck. The IRS is challenging what is The Interior Department’s own statis- tion during the storm. The spill and often called “tax arbitrage.”The IRS has tics indicate that revenue from auditing debate over whether it was being prop- formed a team to consider crafting new and enforcement took a nose dive after erly cleaned up were the subject of an international treaties, as well as perform- President Bush took office. From 1989 article in The Wall Street Journal in ing tax audits that would simultaneously through 2001, according to a report by January. Murphy still faces a number of look at a company’s tax obligations in the Congressional Budget Office, audit- individual suits related to the spill. At multiple countries.There are other ways ing and other enforcement efforts gen- least, this settlement is a step in the that U.S. companies are avoiding paying erated an average of $176 million a year. right direction. their U.S.taxes.For example,technology But from 2002 through 2005, according and pharmaceutical companies are to numbers that the department pro-

BeasleyAllen.com 13 shifting intellectual property assets to bosses would seek to beat the previous blowdown drums and stacks as part of a countries with far lower tax rates, such manager’s numbers. BP appears to be a settlement agreement in the 1992 case as Singapore and Ireland. It’s pretty sad company that needs to straighten up to prevent the dangerous materials from when you consider how ordinary citi- and fly right! venting to the atmosphere, but failed to zens work hard, pay their taxes, and Source: Fortune do so.The report contained the follow- then read where companies like Merck ing findings: and others dodge paying their taxes. • The oil company proceeded with Source: Wall Street Journal REPORT OUTLINES BP’S INDIFFERENCE TO SAFETY conscious indifference to the rights, safety and welfare of those who were Let’s take a closer look at the explo- BP WAS WARNED BUT APPARENTLY DIDN’T killed or injured; and LISTEN sion that occurred at BP’s Texas City refinery last year. Raymond Skinner, the • BP was grossly negligent for continu- BP has already had a bad year, even by former area director of the federal ing to operate its blowdown drums oil industry standards, and the year’s not Occupational Safety and Health Admin- and stacks with knowledge of at least quite over. For starters, the company istration (OSHA), believes gross negli- 19 documented incidents involving had the worst oil spill in the history of gence and indifference to safety at BP hydrocarbon leaks, vapor releases the North Slope. BP also had the worst led to the fatal explosion. The former and/or fires involving blowdown U.S. refinery accident in more than a director wrote in a report: drums and stacks, including F-20. decade. It appears that BP’s problems It is my firm belief the clear and As you will recall, BP merged with were profit-driven and caused by convincing evidence establishes Amoco in 1999. Numerous violations of intense internal pressure to keep costs not only that BP’s negligence was federal health and safety regulations down. It has been reported that the the cause of the March 23, 2005, occurred, including some not included company’s budgeting often took prece- explosion and fire which killed 15 in OSHA’s final report released a year dence over routine maintenance and and injured hundreds more, but ago. OSHA fined BP a record $21.4 even over safety. Current and former it’s gross negligence as well. million after finding more than 300 vio- employees have painted a pretty bad lations.This is obviously a company that picture about the company’s safety Mr.Skinner,who retired from OSHA in doesn’t make safety a top priority. practices. January 2004 after 30 years of service, Unfortunately, they aren’t the only ones As we pointed out in a prior issue, BP was area director of the Houston South to put profits over safety. had been warned in 2002 about the area office for the previous 12 years. In Source: Houston Chronicle company’s corrosion problems. Superi- 1992, Mr. Skinner, while still at OSHA, ors in BP’s corrosion, inspection, and warned Amoco, which owned the Texas chemical team were warned of a poten- City refinery at the time, that so-called FEDERAL GOVERNMENT NEEDS TO SECURE tial “catastrophe.” These supervisors blowdown drums and vent stacks—like LAPTOPS WITH SENSITIVE INFORMATION were told about “the larger lack of con- the kind that exploded last year—were It appears that the federal govern- sistency and lack of standardization dangerous to the environment and ment needs to do a much better job of across the North Slope.” Bill workers and should be replaced or securing laptop computers that contain Herasymiuk, the man who wrote a very changed. That warning was clearly personal information of U.S. citizens. strong memo and still works for BP,has ignored. The Commerce Department has lost been called to appear before the grand The blast last year occurred as more than 1,100 laptop computers jury in Anchorage. It appears that while workers accidentally overflowed the since 2001, most of them assigned to doing very well financially BP elected to refinery’s F-20 blowdown drum and the Census Bureau.The Census Bureau, cut costs by 10%.This meant that things stack, which vented to the open atmos- the main collector of information about like corrosion control funding suffered phere, while restarting a unit that had Americans, lost 672 computers. Of as a result. been shut down for a month. Hydrocar- those, 246 contained some personal The problems in Alaska and Texas bons spewed from the stack and col- data.A half-dozen other federal agencies could have been avoided had BP’s lected on the plant grounds along with or departments have reported data bosses heeded the warnings. At Texas a vapor cloud while workers were con- thefts and security breaches involving City even money for painting and exter- ducting their normal operations. The personal information in the last six nal corrosion control was tight - until materials were ignited by an idling months. Back in May,the Veterans Affairs leaks started appearing.There was an it- truck or other source, causing a series Department suffered the biggest loss can’t-happen-here mentality on the part of explosions felt five miles away. In his with the theft of a laptop and external of middle management. Constant report, Mr. Skinner says the company drive containing information for 26.5 turnover only worsened matters, as new promised to make improvements to

14 BeasleyAllen.com million veterans and active duty troops. relies upon senior executives of public spond to the medical condition of the Other government departments companies not to engage in fraudulent infant or the services provided. Specifi- reporting the loss of computers with transactions designed to misstate their cally,Pediatrix admitted infants to hospi- personal information include the companies’ financial statements. It tal neonatal intensive care units using a departments of Agriculture, Defense, appears that intentional fraud was com- CPT code for admission of critically ill Education, Energy, Health and Human mitted by these executives.The field of infants, when as many as one-third or Services, and Transportation.The Federal reinsurance and so-called finite insur- more of those infants were not in fact Trade Commission also has lost laptops ance appears to be an area where com- critically ill. Pediatrix used critical/ with sensitive data. Clearly, the federal panies have little regard for the law. unstable and critical/stable CPT codes government needs to do a better job of for subsequent days of treatment, when securing laptop computers that contain as many as 50% or more of those infants personal information of U.S. citizens. PEDIATRIX SETTLES FALSE BILLINGS CLAIM were not in fact critically ill. Pediatrix Thus far, at least to the public’s knowl- also used critical/unstable and critical Pediatrix Medical Group Inc., whose edge, no real damage has been done. But /stable CPT codes on discharge days, network of affiliated physician groups the potential for harm to innocent when as many as 85% or more of those provides medical services in various people because of the government’s infants were not in fact critically ill. hospital neonatal intensive care units in lapses is certainly there. The settlement also resolves a lawsuit 32 states and Puerto Rico, has agreed to Source: Associated Press originally filed on behalf of the United pay the federal government over $25 States by Daniel M. Hall, M.D., a Board million to settle government claims Certified neonatologist, under the qui under the False Claims Act. Pediatrix V. tam provisions of the federal False improperly billed Medicaid, TRICARE, Claims Act.Although these cases were THE CORPORATE and the Federal Employees Health Bene- settled, there is no telling how much WORLD fits Program for neonatal care provided actual fraud goes on undetected in con- by their doctors. The investigation nection with federal programs. Based on leading to the settlement was a joint what all is being uncovered,it’s got to be FORMER RENAISSANCERE HOLDINGS LTD. effort between federal and investigators massive in scope. In any event, this sort EXECUTIVES CHARGED WITH SECURITIES from several states. In commenting on of thing can’t be tolerated. It’s good to FRAUD the settlement, U.S. Attorney Rod J. see the various agencies involved in the Rosenstein of the District of Maryland The Securities and Exchange Commis- Pediatrix investigation doing their job. made this observation: sion (SEC) has brought securities fraud Source: Insurance News charges against James N. Stanard and Some health care providers Martin J. Merritt, the former CEO and ‘upcode’ their reimbursement former controller, respectively, of claims and falsely represent that OMNICARE SETTLES MICHIGAN CASE FOR $52.5 MILLION RenaissanceRe Holdings Ltd. (RenRe) they are entitled to reimbursement and also against Michael W. Cash, a for more expensive treatment than Omnicare Inc. and Specialized Phar- former senior executive of RenRe’s they actually provided.In this case, macy Services, Inc., a Livonia-based sub- wholly-owned subsidiary, Renaissance Pediatrix billed the government sidiary, will pay about $52.5 million to Reinsurance Ltd.The complaint, filed in for critical care services when in settle a civil case related to Medicaid federal court in Manhattan, alleges that fact the infants were not critically fraud allegations in Michigan.This is the Stanard, Merritt, and Cash structured ill. Substantial recoveries such as largest Medicaid fraud settlement in that and executed a sham transaction that this one protect the integrity of state’s history. Criminal charges are had no economic substance and no federal health care programs. pending against the president of the purpose other than to smooth and defer subsidiary. Specialized Pharmacy Ser- over $26 million of RenRe’s earnings It took a joint effort—because of the vices Inc. provides pharmacy services to from 2001 to 2002 and 2003.The Com- complexity of the case—to achieve this long-term care facilities. Omnicare has mission also announced a partial settle- settlement.The combined efforts in the operations in 47 states. ment of its charges against Merritt, who investigation brought this case to a suc- Specialized Pharmacy filed Medicaid has consented to the entry of an cessful resolution. Pediatrix must now claims for drugs that weren’t used and for antifraud injunction and other relief. pay back money it never should have patients who died. The investigation This is another case arising from the been paid.According to the settlement began in 2003 and covered a period from SEC’s ongoing investigation of the agreement, from January 1996 through 1999 through 2005.The civil settlement misuse of finite reinsurance to commit December 1999, Pediatrix improperly includes about $17 million in Medicaid securities fraud. The investing public applied CPT billing codes to neonatal services that did not accurately corre- reimbursement. The company will pay

BeasleyAllen.com 15 about $34 million in penalties, $1 million million in maintenance sales before it VI. for public service announcements about was cancelled by Oracle in September CONGRESSIONAL drug pricing, and $300,000 to reimburse 2005. James A.Hicks, a former employee UPDATE the state’s investigation costs.The parties of PeopleSoft’s federal sales office in also reached an agreement requiring the Bethesda, Maryland, filed the case in company to reimburse or pay $3.5 2003 under seal in federal court.Appar- IT’S TIME FOR A CHANGE IN WASHINGTON million related to hospice claims. Compa- ently, Mr. Hicks was fired in 2000 after nies that cheat the government at any he repeatedly raised the issue of fraud I firmly believe that the American level must be punished severely.Provid- with senior company officials.The gov- people need and deserve a change in ing pharmacy services under federal pro- ernment later took over the case, which Washington. It’s quite obvious, based on grams to long-term care facilities is had been filed under the False Claims their record, that Republican leaders in important and costly.As I have stated on Act and the case was settled. both the House and Senate have sold many occasions, fraud committed against Source: Washington Post out completely to the giants of Corpo- the federal government that costs the tax- rate America.The flow of large corpo- payers’ hard-earned money can’t be rate donations to candidates and to 507 tolerated. THE $100 MILLION CEO CLUB committees that work for politicians has Source: Associated Press Although most of the big bosses of the effect of allowing these powerful U.S. corporations are already doing very corporations to actually control politics in our nation’s capital.As a result, indi- ORACLE SETTLES PRICE-GOUGING CLAIM well financially, some are doing even better than the rest. More than 30 CEOs vidual voters have no say-so on how the Database giant Oracle Corp. has for this latter group of companies have members of Congress vote once agreed to pay $98.5 million to settle fully vested stock options worth $100 elected. claims pending in a Maryland federal million or more. That’s in addition to Because of the huge sums spent to court that PeopleSoft Inc., a software their regular pay checks. Until 2004, elect members of Congress, the public maker it acquired last year, had over- companies didn’t have to treat options is shut out of the political system. If you charged the government by providing as an expense, so they could parcel want to find out where the special inter- false pricing information to the General them out on executives without hurting est money goes, check www.cleanup- Services Administration. A new task corporate earnings per share. It is said washington.org. In my opinion, the force targeting procurement fraud was that some companies didn’t even realize stakes have never been higher for our also announced by the Justice Depart- how huge the pot would grow if they nation than in this election.The oppor- ment.The task force, established by the kept doling out options. Nevertheless, tunity for change has never been th Department’s Criminal Division, would that’s exactly what’s happened. The greater.On November 7 , the voters will detect and prosecute fraud associated stock options are just a form of addi- have the opportunity to send America with increased contracting activity for tional compensation for corporate in a new direction and elect leaders national security and other government bosses who are already being paid very who will bring the positive change our programs. handsomely by their companies. country so desperately needs. The settlement with Oracle resolved As you know,stock options give recip- The governing philosophy of the allegations that PeopleSoft understated ients the right to buy shares in the Republicans leading America today is to the GSA the discounts it provided to future at the current price, known as the best described as divide and conquer. commercial customers. GSA regulations “strike” or “exercise” price. The higher Time after time, when faced with criti- require that a vendor disclose its com- the stock rises, the richer executives can cal opportunities to bring Americans mercial pricing policies during negotia- become. Generally,the strike price is set together in common purpose, the tions for a single contract that can give a as the closing price on the day options Republican leaders in Congress chose vendor access to hundreds of govern- are granted. But many firms, particularly instead to exploit wedge issues that ment purchasers.As a result of the defec- during the dot-com boom, consistently divide America, foster fear, and promote tive disclosures, the government alleged, granted options when the stock hit a insecurity. Now the voters have the federal purchasers buying through the monthly or yearly low, suggesting they opportunity to put an end to this GSA program paid inflated prices for chose the grant date with the benefit of cynical philosophy of governing. But software and maintenance services for hindsight. Backdating itself isn’t illegal, doing that requires electing a Democra- many years. Oracle inherited the liability but failing companies that don’t disclose tic Congress. The Democratic Party in when it acquired PeopleSoft, which was it properly risk the wrath of the Securi- my state, for some unknown reason, based in Pleasanton,California. ties and Exchange Commission and the failed to run real strong candidates The 1997 contract resulted in about Department of Justice. against Republican incumbents. As a result, there won’t be any changes in $127 million of software sales and $77 Source: Associated Press

16 BeasleyAllen.com our congressional delegation.That is not 7th.All citizens must get involved and not • Restore Accountability - Pass and the case in other states where changes only vote, but work during the few days enforce meaningful new restrictions will take place. remaining to elect good candidates. On on gifts and travel from lobbyists and The GOP has sought to paint itself as Election Day, we can usher in a better other powerful interests for members the only party with morals and strong day for this nation. In my opinion, a of Congress. family values. But, no single group of failure to bring about real change will • Protect Voters’ Right-To-Know - people has a monopoly on morality.The be a tragic mistake.We must break the Require full disclosure on the Internet recent scandal involving Rep. Foley is stranglehold that the powerful special of all lobbyists’ contributions and any proof of that. Neither does one party interests currently have in Washington. fundraising help members of Con- have the best ideas on how to keep The place to start is in Congress. gress receive from lobbyists. America safe. It’s most interesting to see GOP candidates in a great number of At press time, more than 300 candi- LAWMAKERS ARE ASKED TO RENEW “TRUE- states trying to distance themselves dates for federal office had signed the BLUE REFORMER”STATUS from President Bush. pledge. Members of the 1995 “Reform- A very few people have a monopoly All of the politicians talk about hon- ers” group who hadn’t signed the on power in our government.Without a estly, morality, ethics, and reform during pledge by October 15th have had their doubt, they have used that monopoly to the political season, but few of them True Blue credentials revoked. You can prevent a true debate on how to really mean all that they say.There are find out which candidates have signed expand the economy, how to clean up exceptions. Most of them, however, just the pledge by going to www.Voters- and reform the political process, and parrot what some highly paid political FirstPledge.org. how to really protect our nation.When consultant tell them to say.In November Source: Public Citizen Bill Clinton left office, he left our 1995, Public Citizen bestowed “True- finances in very good condition and our Blue Reformer” credentials on 143 THE PUBLIC SHOULD DEMAND THAT THE government in overall excellent shape. House members—43 Republicans and The former President, who is still very CONGRESSIONAL REVOLVING DOOR STOP 100 Democrats—who voted for bills TURNING popular, had this to say recently about banning gifts and improving lobbying the upcoming elections: disclosure, while voting against five One of the biggest ethical problems Democrats have fresh ideas, pro- amendments that would weaken the in Washington concerns the revolving gressive solutions, and a new measures. Certain of these named door that currently exists in our nation’s direction for America. Expanding “Reformers” continue to celebrate their capital. The American people need to health care, making college educa- True-Blue Reformer status. For example, find out about this door and how it tion an opportunity for everybody, Rep.Tom Davis (R-VA) cites the creden- affects taxpayers.When they do—what energy independence, and a raise tial on his member Web site and on that they find, they won’t like. Persons can in the minimum wage - when you of the House Committee on Govern- go from working for the government to hear talk of a “new direction,”this ment Reform, which he chairs. working for well-connected lobbying is what we’re talking about. But Public Citizen sent renewal notices to firms—and make a killing in the none of those things will become the 68 members of the 1995 Reformer process. An example is Letitia White. reality without a Democratic class who remain in Congress. Only those Within two years, this former congres- majority.The American people are members who agree to sign a Voters First sional receptionist’s lobbying fees had tired of hearing leaders sing the Pledge—a promise to support clean elec- grown to over $3.5 million.The secret praises of an economic recovery tions and lobbying reform—will retain for Ms.White’s success is not too hard that doesn’t feel like one.They are their status as “Reformers.”The pledge, to figure out. Her last job on Capitol Hill tired of a government that gives which Public Citizen, Common Cause, was as a top aide to Rep. Jerry Lewis (R- more to those who already have and Public Campaign Action Fund sent to CA), chairman of the powerful House the most.They are disheartened by federal candidates in June, includes three Appropriations Committee.This is the leaders who have put personal critical reforms to address the root causes committee that the disgraced lobbyist gain before the public good. They of corruption in Washington. Persons and confessed criminal Jack Abramoff know that America can be better. who sign the pledge promise to: used to call the “favor factory.”As a lob- byist, Ms.White became very good over And they are looking for Democ- • Make Elections Fair - Establish and night at getting her clients “earmarks”— rats to lead the way. enforce campaign spending limits by government funds directed by lawmak- providing a set amount of public American citizens—regardless of their ers to specific projects or specific con- funding for all candidates who agree political party affiliation—have a vested tractors. I wonder what special to take no private contributions. interest in what happens on November expertise this former aide suddenly

BeasleyAllen.com 17 acquired that made her such a success- It’s very important because of the corro- through both the House and Senate. ful lobbyist. sive influence money has on politics. Public confidence in the federal elec- This is Congress, better known lately Campaign cash from Big Business and tions must be restored and for that to for corruption than legislating.A broken major industries flows into campaigns happen, the flow of big money must be process has allowed lobbyists to and into 527 committees working for stopped. I hope being able to get infor- channel campaign funds from their candidates.The results have been down- mation about the candidates will ade- clients to lawmakers. In return, lawmak- right shocking. One member of Con- quately inform potential voters about ers earmark money to projects that gress—Randy “Duke” Cunningham of who they should vote for on November benefit those clients.The losers are the California—was jailed for corruption, 7th.Time is short—so get informed! taxpaying public, which gets stuck with and another—Bob Ney of Ohio—has Source: Public Citizen the costs of these special favors. Well- entered a guilty plea to conspiracy to connected industries and companies commit fraud and lying on disclosure will hire persons who work for a forms about gifts received from Jack SHAME ON JOE BARTON senator or member of Congress and Abramoff.At press time, Rep. Ney was The refusal of House Committee on then put them to work with large still in Congress. Former House Majority Energy and Commerce Chairman Joe salaries as lobbyists. Many Appropria- Leader Tom DeLay (R-TX) is under Barton (R-TX) to move the Combating tions Committee staffers who become indictment. Interestingly, DeLay is still Autism Act (S.843) from his committee lobbyists, lobby their former committee being featured on right-wing radio talk and bring it to the floor for a vote and find immediate financial rewards. shows pushing the GOP agenda.The FBI before the pre-election recess was a You have to wonder about their loyal- is reportedly closing in on Rep.William devastating blow to children with ties before entering the revolving door. Jefferson (D-LA), in whose freezer autism and their families. But, the fight At the beginning of this year, GOP agents found $90,000 in “cold cash.” for passage of this critical legislation congressional leaders pledged to curb Most folks believe when lobbyists continues. In his unwillingness to act on influence-peddling, including the use of give members of Congress money, the a bill meticulously crafted over 18 earmarks. Their sudden interest and lobbyists expect something in return. months and unanimously passed by the newly-found zeal was fueled by the When the lawmakers take large sums of Senate, Rep. Barton has put politics Abramoff scandal, the bribery case money, lawmakers have to know that. before the welfare of the children who involving Rep. Randy “Duke” Cunning- Obviously,many of them deliver—to the badly need this legislation. Hundreds of ham (R-CA), and a few other scandals. detriment of the public—and therein senators and members of the House of Perhaps the latest chapter of the lies the problem.The reason that Con- Representatives—from both sides of the Abramoff saga was when Rep. Bob Ney gress didn’t do anything to ease sky- aisle—have met with families impacted (R-OH), agreed to plead guilty to federal rocketing gas prices is because a great by autism.These legislators signed on in corruption charges. I understand there number of members are beholden to support of the Combating Autism Act. will be more to come from the the oil and gas industry. Do you Rep. Barton, on the other hand, showed Abramoff investigation in the near wonder why we now have Medicare no concern for the millions of Ameri- future. prescription drug legislation that won’t cans whose struggles with autism are Source: USA Today allow the government to negotiate the their everyday reality. His actions simply lowest possible price for medications? can’t be justified and his motives have Do you ask why members of Congress to be questioned. VOTERS HAVE WAY TO GAUGE HOW BIG get a raise while efforts to raise the BUSINESS MONEY INFLUENCES LAWMAKERS Autism is an epidemic that now minimum wage fails? The flow of affects one in every 166 of our children, money is directly responsible when Public Citizen has released some vital yet federal funding for autism remains efforts to pass consumer-friendly legisla- information to voters that will help them woefully insufficient. The Combating ture get nowhere in Congress. gauge whether their members of Con- Autism Act would begin to address this In addition to campaign finance gress represent them or the interests of inequity by authorizing $920 million reform, we need real lobbying and Big Business. Information is now avail- over five years toward treatment and ethics reform in Washington. So far, this able detailing the amount of contribu- research into the causes—genetic, Congress has refused to pass meaning- tions from lobbyists, the value of environmental, or otherwise—of the ful reform to clean up its act despite privately funded travel accepted by the country’s fastest-growing childhood public outrage over the scandals from lawmakers, the amount of contributions developmental disorder. If you agree Capitol Hill from the leadership down. from out-of-state donors, the percentage that the fight must continue, let Chair- Reform has not been enacted because of contributions from donors who give man Barton know how you feel! Call this Congress is totally controlled by $200 or less, and the amount of contribu- him at 202-225-2002 and let him know corporate interests and they won’t tions from political action committees. that it is unacceptable for an elected allow anything of consequence to get

18 BeasleyAllen.com official to put personal political inter- ity to prevent the tube from being DaimlerChrysler learned a valuable ests ahead of the needs of families with exposed to accident forces during a col- lesson from this case and will do a autistic children. lision. Our fuel system design expert, better job on safety in the future. The Combating Autism Act of 2006 who had designed fuel systems for builds on the provisions of the Chil- General Motors, established that the dren’s Health Act of 2000 and would Durango fuel filler tube was too rigid, GRAHAM ESDALE SETTLES VEHICLE ROLL- OVER LAWSUIT authorize approximately $920 million in causing it to punch through the body of federal funds over five years to combat the vehicle as it rolled over on its side. Our firm recently settled a case autism through research, screening, When the vehicle rolled over and the involving a Firestone Wilderness AT tire intervention and education. It should be fuel filler tube was exposed,the fuel cap and GMC Sonoma pickup truck. On noted that Speaker of the House Dennis was knocked off, allowing fuel to April 27, 2005, Jimmy Ray Townsel and Hastert (R-IL), who now has his own set escape from the vehicle.The driver was his brother-in-law,Thomas Foster, were of problems, has refused to intervene on trapped inside the vehicle and was traveling north on Interstate 65 when the children’s behalf. On his Web site, unable to escape, even through persons the left rear Firestone Wilderness AT tire this is what the Speaker says:“At home at the scene tried their best to save him. on the truck suffered a tread belt sepa- we put children first, and Republicans Our experts established that a more ration.This caused the vehicle to lose are doing just that in the House.” Based flexible fuel filler tube design like the control and overturn in the roadway, on what we know now, that’s not at all ones used in the Durango’s sister rolling several times. Mr. Foster was true.After the Foley episode, I wouldn’t vehicle, the Dodge Dakota, would have ejected and died at the scene. Mr. be surprised to see a change in the prevented the fire from spreading as fast Townsel, who was properly belted, suf- Speaker’s Web site. In any event, call the as it did in this accident. Our experts fered severe cervical fractures when the Speaker at 202-225-0600 and ask him to also established that DaimlerChrysler roof of the vehicle crushed down on back up his statement and put S.843 on used the safer fuel filler tube design in him.As a result of the cervical factures, the House suspension calendar! He other vehicles such as the Jeep Grand Mr.Townsel was rendered a complete should do what’s right for a change.A Cherokee and the Jeep Wrangler. quadriplegic. Although initially dis- good place to start is by helping chil- A defective ball joint assembly in the charged after several months’ hospital- dren with autism. front wheel of the vehicle also con- ization, Mr.Townsel was readmitted to tributed to the accident. In late 2004, the hospital in October of 2005 and DaimlerChrysler issued a recall for the remains hospitalized for his condition. VII. ball joint assembly on a variety of Dodge You may remember that the Firestone PRODUCT Durangos, including the 2002 model. Wilderness AT tire, in the P23575R15 LIABILITY UPDATE The recall investigation, conducted by size, was recalled by Firestone back in the National Highway Traffic Safety 2000. But, the recall was limited to Administration, established that a design Wilderness AT tires manufactured at the and manufacturing flaw in the upper DODGE DURANGO FUEL FED FIRE CASE Decatur, Illinois plant before May of SETTLED ball joint assembly of the Dodge 1998.The tire involved in this case was Durango allowed lubrication to be evac- manufactured at Firestone’s Aiken, Our firm has been representing the uated from around the ball joint assem- South Carolina plant in 1999. family of a driver of a 2002 Dodge bly because of water entering the Ford disagreed with Firestone’s deci- Durango who was tragically killed in a assembly.This defect allowed the ball sion to limit the recall to Wilderness AT motor vehicle accident. As a trial date joint to separate during operation of the tires made at the Decatur, Illinois plant approached, we were able to settle the vehicle. DaimlerChrysler’s recall notice before May of 1998. Based on the data case for an amount, that is confidential. informed owners of the Durango that Firestone provided to Ford, Ford Our driver was involved in a one-vehicle the defect could cause loss of control of believed that Wilderness AT tires manu- accident when the 2002 Dodge the vehicle. But, the recall notice was factured after May of 1998 and manufac- Durango veered off the road and col- not sent out until after our client’s acci- tured at plants other than Decatur, still lided with a tree. He suffered minor dent. posed significant risks of failure, and as injuries in the collision, but ultimately Ben Baker was the primary lawyer a result, still posed a significant safety died as a result of a post-collision fuel from our firm who represented the risk to its customers.As a result, Ford, at fed fire. family in this case, and he did an out- its own expense, attempted to recall Our experts established that the fuel standing job for his clients.The family Wilderness AT tires made after May filler tube for the Dodge Durango was we represented paid a price no family 1998 at plants other than Decatur.You defective and unreasonably dangerous in the U.S. should ever have to face will find a letter to John Lampe, Chair- because it lacked the necessary flexibil- because of a defective product. I hope man and CEO of Bridgestone/Firestone

BeasleyAllen.com 19 from Ford Motor Company President to serve our customers and, most revision to FMVSS 216. This revision, and CEO Jacques Nasser to be quite importantly, keep their safety as according to the agency’s own esti- interesting and revealing.The following our highest priority.I hope this is a mates, would only prevent about 44 of is the text of the Nasser letter: goal on which you can agree. the 10,000 fatalities occurring in rollover accidents each year. The new As you know, Ford has for many Ford tried to recall the tire made the proposed change would require a months been engaged in an inten- basis of this accident.The problem with vehicle roof to withstand 2.5 times the sive effort to determine the root Ford trying to recall Firestone tires is unloaded weight of the vehicle. The cause of the tire failures that led to that Ford only has the ability to track GMC Sonoma in this case had a strength last summer’s Firestone tire recall, Ford’s vehicles and notify the owners of to weight ratio of 2.27. It is easy to see and to prevent such failures in the the recall. Unfortunately,tires which still that even the new proposed standard is future. Throughout this process, exhibit good tread wear are swapped inadequate. Volvo’s internal standard Ford has shared its findings and on and off vehicles in the used car busi- requires a roof to withstand 3.5 times worked closely and cooperatively ness.That is apparently how this Wilder- the vehicle weight. However,the biggest with NHTSA and with Firestone’s ness AT tire ended up on Mr.Townsel’s flaw in the newly proposed standard is technical team. GMC pickup truck. Mr.Townsel had just that it does not require a dynamic acquired the GMC pickup several weeks Based on our work to date, we are rollover test, does not include occupant before this accident occurred. concerned that the performance of injury evaluation, and provides immu- Although the detread of the tire set certain Wilderness AT tires not nity to a vehicle manufacturer that this accident in motion, the roof crush included in last summer’s recall is meets this inadequate standard. The was the actual mechanism that caused not at a level consistent with the Government and the auto manufactur- Mr.Townsel’s injuries.The roof on this performance of similar usage tires ers can and should do better. Certainly, vehicle crushed approximately 10 from competitive manufacturers. Jimmy Ray Townsel deserved better. inches. Our biomechanical expert, who This concern rests significantly on Graham Esdale represented Mr.Townsel is also an M.D., testified that had the data supplied by Firestone and and did an outstanding job for him. Our roof crush been limited to just a few NHTSA, which shows that failure client’s needs will be taken care of as a inches, Mr.Townsel would not have suf- rates for many of the Wilderness result of Graham’s hard work. fered a paralyzing injury. AT tires are already worse than Unfortunately,the GMC Sonoma is not competitive standards and may the only vehicle on the road with a NHTSA ORDERS ROLLOVER PREVENTION deteriorate further in the future. weak roof. Historically, roofs have TECHNOLOGY Our own laboratory and vehicle become weaker rather than stronger. tests confirm these results. Vehicles built in the 1930s and continu- As you will recall, on September 18th, Although we have discussed our ing into the early 1960s had stronger National Highway Traffic Safety Adminis- concerns with Firestone technical roofs than those built today. Current tration (NHTSA) published a notice of and management personnel, Federal Motor Vehicle Safety Standards proposed rulemaking to require that all nothing we have learned has (FMVSS) allow for weaker roofs. The passenger vehicles under 10,000 changed our view that the tires current version of FMVSS 216 only pounds be equipped with electronic may present a risk to our cus- requires one portion of a vehicle roof to stability control (ESC). ESC is an expan- tomers’ safety. withstand 1.5 times the weight of the sion of antilock brake technology that Accordingly, we intend to vehicle or 5,000 lbs., whichever is less. combines independent braking with announce an owner notification The current 216 test is administered by vertical rotation (yaw) sensors to help program to replace all Wilderness a press-like fixture called a platen.The prevent loss-of-control accidents, and AT tires for our customers at no platen slowly applies pressure to only particularly rollover. Preliminary studies cost to them.This action is preven- one side of the vehicle.This test allows show promising statistics on ESC’s tative in nature since we believe the forces to be distributed across some ability to reduce the likelihood that a the significant risks are largely in of the stronger roof support structures driver will lose control of a vehicle, as the future. However, the data leave of the vehicle.Also, this test allows the well as its ability to mitigate the severity us convinced that this action is windshield to provide additional roof of single-vehicle accidents, reducing the necessary to assure the safety of support and strength. In short, the number of fatalities due to such acci- our customers, an objective that I current version of this test is inadequate dents. know you fully share. and does not represent real world crash ESC will primarily help to prevent conditions. single-vehicle accidents that result in As the replacement effort goes In August, 2005, the National Highway loss of control of the vehicle. Studies forward, let us work cooperatively Traffic Safety Administration proposed a by NHTSA and the Insurance Institute

20 BeasleyAllen.com for Highway Safety have shown that ESC partially ejected occupants were crashes. When combined with an has a strongly positive effect in prevent- wearing seat belts. Addressing protect- automatic collision notification (ACN) ing single vehicle accidents, particularly ing passengers in the event of a rollover system, EDRs would improve emer- rollover in SUVs. ESC works by correct- crash is also important; therefore, gency response time. EDR data, in ing for disparity between the intended although ESC is an important addition combination with ACN, would also line of travel and the trajectory that a to promote vehicle safety, there is still improve the effectiveness of emer- vehicle is actually taking. All ESC much to do to promote safety in the gency responses to crashes, as data on systems incorporate antilock brakes event of a crash. crash forces and belt use would along with sensors to monitor steering provide emergency personnel with input and intended line of travel. clues as to the type of injuries to When the ESC system senses that a NEW RULE ON CRASH DATA STILL LEAVES expect. PUBLIC IN THE DARK driver is about to lose control, the inde- NHTSA estimates that 64% of new pendent brakes engage to correct for The National Highway Traffic Safety vehicles have EDRs, but the greatest rotation about the vertical axis.A study Administration (NHTSA) issued a final safety benefit potential for EDRs will be done by NHTSA shows that ESC th rule August 28 on event data recorders achieved only if they are included in all reduces single vehicle crashes in pas- (EDRs). Although the rule takes neces- new vehicles. Only with full fleet pene- senger cars by 34% and 59% for SUVs. sary steps to standardize EDR data col- tration will EDR data offer the most The rollover prevention statistics are lection, it completely fails to mandate accuracy and utility to crash and defect even more encouraging—71% for pas- these important safety devices in all new investigators, thereby leading to better senger cars and 84% for SUVs. Prevent- vehicles. EDRs record information about safety improvements. In the new rule, ing rollover accidents is the first line of a vehicle’s performance during a crash NHTSA states that it intends for auto defense in preventing deaths resulting or near-crash situation, which is defined makers to eventually include EDRs in all from rollover, of which there are more by events such as airbag deployment or vehicles; but, without a mandate, than 10,000 per year. NHTSA has pro- sudden changes in vehicle velocity. Typ- nothing will prevent auto manufactur- posed a phase-in of ESC, mandating that: ically,EDRs only capture a few seconds ers from halting EDR inclusion in • 30% of vehicles have ESC as standard of information, and through this col- order to avoid standardization costs. equipment by September 2009 lected data investigators can reconstruct NHTSA’s new EDR rule also fails to what happened during the crash event. require data collection on key safety • 60% by September 2010 EDRs offer important benefits for issues, such as passenger seatbelt usage, • All newly manufactured vehicles by highway and vehicle safety development and only requires data recording to September 2011 and also offer opportunities to dramati- occur for a paltry 5 seconds. cally improve emergency response to Furthermore, NHTSA is not currently NHTSA believes that because many crashes. The unprecedented access to collecting EDR data in its Fatality Analy- manufacturers are already including ESC objective, real-world crash data that sis Reporting System (FARS), which as standard equipment on SUVs, manu- EDRs provide offer numerous safety undermines the data’s effectiveness and facturers may comply with the rule benefits including: squanders a valuable opportunity to before the mandated date.The agency learn more about real-world crash pre- has more faith in this industry than I do, • Increased understanding of crash cau- sation and injury sources, which vention. EDRs should be used to fully but I really hope they are correct on maximize their safety benefits. Groups this one. would provide insights for engineer- ing safer vehicles. such as Public Citizen will continue Although it is important that vehicles their advocacy efforts with the Depart- be equipped with ESC to help prevent • Better data on defect trends by allow- ment of Transportation to address the rollovers from happening, there is still ing the Office of Defect Investigations numerous shortcomings of the new much to be done about protecting pas- (ODI) to more effectively target inves- EDR rule. sengers when vehicles do roll over. tigations. When used in conjunction NHTSA’s proposed rule for roof crush with the early warning database, EDR did little to protect passengers—70% of data would enable ODI to expedi- SIDE AIRBAGS SAVE LIVES vehicles already meet the proposed tiously identify defect trends. standard. Also, seat belt failure presents Driver deaths in side-impact collisions a significantly higher risk of ejection in • Safer highway designs by assisting the dropped by more than half in sport a rollover crash. NHTSA reports that in Federal Highway Administration utility vehicles equipped with head-pro- 52% of rollover crashes, passengers (FHA) in determining dangerous road tecting side airbags. Side airbags offer- were partially or completely ejected. A designs. ing head protection could save the lives of about 2,000 drivers a year if every 2003 NHTSA study showed that 50% of • Improved emergency response to

BeasleyAllen.com 21 vehicle on the road had the equipment, sport utility vehicles involved in crashes These types of protective orders are the Insurance Institute for Highway from 2000-2004. basically gag orders that keep evidence Safety estimated in a study released in Source: Insurance Journal of wrongdoing secret.The manufactur- October. The Institute does valuable ers succeed in keeping their wrongdo- work and its research is recognized by ing secret so that they can continue to safety experts worldwide. CONFIDENTIALITY ORDERS AND THE FIGHT lead naive legislators and constituents AGAINST ANTI-SECRECY AGREEMENTS Although the benefits for SUVs with to support tort reform.As lawyers, we head-protecting airbags were higher,the Over the years our firm has handled a have a duty to not only fight for our study found the risk of death still great number of lawsuits involving clients against these types of secrecy dropped 30% in side collisions involving defective products that have either orders, but we also have a duty to SUVs with side airbags that only offer badly injured or killed innocent people expose corporate wrongdoing to the protection to the chest and abdomen. In who were using those products. During public. passenger cars struck on the driver’s discovery in these cases, we have Information sharing among lawyers is side, the risk of a driver being killed obtained many documents that were the only way to achieve full, accurate, declined 37% in vehicles with side extremely damaging to the manufactur- and complete disclosure from these airbags offering head protection, and ers.The defendants in the cases don’t manufacturers. Because defendants fell 26% for cars with side airbags pro- want those documents to be revealed to possess infinitely superior knowledge viding chest and abdomen protection. the public. Increasingly, manufacturers and resources, the need for cooperation Anne McCartt, the institute’s vice-presi- have sought restrictive protective among plaintiffs’ attorneys is great.The dent who authored the study,observed: orders to bar or limit disclosure of these sharing of information among attorneys representing victims has four main We found lower fatality risks documents that are breathtaking in goals: across the board — among older scope. and younger drivers, male and Manufacturers and large corporations • to minimize the advantage of the female drivers, and drivers of both recognized that victims’ lawyers have defendant and allow the plaintiff to small cars and larger passenger begun sharing their knowledge with adequately prepare his case; vehicles. each other in an effort to combat the advantage the manufacturers and corpo- • to enhance the speed and efficacy of First introduced on vehicles in the rations have over them because of their the discovery process; mid-1990s, side airbags are credited vast financial resources.The manufactur- • to provide a mechanism for verifying with helping motorists escape serious ers perceive this coordinated effort by the accuracy of a manufacturer’s or injuries and death when struck along lawyers who represent victims as a corporate defendant’s response to dis- the vehicle’s doors. While a head-on threat. In an effort to combat that covery requests; and crash allows the vehicle’s front-end threat, manufacturers seek highly structure to absorb much of the impact, restrictive and secretive protective or • to reduce the cost of preparing each there’s little protection for a motorist confidentiality orders from the court. case. Hare, Gilbert & Ellenberger, Con- struck in the side without the airbags. The companies’ lawyers seek provisions fidentiality Orders in Product Liability Side-impact crashes continue to be a in protective orders that: Cases, 13 Am. J.Advoc. 597 (1989). concern for auto safety advocates. In 2004, the government estimated that • prevent attorneys from discussing Fortunately, numerous courts have 9,270 people were killed in side documents with other attorneys recognized the plaintiffs’ need to share crashes, accounting for nearly 30% of all involved in similar litigation against information in the preparation of traffic deaths. Automakers pledged in the same manufacturers; complex product liability cases. Most courts that have considered the legality 2003 to install side airbags as standard • restrict an attorney’s right to use the of a restrictive confidentiality order in a equipment by the 2010 model year, and same documents and testimony in defective product case have refused to many vehicles currently offer the pro- other similar cases he may have; tection. About four out of every five uphold such orders if they restrict the new cars, and SUVs have head-protect- • prevent the media from informing the attorneys from discussing the contents ing side airbags as standard or optional public about the content of trial evi- of discovery materials with other equipment. The airbags typically cost dence; and counsel in similar cases.The American between $500 to $700 (euro400 to Bar Association has recommended that • prevent clients from discussing their euro550) as an option. The study was courts permit disclosure of information cases with legislatures or the public based on federal crash data involving to government agencies and other to inform consumers of the danger of 1997-2004 model year cars involved in victims’ lawyers when the information these products. crashes from 1999-2004 and 2001-2004 reveals hazards to other people.

22 BeasleyAllen.com Despite the recognition by numerous The wreck occurred on December 24-year old Alabama woman. She died courts, legal scholars, and commenta- 11, 1999 when Sonya Watson was while participating in correction officer tors across the country of the need for driving her grandmother to an eye training exercises after taking an less restrictive protective orders, this appointment. She was accompanied by ephedra- and caffeine-containing dietary has not stopped corporate defendants her aunt and other relatives. While supplement.We have previously written and manufacturers from continuing to driving along the highway on cruise about other similar settlements in cases, seek very restrictive orders.The manu- control, the SUV suddenly “took off,” the most notable of which was featured facturers seek to take advantage of their according to evidence presented at in People magazine and involved the superior knowledge and resources by trial.The vehicle suddenly accelerated death of a mother during an afternoon striving to prevent the plaintiffs from and the pedal went to the floor. The run after ingesting a Nutraquest establishing any cooperative discovery speed of the SUV got up to about 80 ephedra product.That victim died while mechanism.In other words,they seek to mph. When Ms. Watson couldn’t slow her children looked on. isolate individual lawyers so that they the vehicle down by pumping the In fact, Nutraquest, a company which can take full advantage of their large brakes, she reached down to try and made millions off its ephedra-based financial resources and so that there can grab the accelerator. That’s when her products, filed for bankruptcy in 2003 be no way for an individual to insure seatbelt came undone and she lost as a result of the numerous personal the defendant is making truthful and control of the Explorer, which careened injury and wrongful death actions filed complete disclosures. off the highway and rolled over four against it. That bankruptcy is only Fortunately, there is a small but times.The driver and her aunt, who was now—years later—being finalized with growing movement among states to sitting in the back seat behind the a plan to settle all of those cases for a prohibit these types of secrecy agree- driver, were thrown from the SUV.The total of $34.5 million.The creditors of ments. Florida has enacted sunshine aunt, who was nearly cut in half, died at the debtor are expected to approve the laws, which prohibit secrecy in settle- the scene. Ms.Watson was paralyzed by plan to resolve the bankruptcy in the ment amounts and court filings. Califor- a broken neck, and attended the trial in next few days. Our firm played a large nia has considered a similar law. The a motorized wheelchair.The other pas- role in seeing through the resolution of needs of the victims of defective prod- sengers, who remained inside the these cases, due in large part to our ucts should be first and foremost when vehicle, walked away from the wreck readiness to try a case involving the addressing and weighing the need for a without injury. death of an Army Master Sargeant who protective order.The law is on the con- At trial, the plaintiffs contended that died during his daily basketball match sumer’s side and victims’ attorneys the Explorer’s cruise control system after taking a Nutraquest ephedra-con- should fight vigorously against secretive was “unreasonably susceptible to taining product. and restrictive protective orders. sudden acceleration, failing to disen- A common denominator in each of gage, sticking, locking and/or failing to these cases, regardless of the manufac- deactivate itself when braking or turned turer or distributor, is the complete dis- VERDICT IN SUDDEN-ACCELERATION CASE to the off position.”The vehicle involved regard for the safety of consumers. Not in the accident had previous problems a single one of these companies ade- A South Carolina jury awarded $15 with the cruise control with sudden quately tested or researched the safety million recently to a 17-year-old girl acceleration, and Ms. Watson’s father of their products. It was all about mar- who was paralyzed when a faulty cruise had brought it in for repairs. keting and profits in the most recent control system caused her Ford Source: Lawyers Weekly USA case, which was brought against a con- Explorer to speed out of control and tract manufacturer, distributor, and con- roll over four times on the highway.The tract packager. Not only was the jury awarded another $3 million to the VIII. product not tested by any defendant, girl’s aunt, who was killed in the crash. but each defendant was adamant that it But, the jury didn’t award punitive MASS TORTS had no responsibility regarding the damages. Following a three week trial, UPDATE safety of its ephedra-containing jurors concluded that the cruise control product.At least two of the defendants on the 1995 Ford Explorer XLT was admitted they were aware of injuries defective, but rejected the plaintiff’s OUR FIRM SETTLES ANOTHER EPHEDRA- and deaths that had been reported from argument that faulty seatbelts caused RELATED DEATH CASE people ingesting ephedra products. both the two women to be ejected from Our firm recently settled the last of It is frightening to learn that the regu- the SUV.At trial, Ford argued that the many ephedra-related death cases that lation of food supplements, such as accident was caused by driver error, we have investigated over the past few ephedra, is grossly inferior to that of claiming that sudden acceleration is a years.This case involved the death of a pharmaceutical products, despite the discredited accident theory.

BeasleyAllen.com 23 fact that many herbal products have linked to spinach has uncovered weak- a Public Health Advisory from the FDA, properties similar to pharmaceuticals.In nesses in the regulation of food safety.A the new study linked Trasylol to fact, current regulations don’t even federal advisory group, the Institute of increased risk of death, serious kidney require food supplement manufacturers Medicine, recently issued a report claim- damage, congestive heart failure, and to test their products before marketing ing the FDA is unable to protect con- strokes.William Hiatt, the University of them.The public would be shocked to sumers from unsafe prescription drugs. Colorado vascular medicine specialist learn that the FDA has little control over The report focuses mainly on lapses in who chaired the panel, observed: the herbal supplement industry.Thus, monitoring approved drugs. Serious gaps Why this wasn’t made available at many of those products pose potential were found in the way the FDA monitors the panel meeting a week ago, I health risks of a grave nature. In the these drugs for potentially fatal side have no idea.It seems irregular. case of ephedra products, the pharma- effects. ceutical properties of the ephedra alka- These problems should not come as a It is much more than irregular, it’s loids have been well known by surprise. The agency is under- funded very much the wrong thing to do.There scientists. Unfortunately, companies in and understaffed. For most of the Bush is a growing movement to improve drug the U.S. marketed those dangerous presidency, the FDA has been under safety in the United States by enhancing products to the detriment of con- acting commissioners. Although they the FDA’s powers. Failures to provide sumers. It is amazing to learn that many are generally capable leaders, the acting critically important information from of the companies were started by indi- chiefs usually lack the power to make studies is a major problem.The report viduals with absolutely no training or major changes. An internal analysis from the influential Institute of Medi- experience in either medicine or found that funding for food and drug cine concerning the FDA and its lack of science. In our last case, the main defen- safety responsibilities has not kept up adequate powers to prevent disasters dant was a pipe layer and yard worker with the rising personnel costs, and the like the recall of Vioxx by Merck two who had no experience in herbal sup- number of staff in the food division has years ago is more evidence that the plements. Nevertheless, this man started decreased by several hundred within system isn’t working. producing multi-vitamins and eventually the past couple of years. As of December 2005, Trasylol the ephedra product that killed our The FDA, according to the report, accounted for sales of $300 million at a client. focuses too much of its resources on cost of $1,400 per dose. It’s impossible Ephedra-containing products have reviewing new drug applications and to say from current data how many been banned by the FDA as a result of not enough in tracking post-approval patients might have been adversely the numerous injuries and deaths result- safety. The number of scientists who affected. On January 26th, a paper in the ing from the sale these products. Our follow post-approval safety should be New England Journal of Medicine from firm is proud to have been a part of liti- increased, and pharmaceutical compa- researchers at the Ischemia Research gation that led to the ultimate ban of nies should also be compelled to carry and Education Foundation in San Bruno, this extremely dangerous herb. Unfortu- out additional tests on approved drugs. California, made a case that Trasylol nately, a lot of people died as a result of Consumer safety should be top priority. increased the risk of kidney problems, ingesting ephedra-containing supple- Source: The New York Times and L.A. Times heart attacks, and strokes. ments, including a beautiful, 24-year old On September 21st, the FDA’s panel of young lady whose life—full of promise medical experts met to consider that BAYER HID THE RESULTS OF A STUDY FROM and happiness—was cut way too short. data and voted 18 to 0 that Trasylol THE FDA Roger Smith from our firm, along with didn’t need a new safety label.The FDA David Miceli of Carrollton, Georgia, and German drug giant Bayer failed to tell was not informed of the new study until Christy Crow of Union Springs, the U.S. Food and Drug Administration Wednesday, September 27th—6 days Alabama, represented the family and did (FDA) of a study that connected a con- after the panel’s vote. Trasylol already an outstanding job. troversial heart surgery drug to danger- carries a “black box” on its labeling, ous side effects and death.The FDA had which warns doctors that it can cause convened a panel of experts to evaluate kidney problems. Bayer’s failure to FOOD AND DRUG ADMINISTRATION UNDER report the results of this study may be CLOSER SCRUTINY the drug’s safety.The company notified the FDA only after it was asked to do so the straw that broke the camel’s back, As we all know, the federal Food and by the scientist conducting the study. and Congress may finally be forced to Drug Administration (FDA), which is Bayer claims it “mistakenly” failed to tell act. responsible for products that account for the FDA about the evaluation of 67,000 Source: Forbes a quarter of all consumer spending, has hospital records regarding the drug Tra- been the subject of much criticism lately. sylol, which is used to prevent bleeding The recent outbreak of E. coli infections during open-heart surgery.According to

24 BeasleyAllen.com GUIDANT SETTLES DEVICE SUIT the preemption issue, while not unex- evidence to link the drug to the pected, is still extremely significant. plaintiff’s heart attack. Robert Garry The Guidant Corporation, the maker Source: Reuters Smith, who was in his mid-fifties, of implanted heart devices, has settled a tried to prove that Vioxx had con- fraud suit over its recalled defibrillator tributed to a heart attack he had for an undisclosed amount.The trial in A BRIEF RUNDOWN ON THE VIOXX LITIGATION suffered in 2003. Mr. Smith had the civil suit, brought by two plaintiffs, taken Vioxx for knee pain for about There has been a great deal of activity Beatrice O. Hinojosa and Louis E. Motal, four and a half months, but said he on several fronts in the ongoing Vioxx was scheduled to begin last month in a did not realize at the time of the litigation. We are getting ready to try Texas state court.The plaintiffs in the heart attack that Vioxx might have another case in the MDL in New case claimed the company failed to been a cause for concern.This was Orleans. Fortunately, people are now warn them that their implanted heart a case that under the system in becoming aware of how truly bad devices might fail. Guidant recalled place in the MDL was selected by Merck has been.The following are a few thousands of defibrillators, which use Merck for trial. It was a relatively of the highlights relating to the Vioxx electrical shocks to correct abnormal weak case both on causation and litigation. heart rhythms, in June 2005.The Boston damages. Scientific Corporation, Guidant’s parent Merck Files Appeal In Texas Case company, has said it expects as many as Merck Will Face 10 Vioxx Plain- 3,000 product liability claims related to It’s been more than a year since tiffs In New Jersey Merck and Co. lost the first Vioxx the defibrillators.The settlement is con- Judge Carol Higbee, the New Jersey trial. Now Merck has appealed the fidential. judge managing about 15,000 Vioxx court judge’s judgment that lawsuits, has ordered lawyers to awarded $26.1 million to the plain- pick 10 cases they’d like to present U.S. APPEALS COURT REINSTATES REZULIN tiff. Merck filed a notice of appeal in to jurors at a group trial in January. LAWSUIT a Texas state court in the case of Judge Higbee told the lawyers to Robert Ernst, who died in 2001, and pick the cases from a list of 39 she A federal appeals court in New York who won a much larger jury chose in July for pre-trial prepara- has reinstated a lawsuit filed against verdict. Under Texas law the amount tion. The judge will say later Pfizer Inc. unit Warner-Lambert by was reduced.The company claims whether she wants all 10 cases to people who took the diabetes drug that there was insufficient evidence go to a single jury at the next trial, Rezulin.A three-judge panel for the that Mr. Ernst suffered an injury due which will start on January 16th.In U.S.Court of Appeals for the Second to Vioxx and that it was improper to my opinion, Judge Higbee’s plan to Circuit wrote that a lower court allow certain testimony. present multiple plaintiffs at her judge had wrongly concluded that A jury initially awarded the plaintiff next trial is good for all concerned. federal law preempted claims made $253.4 million, with $229 million of Lawyers for plaintiffs will have a under a Michigan state product lia- it being for punitive damages. But, week to prepare their list of 10 bility statute. The lawsuit, filed by Texas law sets caps on punitive cases and Merck will have three or residents of Michigan who said damage awards. As a result, the four days to object. their various injuries were caused court reduced the amount to $26.1 by Rezulin, had been dismissed by The first phase of the next trial will million. Mr. Ernst, a 59-year-old Wal- U.S. District Judge Lewis Kaplan in determine whether Merck failed to Mart store produce manager, who 2005. warn physicians of the risk of Vioxx ran marathons and taught aerobics As you will recall, Rezulin was pulled and whether the company engaged classes on the side, died after taking from the market in March 2000 at the in consumer fraud. Mark Lanier, Vioxx for about 8 months. I believe request of the U.S. Food and Drug who is one of the victims’ lawyers that Merck will have a very difficult Administration after about 100 people in these cases, stated: time overturning the court’s judg- who took the medicine needed liver ment. transplants or died from acute liver Merck’s clear intent is to try as few cases as possible. Merck failure. Pfizer, which acquired Warner- Jury Returns A Verdict For Merck objects to anything that causes Lambert some three months after In Vioxx Lawsuit Rezulin was withdrawn, has defended cases to be tried. They cannot thousands of lawsuits that claim that A federal court jury in New Orleans offer the judge or anyone any Warner-Lambert failed to inform the ruled in favor of Merck in the latest reasons why it’s not fair. It’s public of the drug’s liver toxicity risks. Vioxx lawsuit to be tried.The jurors done all the time in mass torts This ruling by a federal appeals court on found that there was not enough around the country.

BeasleyAllen.com 25 Judge Higbee’s action is the first holder lawsuits.The settlement covers selected an unnamed company’s offer, step in accelerating the resolution shareholders who bought Qwest stock but Buffets increased its offer to $16.75 of plaintiffs’ cases in various courts. between May 24, 1999, and July 28, and eventually reached an agreement to One would think that’s what both 2002. In the lawsuits, shareholders buy Ryan’s.The deal is expected to close the victims and Merck would want. allege Qwest executives deliberately in the fourth quarter. But, the company doesn’t want to inflated the company’s earnings, result- Source: Associated Press resolve the 30,000 claims it now ing in an accounting scandal that forced faces.Merck’s strategy is to spend its the Denver-based Baby Bell to restate money paying lawyers and experts about $3 billion in revenue. Former HOMEOWNERS AWARDED $3.3 MILLION IN CASE AGAINST DEVELOPER and in the process attempt to dis- Qwest CEO Joe Nacchio pleaded not courage good lawyers from repre- guilty to 42 counts of insider trading A jury has awarded a Vermont home- senting worthy Vioxx victims late last year. The Securities and owners’ association $3.3 million after because of the expenses required Exchange Commission alleges that finding a developer and Winhall Real and the protracted litigation Nacchio and other former Qwest execu- Estate Inc. violated the Vermont con- prospects. Merck has set aside about tives perpetrated financial fraud on sumer fraud act.The homeowners’ asso- one billion dollars for defense costs, investors. ciation filed suit in 2001 contending but not one dime for victims. Even- Source: Denver Business Journal that the developer and the company tually, I believe their defense strat- built the Piper Ridge development in egy will fail Merck’s shareholders. Winhall, Connecticut, on land that was RYAN’S SETTLES SHAREHOLDER LAWSUIT totally unsuitable for building purposes. IX. Restaurant-chain operator Ryan’s The suit alleged that some of the units Restaurant Group Inc. has agreed to were built on a dump filled with rotting BUSINESS settle a shareholder lawsuit involving logs and stumps. Some of the units had LITIGATION the pending acquisition of Ryan’s by substandard roofing and siding. It was Buffets Inc., owner of the Old Country proved that the defendants misrepre- Buffet and other restaurant chains. sented the conditions of the units. An HEALTHSOUTH AND INVESTORS REACH Buffets agreed to acquire Ryan’s in July engineer found the building was sitting SETTLEMENT OF FRAUD CLAIMS for about $876 million, including on stumps and boulders. The owners assumed debt. On July 28th, a class action had to spend about $500,000 to move A final settlement between Health- lawsuit was filed in a South Carolina the building.All of the problems in the South Corp. and investors has been court. The suit named Ryan’s and its development were later fixed by the reached.This will bring to an end class directors, and alleged the purchase management company. TPW Manage- action lawsuits arising from the massive price didn’t result from a fair and open ment of Manchester, which began fraud at the health services company. process.The lawsuit said the company taking care of the Piper Ridge develop- The total settlement is for $445 million. breached its fiduciary duty to sharehold- ment in 1998, did an engineering evalu- Under the agreement, which has to be ers and sought to stop the deal. Ryan’s ation of the buildings and found that approved by the court, the Birmingham- said the claims in the lawsuit are many of the buildings had structured based company will pay $215 million in without merit, but agreed to the settle- issues, including a great deal of rotted cash, stocks, and warrants. Insurance ment to “avoid the expenses and distrac- wood. One of the buildings had already companies will pay the remaining $230 tions associated with litigation.” started to settle rapidly. million of the settlement. The final In a filing with the Securities and Source: Insurance Journal version of the agreement was virtually Exchange Commission, the company identical to a preliminary settlement detailed events leading up to the pro- reached in February. posed acquisition by Buffets, including X. the fact that it retained its financial INSURANCE AND JUDGE APPROVES QWEST SHAREHOLDER adviser, Brookwood Associates LLC, FINANCE UPDATE SETTLEMENT without interviewing other firms. Ryan’s said Brookwood contacted several pos- A $400 million settlement from sible buyers, and weighed offers from MORE ON “DEATH SPIRAL”HEALTH Qwest Communications International three companies including Caxton- INSURANCE CLAIMS Inc. has received final approval from a Iseman Capital Inc., an investment part- U.S. District Court judge. Last Novem- nership that owns Buffets. All three Often times, health insurance compa- ber, Denver-based Qwest announced it companies offered to buy Ryan’s for nies will shuffle unhealthy policyhold- had reached a settlement in its share- $15.25 per share. Initially, Ryan’s ers from one risk group to another in an

26 BeasleyAllen.com effort to “price out” unhealthy policy- they price these loyal paying consumers refusing to pay some of these claims has holders from coverage.This practice is out of the policies. revealed shocking information. Further commonly referred to as a “death spiral.” The following are the companies that discovery has unveiled a boardroom For many years, our firm has repre- we have filed suits against involving decision to engage in a nationwide sented policyholders who were forced the theories of liability mentioned scheme to wrongfully deny benefits to out of their health insurance coverage above: Conseco Insurance Company; policyholders, all in the name of profit. because of constant and exorbitant American Travelers; Pioneer Life Insur- We are currently pursuing cases con- price hikes in premiums.Through dis- ance Company; American Medical cerning the tort of “bad faith” against a covery in these cases, we learned that Security/North American Life Insurance number of companies—other than some health insurance providers engage Company; North American Insurance UNUM/Provident & Accident Insurance in what is known as “death spiraling.” Company, Congress Life Insurance Co.—and some of them are: Allstate This practice involves a complicated Company; UnumProvident & Accident Insurance Company; State Farm Insur- process in which companies move their Insurance Company; and Liberty ance;Alfa Insurance; Farmer’s Insurance unhealthy policyholders from their orig- National Life Insurance Company. Group; Conseco Services LLC; Paul inal risk group to another risk group The Alabama Supreme Court recently Revere Insurance Co.; Metropolitan Life that has all or a greater number of affirmed a class action settlement Insurance Company; and Guardian.We unhealthy policyholders, thus justifying involving the death spiral theory will continue to update our Web site higher rate increases based on higher against American Medical Security and with new developments as they arise in risk.The company will continue to pull North American Life Insurance Com- these cases. the healthy policyholders to another pany. Our firm, as lead counsel, group, keeping them out of the obtained relief for some 30,000 policy- “unhealthy group” all in an effort for the holders who had been victims of FORMER GENERAL RE AND AIG EXECS INDICTED FOR ALLEGED REINSURANCE FRAUD company to “price out” and rid itself of tiering, which is a practice very much the unhealthy policyholders, so they like the death spiral theory. We have tried to keep our readers up insure only healthy people who file to date on matters relating to the small or a few claims. pending litigation our firm is handling INSURANCE BAD FAITH LITIGATION This insidious practice has left thou- for the Tennessee Insurance Commis- sands of people throughout this Our firm has represented hundreds of sioner. But, things are happening so fast country without health insurance clients who have had insurance claims that it’s pretty hard to keep our reports because they can’t afford the artificially wrongfully denied by their insurance current. Recently, four former senior inflated premiums. Our firm was one of companies. Some of these claims executives of Berkshire Hathaway’s the pioneers in this area of insurance involved a cause of action known as bad General Re Corp. and a former senior law, and we continue in that leadership faith. Bad faith is simply a cause of executive of American International role as we continue to file these cases action against an insurance company Group Inc. were indicted on charges throughout the country. that has intentionally denied the they participated in a scheme to manip- A similar fraudulent practice has payment of a properly submitted insur- ulate AIG’s financial statements. The occurred involving the sale of nursing ance claim for no debatable reason. Bad indictment alleges that the defendants home policies, home healthcare poli- faith claims can involve health and life engaged in a fraudulent scheme to cies, and long-term care policies to the insurance, accidental death insurance, make it appear as if AIG — which, as elderly. But these policies involve more disability insurance, automobile, prop- you know, is one of the world’s largest of a “bait and switch” method. These erty,and cancer insurance. insurance companies — increased its policies are sold at “actuarially defec- Our firm has successfully represented loss reserves, a key financial indicator to tive” prices (too low a premium to a tremendous number of clients in bad analysts and investors. sustain the policy) and then the faith actions.We continue the tradition At issue are two reinsurance transac- premium is increased so high in the fol- of representing clients who have been tions between AIG and Gen Re that were lowing months and years that the poli- wrongfully denied benefits by their initiated by an AIG senior executive in an cyholders can’t afford the policies any insurance companies.We are currently attempt to stop criticism by analysts of longer. Often times, a company will pursuing a number of cases against an approximate $59 million reduction in greatly increase the premium on an UNUM/Provident and Accident Insur- AIG’s loss reserves in the third quarter of elderly person’s policy at a time when ance Company concerning disability 2000. The phony transactions made it that person needs the policy the most. policies, with specific attention on the appear as though AIG had increased its This fraudulent practice results in a “own occupation” disability policies. loss reserves by $500 million, according large cash flow to the companies in the Our independent investigation of the to authorities. The conspiracy, using early years of the policies and an elimi- company’s practices in evaluating and phony contracts and a secret side deal, nation of risk to the company when

BeasleyAllen.com 27 was designed to make it appear that resigned from Renfroe.The Rigsbys and Wachter that these two employ- AIG’s loss reserves were growing, in turned over copies of the docu- ees are targets of the investigation. order to inflate the company’s stock ments in question to state and U.S. Magistrate Judge Robert Walker price in 2000 and 2001. federal authorities. Renfroe’s already has ruled that Drain, King, The Connecticut indictment says lawsuit, filed earlier this month in a Wachter, and a fourth employee, there were additional unnamed cocon- federal court in Birmingham, David Randel, can be questioned spirators, including senior level execu- Alabama, accuses the sisters of vio- under oath by lawyers representing tives at AIG and Gen Re. Last year, two lating the Alabama Trade Secrets Act State Farm policyholders. State senior Gen Re executives, John and breaching confidentiality agree- Farm has asked Judge Walker to Houldsworth and Richard Napier, ments with the company. reconsider his ruling.The company pleaded guilty to conspiracy to falsify Lawyers for the policyholder plain- says the employees would risk Securities and Exchange Commission tiffs hope to prove that State Farm incriminating themselves if they are (SEC) filings and are awaiting sentenc- management elected to deny all compelled to testify in civil cases ing.A trial in the criminal case has been policyholder claims where Katrina while facing possible criminal scheduled for March 1st of next year. left only slabs or pilings. In denying probes. Source: Business Insurance Journal slab claims, the company has relied Source: Associated Press on policy exclusions that say water MORE ON STATE FARM AND KATRINA- damage is not covered. State Farm is ORTGAGE RAUD S T N LL IME IGH RELATED LITIGATION also claiming that there is no cover- M F I A A A -T H age for wind damage when water As many of you know, over the past There has been a great deal of activity contributes to the damages. State several years, mortgage interest rates concerning lawsuits pending against Farm’s officials contended that the have been at historical lows.These low State Farm Insurance Co. arising out of company individually investigated interest rates have allowed many con- Katrina and related matters. I will each claim and paid for damage sumers to save great sums of money and mention two of the more important covered under its policies.The first lower their monthly mortgage pay- events below. Hurricane Katrina cases to be tried ments. Better yet, some people have in U.S. District Court in Gulfport Company Sues State Farm Whistle been allowed to take part in the “Ameri- will, at the judge’s direction, involve Blowers can Dream” by purchasing a home for wind versus water claims against the very first time. Unfortunately, as In our last issue, we wrote on the State Farm, Nationwide, and Allstate many new people enter the home activities of the Rigsby sisters. Now, insurance companies. Six cases buying market, and as mortgages a company that contracts with State have been scheduled, two involving become easier to obtain, more individu- Farm Insurance has sued the two each company, to begin January als find themselves becoming victims of former employees who are helping 29th of next year. a growing type of criminal activity to build cases against the insurer for Source: Associated Press known as “mortgage fraud.”The FBI has denying claims after Hurricane recently reported that mortgage fraud is Katrina. E-A Renfroe and Company, State Farm Employees Are Targets at “epidemic” proportions. Losses associ- a Birmingham-based insurance Of Katrina Probe ated with mortgage fraud increased to adjusting firm, alleges in its lawsuit State Farm has now confirmed that over $1 billion last year alone.According that Cori and Kerri Rigsby broke at least two of its employees are to the FBI, the losses associated with the law when they turned over targets of a criminal investigation of mortgage fraud are increasing. reams of internal State Farm the insurer’s handling of policy- I must point out, however, that mort- records to lawyers who represent holders’ claims arising out of Hurri- gage fraud is nothing new. Our firm has State Farm policyholders. cane Katrina. Lawyers for State been handling these type of claims for As you will recall from our previous Farm had asked a judge to protect over a decade.Traditionally,the cases we issue, the Rigsby sisters were four employees, including Alexis handled involved primarily elderly, assigned by Renfroe to help adjust “Lecky” King and Lisa Wachter, from minority, or first-time home buyers who claims for State Farm.According to being questioned under oath by were promised a certain deal, but the sisters, the documents show lawyers in civil cases while they are arrived at closing only to receive an that State Farm manipulated engi- under investigation by Mississippi entirely different and more expensive neers’ reports on storm-damaged Attorney General Jim Hood. The deal.Another common scam lawyers in homes so that policyholders’ claims Attorney General’s office has now our Fraud Section have seen over the could be denied. The sisters have informed a lawyer for both King years involves people being talked into

28 BeasleyAllen.com a mortgage that has a temporary, low those other properties are sold, the time. Apparently, Wal-Mart created a monthly payment that is based on a mortgage broker or financial advisor system that encourages off-the-clock short-term interest rate and/or an pockets the full amount of the pro- work for its hourly employees.Wal-Mart adjustable interest rate. Often the tem- ceeds. Another version of the scam will appeal the ruling. It is possible that porary nature of this rate was not prop- involves the mortgage broker setting up an additional $62 million in damages erly disclosed.When the interest rates a phony mortgage and receiving a bro- may be awarded against Wal-Mart, since inevitably changed, the monthly pay- kerage fee from the bank. Only months the jury found that the retail giant had ments rose to a point where the con- later does the consumer realize that acted in bad faith. It will be interesting sumer could no longer afford them and they have been used to purchase to see how this case winds up on lost the home.Another common mort- another property and the person appeal. gage fraud case involves instances in responsible has skipped town. The Source: Business and Legal Reports which mortgage brokers falsify mort- worst cases are when people are gage applications and get consumers tricked into giving their own home as approved for bigger loans that they oth- collateral for these additional purchases ALLSTATE—THE GOOD HANDS INSURANCE COMPANY IS FOUND GUILTY OF BAD FAITH erwise can afford. Often the mortgage and are forced to file bankruptcy or lose broker is only interested in making a their entire life savings to get out of After a long and drawn out battle, a slick sales pitch for the bigger loan these scams. jury found that Ted K. Fields was in bad amount so that he or she can make a For most American families, their hands with Allstate and awarded the larger commission on the larger mort- home is the largest asset they own. Indiana man $20 million.The jury found gage. Therefore, all of us should follow the that Allstate acted in bad faith against its But, as mortgage products become advice of honest financial advisors customers. Hopefully, this verdict will more diverse, and as more people enter when they suggest not using our home send a message to Allstate and other the home buying market, we have seen as collateral for our other investments. insurers that they have to treat their more elaborate scams. One such scam is Another good recommendation is to customers fairly.Allstate has had a policy the marketing of land deals as invest- never do business with a person until for the past decade that gives its policy- ments and using mortgages to finance you have had an opportunity to check holders two choices: they can either them.The scam can take on many facets that person out. Always ask the mort- accept a poor settlement or face a long, and generally starts by inviting con- gage brokers for names and references drawn out legal fight. sumers with good credit to join an of customers they have helped in the While insurance companies tradition- “investor’s club.”The consumers are told past.The mortgage broker may tell you ally pay out 70 cents on the dollar for that they can participate in the “red hot that he or she can’t give you that per- claims, Allstate pays 52 cents on the housing boom” without risk of losing sonal information. If they really want to dollar in order to make more money.Mr. money.They are told they don’t even help you, however, other clients will be Fields, who is now retired on disability have to put up any money to participate made available as references. If a broker from his job as a steelworker, suffered in the investment. Instead, they are told is not willing to do this, then you should spinal injuries in a 1995 crash.After the that their good credit rating will be used be very wary and consider taking your insolvency of the insurer for the driver to help secure the properties, without business elsewhere. involved in the collision who was at actually buying them. It is then Source: New York Times fault and caused the crash, Allstate explained that once the properties are became responsible under Mr. Field’s sold, they would get a check from a uninsured motorist coverage contained portion of the sale. WAL-MART EMPLOYEES AWARDED $78 MILLION FOR UNPAID WORK in his policy. Mr. Fields had $7,000 in Unfortunately, after a consumer dis- medical bills and suffered $18,000 in closes all of his or her personal informa- A jury in a Pennsylvania court has lost wages. It’s hard to believe, but All- tion, he finds out he has been scammed. determined that Wal-Mart should pay state actually kept Mr. Fields tied up in Sometimes the scam is simply to get the workers at least $78.5 million for refus- courts for almost 10 years.While many consumer’s personal financial informa- ing to pay its employees for extra hours people would fold their tent and surren- tion so that the crooks can steal their they worked and for requiring them to der to Allstate’s litigation tactics, this identity and rip off other vendors and work during rest breaks. The class man refused to quit. credit card companies. But, the more action suit was brought by 187,000 A doctor and psychiatrist testified complicated scams involve getting the current and former employees who during the two-week trial of this case consumer to sign documents that allow worked for Wal-Mart between 1997 and that the stress caused by Allstate’s the broker to take out actual mortgages 2006. The jury awarded about $2.5 actions contributed to Mr. Fields’ rise in on other pieces of property,without the million for the extra unpaid hours and blood pressure, which led to heart prob- consumer’s actual knowledge. When about $76 million for the lost rest break lems and a stroke.According to reports,

BeasleyAllen.com 29 all that Mr.Fields ever wanted was to get Military families are prime targets for Toluene diisocyanate is used to manu- his car fixed and his bills paid, but as Mr. these predatory lenders. Payday lending facture flexible polyurethane for use in Fields describes it, Allstate turned his is a growing business in east Alabama items like upholstery, mattresses, and “claim into World War III.” The $20 because of Fort Benning, which as you car seats. Bayer MaterialScience AG is a million verdict is the largest bad faith probably know, is located outside division of the German conglomerate verdict ever rendered against an auto- Columbus, Georgia. Because of Bayer AG. It is contended in the lawsuit mobile insurer in Indiana. Georgia’s tougher laws against preda- that the explosion happened when When Mr. Fields was hurt by an unin- tory lenders, the lenders set up shop in toluene diisocyanate was mixed with sured motorist and had a valid policy Alabama. The payday lenders have a another toxic chemical. If appropriate with Allstate that covered the incident, growing reputation for taking advantage safety measures were in place, this he really believed that he was in good of military personnel and their families. explosion wouldn’t have happened. hands. But the man soon realized All- Considering how most folks strongly More time has been requested to state’s hands were in reality pretty bad. support the military, it’s impossible to inspect the Bayer facilities.This is neces- Policyholders of any insurance understand how the payday lenders sary to protect any potential evidence company have a right to have their valid could possibly feel good about taking from being altered or destroyed.A tem- claims paid in full, and anything less is advantage of military families. porary restraining order was issued by just flat wrong. When I see the televi- The payday loan business is known the trial judge on September 30th and the sion ads by Allstate claiming to be so for its sky-high interest rates. The Pen- court will be asked to issue a subse- available and responsible in handling tagon asked Congress to cap the quent order allowing lawyers for the claims—and knowing how the com- lending rate for military personnel at employees to examine, photograph, and pany really operates—it makes me 36% and Congress was forced to film the Bayer MaterialScience plant. It is pretty upset. Lots of folks buy Allstate’s respond. More will be said on that expected that Bayer will make a strong marketing tactics and really believe All- development in the Arbitration Section. effort to settle these cases very soon. state is a “good hands” company that As you may know, Payday loans have promptly pays valid claims.That is far already been outlawed in many states, from the truth and Mr. Fields found out including Georgia.They are regulated LAWSUIT FILED IN CHICAGO FIRE THAT KILLED SIX CHILDREN how the company really operates. Fortu- in Alabama, but in a very weak fashion. nately, he stayed the course and a jury In fact, what Alabama did really isn’t A lawsuit has been filed by the parents was able to find out how truly bad All- true regulation. Most consumer groups of six children who were killed in an state is. I hope Allstate learned a lesson. say Alabama’s law was an industry-spon- apartment fire in Chicago. The suit Source: Northwest Indiana Times sored measure that does little for alleges that the building’s owner was at persons who get loans from payday loan fault. It is contended that the landlord operations. There was some relief in failed to keep the building in reasonably XI. Congress, and I will write on that in the safe condition and that the apartment PREDATORY section on arbitration. where the fire occurred in September LENDING had no smoke detectors. The children who were killed ranged in age from 3 to XII. 14. The children’s mother was also PENTAGON WARNS AGAINST PAYDAY LOANS PREMISES injured in the fire.The apartment hadn’t LIABILITY UPDATE had electricity since May,and it appears The payday loan companies are finally candles were being used by the family.If coming under fire from the federal gov- the apartment had no smoke detectors,it ernment and for good reason. The LAWSUIT FILED AGAINST BAYER AFTER would be a violation of the safety codes. Pentagon is quite correct when it says EXPLOSION AT TEXAS PLANT Source: Associated Press that these companies prey on military personnel and need to be watched Twenty-two workers were injured in closely.As previously reported, payday an explosion in September at a Bayer SETTLEMENT REACHED IN WOMAN’S DEATH loan outlets are popping up around mili- MaterialScience plant near Houston, AT PARKING GARAGE tary bases, including locations in Texas. Nineteen of those employees The family of a woman who died Alabama. The business model for the have filed a lawsuit charging the when her car fell from the fifth floor of industry indicates they like to locate company with practicing lax safety stan- a parking garage in a mall located in around military installations. That has dards at the plant.The explosion, which Washington has reached a settlement been a practice since the start of these occurred at a plant in Baytown,Texas, with the owners. The settlement was companies. Obviously, a lot of their cus- shut down one of the facility’s two between the family and Safeco Insur- tomer base is located in those locations. toluene diisocyanate production lines.

30 BeasleyAllen.com ance, which insures the garage. The Biechele, the only other person charged alleviate any problems. The plaintiffs woman died on April 8th after her car fell criminally,was sentenced to four years in rightfully wanted the freedom to enjoy from the fifth floor of the structure onto prison after pleading guilty to involun- their own property. It is important to the entry ramp below. She was driving tary manslaughter. note that the company had 350,000 slowly at the time, so speed was not a Now that the criminal cases are over, hogs on this one location. More than 50 factor.The mall officials will strengthen the defendants can be compelled to similar cases like this one are still the mall’s parking garage by attaching answer questions in the civil case pending. steel rods and plates to outside-facing because they will no longer face crimi- Source: Kansas City Star walls.The owners’ dedication to making nal liability.No longer can they refuse to improvements in the garage was a sig- answer questions based on their consti- nificant factor in reaching the settle- tutional right under the 5th Amendment. XIII. ment. River Park Square is owned by the The two owners are still defendants in WORKPLACE Cowles Co., which incidentally owns the civil case, even though they are HAZARDS The Spokesman-Review newspaper. shielded from paying damages above Source: Insurance Journal their insurance coverage after filing for bankruptcy protection. Prosecutors FAILURE OF WORKERS’COMPENSATION have promised to share evidence with PROGRAMS NATIONWIDE EXPOSED FAMILIES LOOK TO CIVIL LAWSUIT IN the families now that the criminal case NIGHTCLUB FIRE FOR ANSWERS is over. Hopefully, the civil case will A new report released on September The criminal case stemming from The allow the families to get answers and 20th by the consumer rights group Station nightclub fire in Rhode Island put this sad episode in their lives Center for Justice & Democracy (CJ&D) has come to an end. Now,the families of behind them. reveals that workers’ compensation pro- some of the 100 people killed in the Source: Associated Press grams throughout the country have blaze are looking to the civil courts for been devastating for injured workers, accountability. The lawsuit, filed ina leaving them to contend with an adver- SETTLEMENT REACHED OVER HOG FARM sarial bureaucracy and inadequate bene- court by nearly 300 people who were SMELL injured or lost loved ones in the fire, fits that render many destitute. The names a good number of defendants, Large corporate hog farms have been report,“Workers’ Compensation - A Cau- including the rock band Great White, in the news lately.Anyone who has lived tionary Tale,”calls the workers’ compen- whose pyrotechnic display sparked the near one of these large operations can sation system a “colossal failure.”The fire. Many of the families felt that the tell you that they can be a real problem. report correctly concludes: criminal system didn’t follow through In September, three families reached a The real winners are insurance and hold all of those responsible whose $4.5 million settlement involving a hog companies, which continue to actions contributed to the fire and loss farm stench that caused a nuisance. boast record profits as workers’ of life.They hope that the civil system After a trial, a jury found the defendant, benefits are declining. will assign responsibility to everyone Premium Standard Farms, Inc., owed who contributed to the tragedy. plaintiffs $4.5 million in actual damages, The report closely analyzes the pro- The fire at the West Warwick, R.I., along with an unspecified amount of gressive deterioration of the workers’ nightclub was sparked by pyrotechnics punitive damages.The plaintiffs decided compensation system since its incep- that ignited the foam during a concert by to settle for the total amount of actual tion in the early part of the last century, Great White on February 20, 2003. It was damages and agreed to drop the claim highlighting disturbing trends in several the fourth-deadliest nightclub fire in U.S for punitive damages. states. CJ&D lawyer and policy analyst, history.The lawsuit alleges that careless- Premium Standard has 2,200 employ- Amy Widman, the report’s author, ness and negligence by the defendants ees and is the second largest pork pro- observed: was to blame for the 100 deaths and ducer in the United States. It is owned Workers’ compensation is an more than 200 injuries. Many family by ContiGroup Cos.Inc.,but is currently unfortunate example of how a members of those killed in the fire are being sold to the second largest pork seemingly fair program can be unhappy with the plea deal entered into producer in the world, Smithfield manipulated by political forces by the nightclub owners.In exchange for Foods.Although the companies admit- into a nightmare for those it was no contest pleas to involuntary man- ted to past environmental problems, originally meant to help. slaughter charges, one of the owners will Premium Standard argued that they receive four years in prison, while the spent millions of dollars to control The release of this report came other will avoid prison altogether. odors and waste, and claim to be contin- shortly after the fifth anniversary of Sep- Former Great White tour manager Daniel uing the search for new technologies to tember 11th, where the plight of many

BeasleyAllen.com 31 clean-up workers who are being denied WORKPLACE ELEVATOR DEATH BEING According to OSHA, the discharge from even meager workers’ compensation INVESTIGATED the device pushed Mr.Winder against a benefits for their illness and injuries, guardrail that gave way. OSHA issued illustrates many of the problems A contractor faces $63,000 in federal five citations and assessed penalties of workers face in getting claims paid.The workplace safety fines for an accident in $63,000.This is the second time in two CJ&D Report also brands workers’ com- Pittsburg, Pennsylvania, which a subcon- years the facility in Cedar Springs, has pensation a “cautionary tale” about the tractor’s employee was decapitated by been fined in relation to a fatality. GP pitfalls of administrative compensation an elevator. the federal Occupational says it has addressed the safety issues programs that take away people’s right Safety and Health Administration cited by OSHA and is working to ensure to trial by jury,such as proposed “health (OSHA) proposed the fine against that safety is a top priority at its facili- courts” for medical malpractice victims. Massaro Corp. of Pittsburgh, involving ties. the April 13th death of James Neely. Mr. Citing problems with workers’ compen- Source: Associated Press sation, the CJ&D Report warns against Neely, who was 44 years old, was this concept, stating: working for subcontractor Mariani & Richards Inc. when he was struck by a OSHA FINES ALABAMA FIRM FOR DEATH OF Once political forces take over a passing elevator car. The worker had WORKER IN TRENCH COLLAPSE statutory system, and they always looked through a panel in a freight ele- do, it is merely a matter of time vator shaft door. OSHA investigators An Alabama company whose worker before a pro-victim proposal for found that Massaro Corp. willfully vio- died in a trench collapse has been hit no-fault compensation is turned lated workplace safety rules by not cov- with the most severe citation that The into a fault-based, bureaucratic ering glass panels that had been broken Occupational Safety and Health Admin- nightmare for the injured person. or removed from the doors leading to istration (OSHA) can hand down. the elevator shaft. Federal officials cited Big Warrior Corp. Alabama’s worker’s compensation OSHA also proposed a total of of Cleveland,Alabama, for a willful viola- laws are written to benefit corporate $21,500 in fines against Mariani & tion and seven serious violations in the employers and are among the weakest in th Richards and six other subcontractors wake of the worker’s April 27 death. the country.I have often wondered why for lesser safety violations.The accident The agency has proposed fines totaling a strong push to revise our laws hasn’t happened at a former warehouse that is $78,100 for failure to follow standard been made by consumer and labor being converted into apartments for stu- safety precautions. The 20-year-old groups. Maybe this report will prompt dents at the Art Institute of Pittsburgh. worker died when an 8- to 10-foot somebody to take action and attempt to The elevator operator says he did not trench collapsed while he and two co- get some changes in the worker’s com- know that Mr. Neely was looking into workers were digging under a sewer pensation laws in the several states. the shaft. OSHA found that the buttons line. Source: Center for Justice & Democracy used to summon the elevator were not The company disregarded its own working. Workers at the site used safety manual requirements and federal safety regulations with tragic results, WORKER KILLED IN SOUTH CAROLINA walkie-talkie-type phones to communi- according to OSHA. They knew they TEXTILE PLANT cate with each other. Source: Insurance Journal needed to use trench boxes or trench A textile worker who was killed while shields, shore the trench up, or slope it operating a large machine at Delta back. OSHA imposes a willful citation Woodside Industries’ Beattie Plant in CEDAR SPRINGS PLANT FINED FOR SAFETY when a company has shown an inten- Fountain Inn, S.C. Melvin Stafford, who HAZARDS tional disregard of or plain indifference was 62-years-old, was operating a bale to OSHA regulations.The other citations The Occupational Safety and Health press—a machine large enough for an allege the company failed to provide a Administration (OSHA) has fined adult to walk into—when he became safe way to enter and exit the excava- Georgia-Pacific’s Cedar Springs, Georgia, entangled in it. An autopsy was per- tion, failed to provide safety training for facility for safety hazards related to a formed, but the cause of Stafford’s death the workers, put excavated materials fatal accident in April. Jerry Leslie was still pending at press time. There too close to the edge of the trench, and Winder, a 59-year-old employee, died were 60 to 70 workers in the plant at failed to conduct soil analysis. from head injuries received on the job. the time of the incident and no one else Mr.Winder fell 30 feet from a catwalk was injured. The Occupational Safety when a vacuum pressure release device and Health Administration is investigat- released steam and paper stock. He was ing the death. on the catwalk to act as a fire watchman Source: Insurance Journal while another employee was welding.

32 BeasleyAllen.com XIV. have sued Greyhound Lines Inc., claim- including one of my favorites, Richard TRANSPORTATION ing the driver fell asleep before the New Petty — to promote what the CPSC York-to-Montreal bus flipped in the called “a major campaign to educate highway median and killed five passen- riders, young and old, on the safe use of BUS OPERATOR IN EXPLOSION CASE IS gers.The 52-year-old bus driver was also ATVs.” But Ms. Rabe said that when a CONVICTED OF CRIMINAL CONSPIRACY killed.There were 48 survivors.The suit child looks at Richard Petty,it makes the was filed in Dallas, Texas, against the child “want to race an ATV.”That, in her In a recent issue we discussed the Dallas-based company. Officials said the opinion, is “counterproductive.” Ms. tragic bus accident that killed 23 people bus flipped on the evening of August Rabe, who believes the new campaign outside of Dallas,Texas, during the Hur- 28th on a remote stretch of Interstate will undermine safety because the CPSC ricane Rita evacuation. The company 87 in the eastern Adirondack moun- is weakening the rules on youth-sized that operated the bus that exploded tians.The lawsuit claims the driver fre- ATVs, observed: was convicted last month on criminal quently talked on his cell phone and Right now, the ATV industry and charges of conspiring to falsify logs and listened to an iPod-like device with the CPSC have a golden rule—no two other safety violations. James headphones while driving that evening. one under 16 riding an adult- Maples, the owner of the company, The lawsuit also claims the driver did sized ATV. That means no child Global Limo Inc., was found not guilty not get enough rest before starting the under 16 on anything larger than of conspiracy, but was convicted of trip and drove faster than necessary.It is a 90 cc vehicle. But the CPSC and poorly maintaining his fleet and not alleged that Greyhound should have the industry want to change that requiring drivers to fill out vehicle known the driver was unfit to drive. so that children 12 to 16 can ride inspection reports. Global Limo was Source: Associated Press convicted on those same charges. It vehicles that are larger than 90 should be noted that none of the cc—anywhere from 125cc to 175 charges were directly related to the bus PARENTS GROUP DON’T LIKE THE ATV cc. They are changing the defini- explosion.The judge prohibited prose- CAMPAIGN BY THE CPSC tion of ‘adult-sized ATVs.’This will cutors from mentioning the accident, lead to more children dying on Although adult-sized all-terrain vehi- saying it fell outside the scope of the ATVs. It’s a huge step in the wrong cles (ATVs) should never be used by charges and would prejudice the jury. direction. No child under 16 children, manufacturers know that they Global Limo faces a $500,000 fine on should be on an adult-sized ATV— are being used by children as young as 8 the conspiracy count and a $200,000 meaning anything over 90 cc. to 10 years old.The Consumer Product fine on each of the two other convic- Safety Commission (CPSC) currently has The number of four-wheel ATVs in tions. Mr. Maples faces up to a year in a safety campaign in place. The CPSC use in the United States has increased federal prison and a $100,000 fine on says it is promoting safety when it over the past 10 years from just over 2 each of his two convictions. Sentencing comes to the campaign. But, a group of million to more than 6.9 million. From is set for December 14th. The trial parents who have lost children to ATV 1982 through 2004, there were nearly stemmed from a federal investigation accidents have accused the CPSC of 6,500 deaths involving ATVs. In 2004 into the Global Limo bus that exploded engaging in nothing more than a “pure alone, an estimated 136,000 people and burned while held up in traffic on public relations” campaign. Concerned were treated in hospital emergency September 23, 2005, killing 23 elderly Families for ATV Safety say the CPSC has rooms for ATV-related injuries, many of patients too frail to escape.The patients’ weakened safety regulations at the them life-threatening. In 2003, an esti- oxygen tanks exploded as the flames request of the ATV industry. Sue Rabe, a mated 740 people died nationwide in engulfed the bus.Victims and relatives co-founder of the group, says: ATV incidents. It’s significant that about of victims had previously reached a sat- 30% of all deaths and injuries involve isfactory settlement with Global Limo The CPSC’s campaign is not going children younger than 16.That should and BusBank, the travel broker that to save one child riding on an speak loudly to both the manufacturers hired the company. The settlement adult-sized ATV. and the CPSC. avoided a civil trial in those cases. It now seems that the battle for ATV Source: Associated Press In May 2002, Ms. Rabe lost her son Kyle when his adult-sized Arctic Cat ATV safety is shaping up as one between rolled over and crushed him to death. parents who have lost children to ATV VICTIMS FILE LAWSUIT IN NEW YORK BUS Her group wants the CPSC to pass a accidents, pediatric physicians, neuro- CRASH rule that would prohibit the sale of surgeons, and trauma nurses on one adult-sized ATVs for use by children side, against the powerful ATV industry Fifteen victims of a deadly bus crash under 16 years of age. Instead, the CPSC and the CPSC on the other side. I that occurred in northern New York brought in famous race car drivers— believe that all states should pass a law

BeasleyAllen.com 33 prohibiting the use of an adult-sized work history and driving records, trained drivers who obey safety rules, ATV by a child under 16 years of age. then put the new hires behind the regulations, and statutes. When a state The CPSC should join with Ms. Rabe wheel of rigs with the destructive like Texas is lax on its responsibilities and the groups aligned with her and potential of guided missiles; relating to regulation of the trucking correctly define adult-sized ATVs. Safety industry, and those trucks travel across • When accidents occur, trucking com- has to be a top priority and the CPSC state lines, the citizens of those other panies defend their drivers and often has an obligation to make that a reality. states are put at risk. As mentioned blame the other vehicles—and in Source: Corporate Crime Reporter above, it’s an especially serious problem many cases the dead occupants— in Texas because of the state’s proximity regardless of the evidence. to Mexico. I hope the excellent report- PROBLEMS IN A TEXAS AFFECT CITIZENS IN • They typically fight any release of ing by the Dallas Morning News will get OTHER STATES information about their drivers and the attention of public officials in Texas. Based on a series that appeared vehicles, and wage protracted legal If that happens, and the state officials recently in the Dallas Morning News,it battles to avoid blame. respond, travelers on the highways of appears that the State of Texas has been other states will be safer as a result. • Beyond that, the companies suffer doing a very poor job of regulating the Interestingly, the American Trucking few consequences, in part because trucking industry. As a result, trucks Association is now asking truck manu- the soaring number of trucks on from Texas can create safety hazards facturers to make their trucks so that Texas highways are overwhelming when these trucks travel into other the speed can not exceed 68 mph. regulators and law enforcement offi- states. It should be noted that over the Source: Dallas Morning News cers. past several years the trucking industry in the U.S. has grown at a rapid pace. More than 5,200 people died in acci- MAN PARALYZED IN SKYDIVING PLANE CRASH dents involving large trucks in the U.S. Similar growth has also been the case in FILES SUIT the Lone Star State.The trucking indus- last year. The most comprehensive try’s growth seems to have over- national study,released in March by the A fourth lawsuit against a Connecti- whelmed law enforcement agencies in U.S.Department of Transportation,found cut-based engine-maker has now been Texas.The problem is especially acute in that truck drivers were at fault in at least filed by a paralyzed survivor of a skydiv- that state. It’s where U.S.-based trucks 44% of all accidents between cars and ing plane crash that killed six people in pick up loads at the Mexican border and big trucks.The American Trucking Asso- eastern Missouri. Steve Parrella, who is then transport them across the country ciation, which represents the industry’s from St. Louis, was one of only two sur- to make deliveries. As we have previ- largest companies, claims that trucks vivors of the July 29th crash.The crash ously reported, U.S.-Mexico trade has cause only about 25% of fatal accidents rendered Mr. Parrella paraplegic and he more than doubled since the North involving cars. According to records, is still hospitalized because of his American Free Trade Agreement was when trucking companies are to blame, injuries. The lawsuit, which contends implemented in 1994. About 68% of it’s because truckers drive too fast, don’t that engine failure caused the crash, truck traffic from Mexico enters this pay attention, work too many hours, or names engine-maker Pratt & Whitney; country at the Texas border, according take to the road in poorly maintained Quantum Leap Skydiving Center of Sulli- to federal data.That puts a tremendous equipment—sometimes with the knowl- van, Missouri; and the pilot, who is a responsibility on Texas officials. edge and encouragement of their Quantum Leap co-owner, among others, The Dallas Morning News concluded employers.This is why we have seen an as defendants.The crash occurred soon a seven-month investigation dealing increase in highway crashes involving after takeoff from the airport at Sullivan, with trucking companies in Texas and large trucks in the U.S. which is located about 70 miles south- wrote a series that was most informa- In Texas, the number of interstate car- west of St. Louis.The parents of three tive.Their investigation found that: riers based in that state increased by other crash victims had already filed about 43% in the past five years. The suit.The National Transportation Safety • The trucking companies hire illegal number of registered large trucks in the Board is investigating, but a final report immigrants who struggle to read road U.S. increased 24% from 1994 to 2004. won’t be available until early next year. signs and communicate in English U.S. trucking companies reported a with police and emergency person- record financial year in 2005, generating nel; $623 billion in revenue while hauling • They hire felons, drunks, and drug almost 70% of the nation’s freight.With addicts; all of that being said, the public should be entitled to expect all trucks on the • They make only cursory checks of road to be safety operated by well-

34 BeasleyAllen.com XV. armed forces stationed anywhere in were in critical condition at press time ARBITRATION the world and/or their dependents. because they are premature, but were UPDATE Interest is defined to include all extra not considered in danger from the over- charges and fees of any kind, includ- doses. ing the sale of related products like The hospital offered to pay for family credit insurance. This requirement counseling and provide restitution to all VICTORY FOR MILITARY CONSUMERS AND AGAINST ARBITRATION CLAUSES complements existing federal law, six families affected. Since the over- which requires lenders to lower inter- doses, the hospital has taken steps to I mentioned in a prior section that the est rates to 6% on loans that Service ensure the mistake does not happen Pentagon was putting pressure on Con- members open before they enlist. again.The hospital will no longer keep gress to take action to protect military certain doses of heparin in inventory.All •A prohibition on lenders from basing personnel and their families.That pres- newborn and pediatric critical care loans to Service members on the sure and an outcry from the public units at the facility will require a writing of checks without adequate prompted swift action by a Congress minimum of two nurses to validate any funds in the bank to cover the check, that had heretofore ignored the dose of heparin.This was a tragic occur- or on electronic account access or problem.As you may know,amendments rence that was easily preventable. I wage allotments that allow lenders to bills in Congress don’t have to relate hope it will serve as a wake-up call for priority access to bank accounts or to the subject matter of the bill being that hospital and others who learn of military pay. Loans secured by title to amended. That’s not the case in most what happened. the Service member’s vehicle (Car state legislative bodies. But, that unusual Source: Associated Press Title Loans) are also prohibited. rule in Congress has now paid dividends for consumers at least this once. An •A prohibition against Binding Manda- ILLINOIS DENTIST SUSPENDED AS A RESULT amendment was offered by Senator Jim tory Arbitration Clauses and any other OF CHILD’S DEATH Talent (R-MO) to the Department of type of waiver of any other right to Defense appropriations bill that has now seek legal recourse. State regulators have suspended the become law.It will protect military per- license of an Illinois dentist whose 5- Obviously, the first two items are sonnel and their families against the pre- year-old patient fell into a coma in his extremely important, but the most sig- dations of payday lenders. office and later died.The dentist’s prac- nificant feature deals with arbitration. This will not only protect members of tices were said by the Illinois Depart- Prohibiting arbitration is a major victory the military, which is obviously unbe- ment of Financial and Professional for consumers. For anyone interested lievably important in its own right, but Regulation to pose an “imminent danger the bill, it can be found at: http://naca. it will provoke needed debate on to the public.”The dentist failed to prop- net/MilitaryPaydayLoanLaw.pdf. broader issues of consumer protection. erly monitor the child’s blood pressure, Congress has finally recognized that pulse, and respiration during her treat- binding mandatory arbitration provi- XVI. ment at his storefront clinic.The state sions are unfair as applied to all agency’s complaint said the dentist members of the military who deal with HEALTHCARE recorded that the child was “alert and these loan sharks. How does that corre- ISSUES responsive” on discharge, although her late with the claim made by Corporate mother claims to have found her “coma- America that binding arbitration is tose”in the dental chair. fairer, cheaper, and better for consumers DRUG OVERDOSES KILL INFANTS The child later died at Children’s who deal with lenders? It should be Memorial Hospital in Chicago. She had Three premature infants in Indiana undisputed that mandatory, binding been on life support for four days after died after being accidentally given an arbitration is unfair in any type con- her visit to Little Angel Dental to have adult-sized dose of blood thinner med- sumer transaction between a consumer some teeth filled and others capped. ication at a hospital in that state. An and a large corporation. So now, Con- The 40-year-old dentist faces up to adult dose of heparin, a drug routinely gress has passed one of the most impor- $10,000 in fines for each of four viola- given to premature babies, was given to tant pieces of consumer legislation in tions, which include making false or the babies.They were given the drug, the few past decades. The law’s high- fraudulent representations, professional which is often used to prevent blood lights include: incompetence, and gross malpractice. clots that could clog intravenous tubes, State regulators said the child received • An Interest Rate Cap that prohibits after a pharmacy technician acciden- two injections of diazepam or Valium any lender from imposing an annual tally stored adult doses in the neonatal within five minutes, followed by oral percentage rate of interest of more unit’s drug cabinet. Two other babies Valium, lidocaine, several other medica- than 36% on loans to members of the who also received too-strong doses tions, and nitrous oxide.The combina-

BeasleyAllen.com 35 tion of the drugs at the dosages given of internal organs. The disease is typi- in the country and are dedicated to was inappropriate for the 35-pound girl. cally found in the lining of the lungs aggressively pursuing claims arising out Source: Associated Press (known as pleural mesothelioma), but it of exposure to such a dangerous may also be found in the lining of the product. Mike Andrews in our firm is heart (pericardial) and the lining of the primary lawyer handling these FDA SAYS GLAXO ANTIDEPRESSANT MAY BE abdominal cavity (peritoneal). Short- claims. If you want more information LINKED TO BIRTH DEFECTS ness of breath, cough, and pain in the concerning this litigation, you can GlaxoSmithKline PLC’s antidepres- chest caused by an accumulation of contact him or go to our Web site. sant drug Lamictal may cause birth fluid in the pleural space are often defects in babies exposed to the drug symptoms of pleural mesothelioma. CANCER RISK FOR ALABAMIANS during the first three months of preg- Although a small percentage of mesothelioma cases are difficult to trace nancy.This comes from a notice found Pat Byington, the former Vice-Chair- to a specific source, the only known on the U.S. Food and Drug Administra- man of the Alabama Environmental Man- cause of mesothelioma is exposure to tion’s (FDA) Web site. Babies exposed to agement Commission, recently wrote asbestos. the drug in early pregnancy may have a about an important topic in state news- As a result, it is almost certain that if higher chance of being born with a cleft papers that you may not have seen. Mr. you have mesothelioma (also sometimes lip or cleft palate, a gap in the upper lip Byington, who served as Chairman of referred to as “asbestos cancer”), you or roof of the mouth, according to the the Commission’s Strategic Planning were exposed to asbestos. Although document. Lamictal is an antidepressant Committee, contends that because of an mesothelioma can occur in both men that is used to treat patients that experi- Alabama policy decision, a person is and women, it is more likely to occur in ence seizures or bipolar disorder, which more likely to get cancer in our state men as a result of exposure in the work- the FDA notes are serious conditions than in many of our neighboring states. place decades ago. Most people who that require treatment, even during In 1991, the Alabama Environmental develop mesothelioma have worked on pregnancy.The report was based on pre- Management Commission adopted a jobs in which they inhaled asbestos par- liminary findings by the FDA,which said cancer-risk level to use in regulating the ticles, or are exposed to asbestos dust more research is necessary before a water quality of rivers and streams in and fiber in other ways, such as by final conclusion is reached. Until now, Alabama.The Commission was asked to washing the clothes of a family member Glaxo, based in London, had listed far make a decision that all Alabamians who worked with asbestos, or by home less severe side effects that could result should find important: “How many renovation using asbestos cement prod- from taking the drug, including dizzi- people does the state find acceptable to ucts. There is no known association ness, headache, blurred or double get cancer as a result of the toxic pollu- between mesothelioma and smoking. vision, lack of coordination, sleepiness, tion that industries discharge in water Typically, from the time of exposure nausea, vomiting, insomnia, and rash. under permits issued by the Alabama to asbestos to the first symptoms of Source: Wall Street Journal Department of Environmental Manage- mesothelioma, the disease can take 20 ment?” to 40 years to fully develop. Unfortu- Mr. Byington contends that, despite nately, because of the highly aggressive XVII. being given the opportunity by the U.S. nature of the cancer, the time from diag- ENVIRONMENTAL Environmental Protection Agency to nosis to death is usually less than 24 adopt a more stringent risk level, the CONCERNS months. Because asbestos was widely Commission, with the support of the used in various industrial and consumer Alabama Department of Public Health, products, relating the disease to a spe- adopted a cancer-risk level that was the OUR FIRM CONTINUES TO HANDLE A NUMBER cific asbestos exposure is often difficult OF MESOTHELIOMA CLAIMS least stringent. At present, while and time-consuming. Frequently the Alabama still has the same 1 in 100,000 conclusion is that a case of mesothe- Every year over 2000 new cases of cancer-risk level it adopted fifteen years lioma is the result of cumulative expo- mesothelioma are diagnosed in the ago, Mississippi, Florida and Georgia sure to many different asbestos United States. Our firm has been have all adopted the 1 in 1,000,000 products. Simply put, the continual actively investigating mesothelioma cancer-risk level. exposure to asbestos overwhelms the claims around the country for a good In order to get better information, Mr. ability of the body to fight back. But, while. We currently represent a Byington met with a UAB professor sometimes it is possible to relate expo- number of persons with these claims. emeritus in epidemiology.This professor sure to a specific source and time. In Mesothelioma is a relatively rare but taught risk assessment for twenty years either situation, we are interested in extremely aggressive form of cancer and served on the Agency for Toxic Sub- investigating potential cases anywhere that attacks the mesothelium or lining stance and Disease Registries Board of

36 BeasleyAllen.com Scientific Counselors, a federal agency the Commission, wasn’t reappointed Once the loan balance grows to a that studies the health effects of pollu- when his term expired. In my opinion, certain point, the full principal and tion.The two discussed cancer and pol- that was Alabama’s loss and industry’s interest is due on a now larger loan. lution, and Mr. Byington was reminded gain.We need folks like Pat Byington in Many people purchasing Option ARMs that—along with Alabama’s cancer-risk state government and especially on do not understand the loan.They make level—many of our environmental and boards and commissions that deal with the minimum payments every month health standards do not address suffi- environmental issues and concerns. and are confused to see the loan ciently chronic diseases such as birth increasing.They also believed the loans defects, asthma, and diabetes.The stan- were fixed for a longer period of time dards also do not adequately take into CREATIVE LOAN OFFERINGS DESTROYING and are stunned to see their rates reset- MANY BORROWERS account the cumulative health impacts ting at much higher numbers. Flat of toxic pollution. Now that the housing bubble has housing prices and prepayment penal- Last July, the Environmental Manage- burst, about 20% of homeowners are in ties have left many borrowers trapped ment Commission’s Strategic Planning for a rough ride. Between 2003 and in these loans. Committee unanimously recommended 2006, as housing prices soared, lenders The shame is that these complex a new draft Environmental Management became increasingly creative with their loans were offered to unsophisticated Strategic Plan for the state. One of the mortgage options.The results of this cre- borrowers, and borrowers were not cornerstone goals within the plan is to ativity are such products as Teaser ARMs properly and carefully informed of the “ensure regulatory standards are most (adjustable rate mortgages), Subprime true nature of the loan. Option ARMs protective of health and environment in ARMs, Option ARMs and Interest Only were very attractive loans for brokers the nation based on science and ecolog- loans. As long as home values steadily and lenders. Brokers were often paid ical conditions.” This goal was devel- increased, homeowners were all right. more to sell Option ARMs than tradi- oped by two committee members, Dr. But now that values have leveled and in tional mortgage loans. Lenders were Kathleen Felker and Ken Hairston. Dr. some cases decreased, the results will be allowed to claim the full monthly Felker,a radiologist, is a passionate advo- devastating to many homeowners. payment as revenue on their books cate for breast cancer awareness. Mr. Many of these mortgage products even when borrowers were only Ken Hairston, General Counsel for have been around for a long time, but making minimum payments.These were Alabama A&M University, has been a were reserved for wealthy sophisticated huge incentives to lenders to push champion within the Commission on borrowers.This all changed during the Option ARMs and keep borrowers in behalf of environmental justice. superheated bubble market. Borrowers the dark as to their unsuitability. By the time you read this, the Environ- saw home values skyrocketing and easy mental Management Commission will financing available, and jumped aboard CHICKEN FARMS POLLUTE WATER AND AIR have had an opportunity to move with little awareness of the conse- forward with the strategic plan and the quences. The Teaser ARM offered an Residents in Tahlequah, Oklahoma, are “most protective” goal to set into incredibly low initial interest rate that complaining of the contaminated water motion a re-evaluation of Alabama’s allowed homebuyers to stretch them- of the Illinois River.The residents allege health-based environmental policies, selves into more house then they could that companies like Tyson Foods, which standards, and regulations. If adopted, otherwise afford. Now as those teaser as you know is based in Arkansas, are the result will be fewer cancers, cleaner periods end, interest rates of as low as dumping chicken waste that contains air, land and water, and, most impor- 1% to 2% are resetting at market rates. hazardous chemicals into the river. Fol- tantly,overall healthier Alabamians. Homeowners are now shocked as their lowing a recent trend, states and locali- You may have read earlier where mortgage payments on a $200,000 ties are suing polluters outside their some business groups, such as the Busi- home jump from $725 per month to jurisdiction to stop water and air con- ness Council of Alabama, have opposed $1,340 per month. tamination that respects no borders. In certain parts of this strategic plan. I The most dangerous and misunder- this case, Oklahoma blames Arkansas for don’t know about you, but it is hard for stood of these products is the Option its pollution troubles. Because federal me to understand how any group ARM. This highly complex loan offers laws and regulations are few, the farms would put their personal business inter- borrowers a choice of payment options. in Arkansas and Oklahoma are seeking est above the health of Alabama citi- Borrowers can pay the traditional prin- federal guidance. Existing laws do not zens. If you know someone who has cipal and interest, just the interest, or a currently apply to those who buy cancer, which I am sure you do, then minimum payment that is less than the poultry waste for fertilizer. you will understand why this strategic monthly interest.The deferred interest Oklahoma state poultry officials plan is so important. By the way, Pat left when the borrower pays the blame Bentonville and Fayetteville, Byington, who did great work while on minimum is added to the loan balance. Arkansas for the pollution.The officials

BeasleyAllen.com 37 claim those cities are the fastest working for RX Medical, an online phar- greens. He continues to work as a growing poultry producers, and those macy, and was getting $3 for each licensed pharmacist and is allowed to industries create their own runoff in the patient. dispense medication on a probationary river. In recent months, many states are My advice is to stick with a local phar- license. The company plans to appeal complaining that out-of-state pollution macist to fill your prescriptions. That the verdict. Jurors said they believed Mr. is hurting their tourist industry.A recent means your doctor, who knows you and Kulisek’s deteriorating health was example is Kentucky, which claims its your medical history,and has an oppor- caused by the wrong prescription and tourist industry will be injured if Vir- tunity to see and examine you, will give contributed to his death. Walgreens’ ginia votes to allow Consolidation Coal you a prescription to have it filled.You failure to catch the pharmacist’s thefts Company to discharge water from its then can go to a drug store, and your and signs of addiction played a role in mining operations that would pollute pharmacist will make sure that the drug their verdict.The pharmacist admitted the reservoir Fishtrap Lake. Because of is one that you can safely take. If you that he stole 86,000 pills during the the lack of air and water regulation at want to roll the dice and maybe save a time he worked for Walgreens. the state level, many states are turning little money, then online drugs are fine to the federal government to provide for you. But remember to consider the stricter regulations concerning poultry consequences when you take that route. DR.PHIL AND DIET PILL MAKER SETTLE LAWSUIT waste and water runoff. Source: The Washington Post A settlement has been reached in a PRESCRIPTION MIX-UP KILLS ELDERLY CUSTOMER class action lawsuit involving Dr. Phil of TV fame. Buyers of diet products XVIII. Walgreens must pay $31 million to endorsed by “Dr. Phil” McGraw, the TV THE CONSUMER the family of a 79-year-old man who psychologist, will be eligible for cash CORNER died after being given the wrong pre- refunds or replacement vitamin supple- scription by a Walgreens pharmacist. ments under terms of a $10.5 million Leonard Kulisek slipped into a coma a settlement of a lawsuit alleging that the ALL AMERICANS SHOULD BEWARE OF day after taking the wrong medication products didn’t work as advertised.The ONLINE PHARMACIES and suffered through a series of ill- Shape Up products, which are no longer nesses over the next 22 months before distributed or sold, included shakes, Congressional investigators started he died.The pharmacist who gave the bars, and multi-vitamins made by CSA looking into Internet-based pharmacies wrong prescription admitted he’d been Nutraceuticals of Irving,Texas. Dr. Phil a few years back and for good reason. In popping OxyContin and hydrocodone got into the lucrative weight-loss market 2000 the Governmental Accountability for eight years. He was stealing the pills in mid-2003 with a campaign that Office (GAO) located less than 200 of from the Walgreens stock he managed included advice books, a prime-time TV the online drug outlets. In 2004, the and was responsible for.After the trial, special, and the Shape Up products. GAO found that these sellers of drugs jurors said they believed the pharmacist Facing a Federal Trade Commission via the Internet had grown to 1,400.The was under the influence on the day he investigation into allegations of false online pharmacies will sell anybody pre- gave Mr.Kulisek the wrong medication. advertising, CSA Nutraceuticals stopped scription drugs regardless of their prior Mr. Kulisek, retired from International making the products in early 2004. health history or their current situation, Harvester, was a volunteer tutor at a The class action lawsuit, filed a year and regardless of what other drugs they local elementary school. He had a ago in state court in Los Angeles, alleged may be taking. I am sure that some of history of health problems, but hadn’t that Dr. Phil made false and misleading these outlets are legitimate, but others suffered any major illnesses in the years claims in marketing the supplements. are at least suspect. The risks are so just before the mistake. He also suffered The plaintiffs, who bought the Shape great that all who use the online phar- a stroke before his November 2002 Up products, alleged that instead of macies are putting their health and death. Mr. Kulisek was supposed to get a losing weight, they lost money. The perhaps their lives on the line. pill for gout, but the pharmacist instead regimen required the user to take 22 An interesting bit of information gave him an insulin pill that dropped his pills daily at a cost of $120 a month. involves a doctor in Rockingham, North blood-sugar levels dramatically, putting Under terms of the settlement, class Carolina, who told the North Carolina him into a coma and causing him members can receive a cash refund of Medical Board that he had treated kidney troubles. Mr. Kulisek filed his $12.50 for every box of Shape Up they 244,000 patients in only 8 months. He lawsuit while he was still alive. It was bought, up to four boxes. If they don’t had been approving questionnaire continued after his death by his family. want that, they can elect to receive requests for medications and had never The pharmacist went through drug two bottles of Nutrilite Daily Multivita- seen a single one of the patient’s who rehabilitation and was fired by Wal- min/Multimineral supplements for each were getting the drugs.The doctor was

38 BeasleyAllen.com box of Shape Up, up to eight bottles. this without being forced to do so. But, XIX. Since his liability insurance carrier will that probably won’t happen. So Con- RECALLS UPDATE pay the cash involved in the settlement, gress and state legislative bodies should Dr. Phil will not be personally liable for get involved. paying any of the settlement funds.The Source: USA Today Each month, I attempt to mention class includes more than 100,000 some of the product recalls that we people. Class members must file a valid believe to be significant.The following claim by January 22, 2007. Details of the ATTORNEYS GENERAL SETTLE CASE AGAINST JEWELRY COMPANY recalls fall in that category: agreement can be found online at http://www.shapeupsettlement.com or A jewelry company that signed Mitsubishi To Recall 27,367 Mini- toll-free at (888) 212-5570. people up for credit insurance without vans Source: LA Times their consent must stop the practice Japan’s Mitsubishi Motors Corp. will and repay their customers, according to recall more than 25,000 minivans an agreement reached last month with CREDIT CARD COMPANIES PREY ON over an airbag defect. Mitsubishi STUDENTS the Attorneys General of Alabama and Motors, Japan’s fourth-largest 17 other states. Under the settlement, automaker, will be recalling 27,367 There is a tremendous need for a Friedman’s Jewelers will have to “i” minivans due to a defect in how nationwide ban on credit card marketing provide clear disclosures of extra insur- passenger-side airbags were packed on college campuses. College students ance charges to customers who apply that could prevent them from inflat- tend to have less financial experience for credit.This was a case of fraudulent ing fully.The minivans affected by than older adults, making them more vul- conduct, which took advantage of low the recall were produced between nerable to the hard-sell marketing tactics income people by a company that has December 25, 2005, and July 22, of credit card companies.Although credit about 420 stores nationwide. The suit 2006, all sold in Japan. Mitsubishi card marketers have aggressively was filed in Texas against Friedman’s in will also implement a service solicited students for years, the activity December 2004. program to repair a gear shift defect has intensified. Some companies solicit The company had routinely sold in 11,610 “i” minivans free of by phone or e-mail, and others flood stu- credit, property and disability insurance charge.The vehicles involved were dents’ mail boxes with credit card appli- to low-income customers who applied produced from January 10th to cations. Marketers even set up tables in for credit to buy jewelry.The charges for April 4th of this year.All were sold heavily traveled areas on college cam- credit insurance sometimes exceeded in Japan. puses offering free sandwiches or pizzas $100. Even though the customers didn’t to students in order to get them signed request or approve the coverage, they Mitsubishi Will Repair Sensor up for credit cards. paid the charges. Some customers were Defect Unfortunately, many students leave paying for credit insurance even though In a service program, the Tokyo- college with a tremendous amount of they hadn’t signed the section of the based Mitsubishi will repair a credit card debt.This has caused a great purchase contract that authorizes the sensor device defect in activating deal of misery for young people just coverage. Customers who noticed the airbags in 16,954 Outlander sport starting out in the real world of work. insurance charges and complained were utility vehicles and sold in Japan, as Colleges should draw the line and falsely told the coverage was mandatory well as about 120 units sold abroad. restrict access to the credit card compa- to get credit from the store. The service program will also be nies. Instead, many colleges are earning Alabama customers can apply for implemented in exporting coun- up to millions of dollars each in annual restitution through the Attorney tries, according to the respective fees by giving banks the right to market General’s office but must do so by country’s safety rules. The Out- credit cards on their campuses. It January 11, 2007. Customers in other landers were produced between appears that Bank of America is one of states should apply through the Attor- October 9, 2005, and March 4, 2006. the worst offenders.That bank has deals ney General’s office in their state. Other with about 700 colleges nationwide, states included in the settlement were: Ford Recalls 140,000 Vehicles which is a result of its acquisition of Arkansas, Delaware, Florida, Georgia, Illi- Over Faulty Doors MBNA. Even some alumni associations nois, Indiana, Kentucky, Louisiana, Mary- Ford Motor Co. is recalling over make billions in return for giving banks land, Mississippi, Missouri, North 145,000 vehicles in the United exclusive access to solicit alumni and Carolina, Ohio, Oklahoma, South Car- States for a range of problems from students. It’s time to take action to olina and Tennessee and Texas. defective latches to faulty drive- protect college students from the credit Source: Associated Press trains.The recall involves 139,537 card companies.The colleges should do 2005 model-year Five Hundred and

BeasleyAllen.com 39 Montego sedans and 2005-2006 Bench is a 20-inch tall plastic toy have issued recalls include Dell model-year Freestar minivans tool bench with an animated red Inc.,Apple Computer Inc., Lenovo because the side door latches may toy saw,a yellow toy drill and a blue Group Ltd., Toshiba Corp., Fujitsu let in water. This may cause the toy vice. The toy talks and makes Ltd and Panasonic.The batteries in latch mechanism to freeze in cold various sound effects.The product all of these cases, with the excep- weather, and the door could open also includes a toy hammer, screw- tion of Panasonic, are manufactured while the vehicle is moving. driver, two 2-1/4-inch plastic by Sony Corp., and may pose a fire screws, two 3-inch plastic nails and hazard from small particles causing Separately, Ford is also recalling pieces to build a small toy plane. the battery to short circuit. 6,164 Escape hybrid sport utility The red Playskool logo is on the vehicles from 2006 model year front of the brown surface of the because a drivetrain shaft may frac- tool bench. XX. ture. If a fracture occurred, it could cause the vehicle to move, even in The toy was sold at Toys R Us,Wal- FIRM ACTIVITIES the park position, the National Mart, Target, KB Toys stores and Highway Traffic Safety Administra- various other stores nationwide EMPLOYEE SPOTLIGHTS tion (NHTSA) said. Ford dealers will from October 2005 through Sep- inspect the drivetrain shaft and tember 2006, priced at about $35. replace it if necessary. The CPSC said consumers should Cole Portis immediately take the two toy nails Cole Portis serves as Section Head of You can get more information on away from children and contact our Product Liability Section. He and these recalls by going to NHTSA’s Playskool to get information on his staff have successfully handled 34 Web site,which is www.nhtsa.gov. returning the nails for a $50 certifi- cases that were tried or resolved on Playskool Toy Bench Recalled cate for another Playskool product. behalf of clients for more than one After Deaths Reported For additional information, con- million dollars. Cole believes it is impor- sumers can call Playskool at 800- tant to use the gifts God has given him Toymaker Playskool and the U.S. 509-9554 or go to the company’s in our community.Thus, as an attorney, Consumer Product Safety Commis- Web site at http://www.playskool.com. he feels compelled to participate in sion (CPSC) issued a recall in Sep- legal organizations. He is a past presi- tember of about 255,000 of its Segway Recall Scooters dent of the Montgomery County Bar “Team Talkin’Tool Bench” toys fol- There has been another scooter Association (2002). Additionally, Cole lowing the deaths of two young recall by Segway. The company’s served as President of the Alabama children. Playskool, a unit of Hasbro calling back more than 23,000 of its Young Lawyers Association (2000- Inc., said it had received reports Personal Transporters because of a 2001), President of the Montgomery that a 19-month-old boy from Mar- software glitch that could throw County Trial Lawyers Association tinsburg,W.Va., and a 2-year-old boy the wheels into reverse, causing (1999), and President of the Auburn Uni- from League City,Texas, suffocated riders to fall off. The Consumer versity Bar Association (1999).He is also when oversized, plastic toy nails Product Safety Commission has told an active member of the Trial Lawyers sold with the tool bench toys people to stop using the self-balanc- for Public Justice. became lodged in their throats. ing scooters immediately. It says Cole is an active member of Morn- ingview Baptist Church, where he The company said it is recalling the Segway has received six reports of serves as chairman of the Deacons. In product even though the toy nails people suffering head and wrist addition, he teaches the College/Career are not considered a small part, and injuries.The company is offering a Sunday School class and sings in the the toys are intended for children free software upgrade to fix the choir. Last year, Cole served as President age 3 and older.According to CPSC problem. This is the second time of the Jimmy Hitchcock Award, a presti- spokesman Scott Wolfson, the pack- the scooters have been recalled gious award honoring Christian student- aging for the toy did not have a since they first went on the market athletes in Montgomery.He is a member choking hazard warning because in 2002. of the Advisory Board at Auburn Univer- none of its parts is considered to be The Battery Recalls Continue sity–Montgomery.He is a member of the a “small part” as classified by the board of directors for Trinity Presbyter- agency. The typical measurement The tremendous number of laptop ian School and Character at Heart, an for a small toy part is 2-1/2 inches battery recalls may leave some cus- organization that implements character in length and 1.75 inches in width, tomers feeling confused as to what education in our schools. Finally, Cole or smaller. The Team Talkin’ Tool is going on. So far, companies that recently completed his tenure on the

40 BeasleyAllen.com Board of the Alabama Head Injury Foun- bility Section. Kay stays very busy lending fraud litigation. Rhon is currently dation, a dedicated group established to helping JP deal with clients and prepar- involved in toxic exposure cases in Col- raise money for those who suffer trau- ing their cases for trial. Kay is married to orado, Minnesota, New Jersey, Florida, matic brain injuries. Jeff, who is employed with Honeywell Georgia, and Alabama, as well as the Cole is married to the former Joy International as an Account Executive, investigation of a toxic exposure claim in Mikell of Millbrook and they have two and they have twin girls, Erin, who is in Canada. In addition to his legal work, daughters and two sons. Their most 7th grade at Prattville Jr. High School, and Rhon is active outside the firm. He cur- recent addition to the family is a three- Jessica, who is in 6th grade at Daniel rently serves on the Executive Board of year-old boy adopted in China. Cole is a Pratt Elementary. Kay and Jeff are the Family Sunshine Center. He and his very good lawyer who cares deeply for extremely proud of their girls. wife, Deanne, are actively involved in the his clients and works hard for them. He Kay graduated from Prattville High Sunshine Center and regularly donate also treats the lawyers and support staff School in 1982 and then from John M. their time and money to help this worth- in his section fairly and respects them as Patterson State Technical College in while organization. individuals with value and worth.To put 1983. During 1993, she attended a con- Each day, at least three children die of it simply—in dealing with people, Cole tinuing education course at Auburn Uni- abuse or neglect. Domestic violence is follows The Golden Rule! versity at Montgomery (AUM) and the number one killer of women. The received her Legal Assistant certificate Family Sunshine Center exists to end Keith Scott as a result. In 1998, Kay attended a family violence and foster hope and Keith Scott, who came to work for the course, “Partners in Policymaking of healing in seven Alabama counties: firm as an Investigator in June of 2001, Alabama,” which gave her the skills Autauga, Butler, Chilton, Crenshaw, currently works in our Personal needed to advocate for her daughter, Elmore, Lowndes, and Montgomery.One Injury/Products Liability Section. He Jessica, who has cerebral palsy. This of the Center’s strategies is to provide also helps out with any other investiga- program involves and empowers indi- life-saving information via their Web tive needs for the firm. Needless to say, viduals with developmental disabilities site, www.familysunshine.org.You can because of our caseload volume, the and their families in the policymaking find more information about what to do investigators have a busy schedule.An arena. It also educates the participants if you or someone you know is a family important part of their work involves about current local, state and federal violence victim on this Web site. helping the lawyers work up product issues; and equips them with the knowl- liability cases. Often, Keith and the other edge of the policymaking process. Kay investigators have to locate vehicles and previously served on the Mayor’s BEASLEY ALLEN HOSTS SEMI-ANNUAL parts for use during trials. Serving sub- BLOOD DRIVE Council on Disabilities established by poenas on a daily basis is also part of Prattville Mayor Jim Byard, which their work. Keith previously worked for Our firm held its semi-annual Blood brought awareness to the City concern- st the Montgomery Police Department, Drive on September 21 with LifeSouth ing the special needs of individuals. spending 14 years in the Detective Divi- Community Blood Center. The event Kay enjoys going to Prattville football sion before his retirement. Keith gradu- attracted a good number of donors from games and University of Alabama games ated from Troy State University with a the firm.All donors received a free T-shirt whenever possible. She really likes to degree in Criminal Investigation. He is and cholesterol screening. LifeSouth is a spend time with family and friends and also a graduate of the Police Academy. primary blood supplier for Montgomery, spends as much time as possible out- Keith and his wife, Marion, have two Autauga, Elmore, and Crenshaw Coun- doors, whether it be walking/jogging or children. Their 18-year-old daughter, ties. LifeSouth supplies 100% of the just working around the yard. Kay is a Meredith, is a freshman at Auburn Uni- blood supply for Baptist Medical Center very good employee and does excep- versity.Their son, Cy, who is 14 years East; 99% to Jackson Hospital and 96% to tional work for the firm and the clients old, attends 9th grade at Prattville High Baptist Medical Center South. We con- JP represents in product liability cases. School. Keith and his family are active sider participating in the blood drive to We are fortunate to have her with the members of Prattville United Methodist be our civic responsibility. firm. Church.Away from work, Keith enjoys hunting and fishing. Keith is an excel- EMPLOYEES SUPPORT NATIONAL FUNDRAISING lent employee and we are fortunate to SHAREHOLDER SERVES ON FAMILY SUNSHINE CAMPAIGN have him with us. CENTER BOARD In honor of Breast Cancer Awareness Kay Cox Rhon Jones joined the firm in 1994 Month, our firm’s employees partici- Kay Cox, who has been with the firm and now manages the Toxic Torts Section pated in the eleventh annual Lee for over three years, serves as Legal Sec- of the firm. He also maintains an active National Denim Day®. Lee Jeans invites retary for JP Sawyer in our Products Lia- practice in both business and predatory companies and organizations nation-

BeasleyAllen.com 41 wide to participate each year by allow- not been the case in some of our appel- folks who pay Skip well expected me to ing their employees and members to late courts around the country. The respond in kind. I can’t say that the wear denim in exchange for a $5 dona- powerful special interests representing thought never crossed my mind. tion to the Susan G. Komen Breast oil, insurance, and others in Corporate Instead, I would simply ask those of you Cancer Foundation. On October 6th, America have literally taken over in who will to pray for Skip. Even though I people all over the country joined some of these courts. When you see didn’t like what he wrote, I realize he together in an effort to raise awareness courts in a state like Alabama with not a believes that, in order to stay on their and funds for the fight against breast single African-American serving on any payroll, he has to write whatever his cancer. Because the event was held on a of the three appellate courts, something bosses tell him to write.That’s sort of Friday and our firm already allows is badly wrong with the system. Special sad, but I forgive him and am totally at employees to wear jeans on Fridays, we interest domination of our appellate peace with Skip regardless of his allowed our folks to wear their denim court system in Alabama is very bad for motives or those of his bosses. on a Monday.We had a good number of our state and its people.We have some employees who participated, wearing very good judges who serve on our their pink-ribbon pins and their denim. appellate courts and who try hard to be XXII. The firm collected a considerable fair and impartial. But, those judges have SOME PARTING amount for the most worthwhile cause. become victims themselves of a broken WORDS system.When you get down to it—all a person should expect from a judge is to XXI. have a level playing field with the rules SOME CLOSING and law being followed by that judge in I continue to get a good number of responses to things written in this part OBSERVATIONS a fair and impartial fashion.We must get the big money that is being spent in of the Report. An example of one judicial elections out of the system. Judi- response from a reader reminded me of cial elections should not be required to a prayer that is displayed at Duquesne This year congressional elections run as Democrats or Republicans. University Law School in Pittsburgh, around the country are more critically Neither should we allow the candidates Pennsylvania. I recommend this prayer important than ever. The individuals to be attacked by shadow groups— to all of our readers who are lawyers or who have made up the Republican lead- funded by special interest groups— law students and even to judges. In fact, ership in both the House and Senate which don’t have to disclose the source starting any journey in life asking for since the so-called Republican take-over, of their funds. In Alabama, we must fix a God’s guidance should be the rule and have become so controlled by powerful badly broken system of electing judges, not the exception: special interest groups that they have but that’s for another day. Almighty God, the Giver of been almost totally ineffective insofar as In the short term, the elections on Wisdom, without whose help reso- issues that affect the American people November 7th must be addressed. Find lutions are vain, without whose are concerned. In my opinion, it’s high out all you can about the candidates blessings study is ineffectual, time for a change in Washington. The who are running for judicial offices, enable me, if it is Thy will, to failed policies of the Bush Administra- including where their money comes attain such knowledge as will tion, combined with the domination by from and what groups are supporting qualify me to direct the doubtful lobbyists who control Congress, have them. Look past the television ads, and instruct the ignorant, to placed our nation on a downhill slope. which may or may not reflect the real prevent wrongs and terminate Over our history, we have been a great views of a candidate, to learn who those contentions, and grant that I may nation—respected and even feared candidates really are, and then select use the knowledge which I shall when fear became necessary—and that qualified persons who don’t have attain to Thy glory and my own greatness can now be restored. agendas to serve as judges in our court salvation. Amen. However,the current group in charge in system. Washington has proved that they are Finally, I want to mention an old Samuel Johnson’s Prayer Before not up to the challenge. Hopefully, we friend who has had a few bad things to the Study of Law will have a new direction in Congress say about me recently. Skip Tucker, who th I can’t think of a better way for any and in the country after November 7 . is a hired gun for a politically active The elections on the state level are person connected in any manner to the group in Alabama, wrote all of the news- law to start out on their initial journey! also very important. That is especially papers in Alabama and had some pretty true when it comes to judicial elections. It’s also a good prayer for even an “expe- rough things to say.A few of the papers rienced”lawyer like me to start each day Ordinary citizens are entitled to a level even printed his remarks. I suspect the playing field in the courts, and that has with. It will keep us on the right track

42 BeasleyAllen.com and that’s vitally important. take a look at what the Bible tells us: When we really put God first in our Another Bible verse was sent in me lives and then follow up on that priority, “A son honors his father, and a by a fellow lawyer, who like me, repre- we will receive blessings over time that servant his master.If then I am the sents people who have problems of are beyond my ability to describe. It is Father,Where is My honor? And if I some sort. I thought about sending it on good to reflect back on what Jesus had am a Master, Where is My rever- to some of my friends in the Legislature to say concerning our relationship with ence? says the Lord of hosts to you and to others who hold public offices, the Father.The following verses say it priests who despise My name.Yet but decided against it. Instead, I will well: you say, ‘In what way have we pass it on to all of our readers. despised Your name?’ “ ‘You shall love the Lord your God Woe to those who enact unjust with all your heart, with all your “You offer defiled food on My altar. statutes and who write oppressive soul, and with all your mind.’This but say, ‘In what way have we decrees, depriving the needy of is the first and greatest command- defiled You?’ By saying, ‘The table judgment and robbing my ment.” of the Lord is contemptible.’ peoples’ poor of their rights, Matthew 22:37, 38 making widows their plunder, and And when you offer the blind as a orphans their prey. sacrifice, is it not evil? And when There doesn’t seem to be any place you offer the lame and sick, is it for less than our best if we truly follow Isaiah 10:1-2 not evil? Offer it then to your gov- that commandment. But for some As we travel along the many paths ernor! Would he be pleased with reason, we all seem to add a little bit to that life takes us, at times we all tend to you? Would he accept you favor- it, and when we do, that’s when the get so busy or distracted that we don’t ably?”says the Lord of hosts. trouble begins. On all too many occa- always have our priorities in order. sions, we surely don’t like to be put to You also say, ‘Oh, what a weari- Many of us, and that certainly includes the test. But when we truly give God ness!’And you sneer at it,”says the me, are willing to serve God, but only if the place of highest honor in our Lord of hosts.“And you bring the it fits into our schedule or doesn’t take hearts, we will then put Him first in our stolen, the lame, and the sick; thus too much effort or time. I must confess everyday lives.We will then offer Him you bring an offering! Should I that I haven’t always put God first in my the best we have without ever having to accept this from your hand?” says life and I certainly haven’t given him my be reminded.We can find joy in serving the Lord. best. God really expects our best and our Lord and that’s really what this life can’t be satisfied if we only assign Him “But cursed be the deceiver Who is all about! second or third place on our priority has in his flock a male, And takes list. Regardless of the circumstances, a vow, but sacrifices to the Lord God never asks for more than we can what is blemished— for I am a readily give. But He does ask for the great King,”says the Lord of hosts, very best that we have and can give. “And My name is to be feared That is just as certain as the sun rising in among the nations. the east each morning and then setting each night on schedule in the west.Let’s Malachi 1:6-8, 13 & 14.

To view this publication on-line, add or change an address, or contact us about this publication, please visit our Website: BeasleyAllen.com

BeasleyAllen.com 43 218 COMMERCE STREET (36104) POST OFFICE BOX 4160 PRESORTED MONTGOMERY,ALABAMA 36103-4160 STANDARD (334) 269-2343 U.S. POSTAGE TOLL FREE PAID (800) 898-2034 MONTGOMERY,AL TELECOPIER PERMIT NO. 275 (334) 954-7555 WEB PAGE www.BeasleyAllen.com RETURN SERVICE REQUESTED BeasleyAllen.com greater than the quality of legal servicesgreater than the quality of legal other lawyers. performed by No representation services is made that the quality of legal to be performed is