Corp Reform - Not Tort Reform

Waterboarding

You know what pisses me off?  The fact that no one wants to answer whether waterboarding is torture, and they refuse to answer on national security grounds.  This makes absolutely no sense.  Allow me to debunk some arguments.

1. "But if we say we use it, so might the enemy!"  Nope, the enemy is too busy beheading us.  I'm sure it's a horrible experience, but I'll take waterboarding any day over beheading.
2. "It's a special proprietary secret on how we do it."  Sorry, that cat's out of the bag too.  See Wikipedia, CNN, etc.
3. "If they know we don't use it, they'll be emboldened!"  Get real.  We're dealing with people who tape explosives to themselves - waterboarding isn't likely to scare them.  It also can't possibly be a deterrent, considering we also kill them.
4. "If they know we use it, they'll seek revenge."  See argument 1.

The only reason not to answer the question is because (a) we use it, and (b) we're afraid of public condemnation.

Technorati Tags: Waterboarding

Edwards ends his campaign. I'm sad.

(sigh)  I blame the media for this.  They've been so caught up with reporting "Oh my god, a black man and a woman are running for President" that they had no use for a white guy... nevermind who is the most qualified for the job.

ABC News has learned that Edwards made the decision to bow out in the last two days. Telling signs that he was dropping out included his canceled scheduled campaign stops in the Feb. 5 states of Alabama and North Dakota. Instead, the Edwards campaign announced yesterday he was going to New Orleans to make a "major poverty address." Edwards was also scheduled to go on the air yesterday in several Feb. 5 states with television ad that had been delivered to local television affiliates -- but the ads did not go up as scheduled.

ABC News: 'It Wasn't Going to Happen': Edwards to Abandon Presidential Bid

I think Edwards was the most electable candidate.  Maybe I'm just overly biased against the south, but I just don't think that your average redneck is capable of voting for a black man or a woman.  You've gotta remember that in a good portion of the country - especially the south - it's not politically incorrect to use "the n word" in public.  If anything, saying "African American" would be considered inappropriate.  I truly hope that my beliefs are wrong and southern voters have no problem voting for a minority... but I'm very skeptical.  Yes, Obama did very well in South Carolina.  But everyone who voted for him was a Democratic primary voter.  Primary voters of any party aren't your average voters.  I'll go ahead and pay lip service to the fact that a lot of blacks voted for Obama, but I don't think race is nearly as relevant in a primary.  It's not like those people who voted for Obama just because he's black are going to vote Republican if Obama doesn't get the nomination. 

I've got a very bad feeling that today marks the day the Dems lost the 2008 Presidential election.   But maybe I'm wrong, and I'm overestimating the amount of racism and sexism in the country.

Technorati Tags: John Edwards, 2008 Election, Racism, Sexism

A Chemical Company With a Good Sense of Humor

I don't know anything about Lyondell Chemical Co. other than what I read in this brief article, so don't take this as an endorsement of them as a whole.  But I do wholeheartedly endorse this particular practice:

The recent meeting that Lyondell Chemical Co. held for its outside litigators was, for the most part, a staid and conventional affair. The Houston-based firm assembled 90 lawyers at the local Four Seasons Hotel to review recent cases and discuss upcoming issues. But the daylong session also featured something that you won't see at any other corporate conference: knighting ceremonies. ...

Each first-time honoree was given a four-foot-long sword -- unsharpened, but still looking like it could inflict serious damage. Four repeat winners received a bronze statue of a knight on horseback. And all were celebrated by Speelman with mock-heroic proclamations describing their deeds.

During the meeting's final ceremony, for example, Speelman called up Michael Nilan and Scott Smith of Minneapolis-based Halleland Lewis Nilan & Johnson. The two had "sojourned across the land," Speelman proclaimed, "guarding against marauding hordes." But then, "Lo! A summons was issued from the faraway country of Wisconsin, where the Enterprise was attacked yet again by its lead paint adversaries." (Lyondell was sued by a Wisconsin resident who claimed injuries from paint...)

Behold the Lawyers of the Round Table

Recognition like this will motivate lawyers in a way that hourly fees can't; money can't buy morale.

Technorati Tags: Lyondell, Knights, Round Table

Sprint: "It's our policy" to break the law

Every now and again, I get a reminder of why I want to be a plaintiff's lawyer.  This morning, my mother called to let me know she's canceling our Sprint cell phone plan.  We're on a family plan with 4 lines.  We've been customers for a little over seven years, and have never had any disputes or late payments.  But last month, my parents happened to look through their Sprint bill and discovered something interesting.  For the last 3 and a half years, Sprint has been charging us about $6 bucks a month in Texas state and local taxes.  The problem is that none of us have lived in Texas for 3 and a half years... and Sprint has also been charging Nevada state and and local taxes.  Obviously, that's about $250.00 that we shouldn't have paid Sprint.

Needless to say, we disputed that with Sprint and asked for a credit.  It's taken about a week of telephone tag, but we finally heard back from Sprint.  They're only willing to refund the past three month's worth of illegal taxes because it took so long for my parents to discover their error.  That's just "their policy."

Why is it that it's OK for a big corporation to have a policy of ripping off consumers, but it's horrible for consumers to rip off big corporations?  What do you think would happen if we underpaid Sprint $6 bucks a month for three years, and when caught told Sprint that we'd only refund them three month's worth because it took them so long to catch our error?  I imagine they'd use the oppressive credit reporting system to blackmail us into paying.

The odds are that this will probably end up in court because Sprint plans on charging $800 in early cancellation fees, when they clearly breached their contract.  Let's be honest - it will be ridiculous to go to court over this.  But what's the alternative?  Letting Sprint overcharge us because it's too costly to go to court?  To hell with that.  I once spent $160 in filing costs over an $18 overcharge that a notoriously corrupt company refused to correct for me.  It took three months, but they settled and gave me my $18 and my filing costs.  Again, a ridiculous lawsuit.  But I'll be damned if I was going to let someone steal twenty bucks for me.

I was fortunate enough to be able to file that suit myself.  And my family is fortunate enough that my father is an attorney, so he'll be able to handle any legal matters himself.  But the millions of consumers out there who get ripped off and aren't attorneys don't fare as well.  No lawyer will touch cases like these on a contingency basis because the dollar amount is so small, and no rational consumer will spend $1,500+ to hire an attorney to recover my $20 or my parents' $250. 

Meanwhile, as consumers across the country are ripped off to the tune of millions - perhaps even billions - of dollars a year, corporate America has convinced us that "frivolous lawsuits" are a drain on the economy and that we need to make it harder to sue them.  Too bad no one wants to make it harder for corporations to rip us off, eh?

Why are mandatory arbitration clauses so prevalent in consumer credit card agreements?

Mandatory arbitration agreements have been getting a lot of attention lately, particularly because of the high rate of "wins" when a creditor is a plaintiff.  This win rate has been placed as high as 95%.  The "reform" movement is quick to suggest that the reason the win is artificially high because there are so many default judgments in credit card agreements.  I agree with that hypothesis.  The vast majority of debtors will simply not respond when sued or taken to arbitration.  Generally, people who get 3-6 months behind in their bills do so because they don't have enough money to pay their bills - let alone to hire an attorney to defend them for not paying their bills.  But where I disagree with the "reform" crowd is why I believe mandatory arbitration clauses are so prevalent in credit card agreements. 

The "reformers" suggest that credit card companies favor arbitration because it is (a) cheaper and easier than court proceedings, and (b) prevents "deadbeats" from driving up the cost of litigation.  Note that the latter claim acknowledges that defendants can and do drive up the cost of litigation; reformers usually attribute such tactics to plaintiffs, when it's actually plaintiffs who have the greatest incentive to move litigation along. 

Credit card companies know that perhaps 90 out of 100 people aren't going to respond to legal action.  Knowing this, the credit card companies obviously have an incentive to use the cheapest legal method to collect the debt.  That's arbitration, right?  Wrong.

The process of suing a debtor or taking a debtor to arbitration is so similar that there won't be any difference in legal costs for the creditor.  In either case, the creditor's attorney will have to draft a 1-2 page complaint that alleges a few basic facts: That the debtor has an account with the creditor and that the debtor owes the creditor X amount of dollars.  Any competent lawyer can draft such a complaint in 30 minutes.  Any competent lawyer who does collection work routinely can draft such a complaint in 5 minutes - debt collection firms have automated software that can crank out complaints that quickly. 

Once the complaint is drafted, the next step is to either file it with the court and serve it upon the debtor, or to initiate the case with the arbitration agency and serve it upon the debtor.  The National Arbitration Forum is the largest arbitration company in the country, and is used by many, if not most major credit card companies.

Let's compare the cost of taking a debtor to arbitration vs. taking a debtor to court in the two populous states of Texas and California.  The table below indicates the cost of filing and serving a complaint requesting $4,999, $7,499, and $25,000 in an NAF arbitration proceeding, in a Texas court, and in a California court: 

In California and Texas, it is much cheaper to commence an action in court as opposed to arbitration.  I have been unable to find a comprehensive listing of court filing fees by state, but the handful of states I checked are in line with the pricing of these states.  As the table shows, it can be over five times as expensive to take a debtor to arbitration than it does to take him or her to court.  So just to initiate the legal action, the courts have a substantial cost advantage over the arbitration system. 

Again, recall that evidence suggests over 90% of these actions result in a default judgment.  It's also not cheaper to obtain a default in arbitration than it is in court.  In arbitration or in court, the procedure to get a default judgment is the same: File a motion requesting a default judgment.  The motion in either forum will be a one or two page document that explains that the debtor failed to respond to the lawsuit/claim in the required amount of time.  The motion will then ask the court or arbitrator to grant a default judgment.  An arbitrator will generally grant a default judgment without the necessity of a hearing.  Many judges will grant a default judgment without a hearing, but some won't.  If a judge does require a hearing, it will be very quick- 15 minutes or less.  I've seen them done in as few as five.  Even if it takes an attorney a full hour at $200 an hour to get through the hearing, getting a default judgment through arbitration is still more expensive than getting a default in court.  Plus, it's easier to enforce a default judgment from a court (levying bank accounts, etc.) than it is to enforce a default from an arbitrator.  All of this evidence suggests that if you're planning on winning a majority of your cases through default judgments, it's smarter to go to court to do so.  So why do creditors put in mandatory arbitration clauses that prevent them from taking debtors to court? 

Because mandatory arbitration clauses prevent debtors from taking creditors to court.  Credit card companies get sued routinely for violations of such acronyms as the Truth in Lending Act (TILA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Deceptive Trade Practices Act (DTPA), and a variety of other state and federal laws.  In addition, many of these lawsuits turn into class action lawsuits, which the "reformers" constantly argue are an affront to God.  By placing mandatory arbitration clauses in their contracts, credit card companies get to eliminate those evil class action lawsuits before they're even filed. 

I was inspired to write this post because the "reform" movement has been making a false argument.  They've been arguing that mandatory arbitration clauses are used because it's so much cheaper to "go after deadbeats" in arbitration than it is to court.  Therefore, mandatory arbitration clauses benefit consumers who do pay their bills because the cost savings is passed on to them.  This is plainly false because it's more expensive to "go after deadbeats" in arbitration than it is to use the court system. 

* In Texas, the jurisdictional limit for the Justice of the Peace courts is $10,000.  Thus, any suit for $10,000 or below can be brought in JP court, where filing fees are between $10 and $20, depending on the county.  Sheriffs will personally serve a defendant for fees ranging from $50 to $70, depending upon the county.  The figure of $72 assumes a filing fee of $17 and a service fee of $55.  Depending upon the county, filing and service costs may differ by $10 or so.  The filing fee in all County Courts of Law in Texas is $232, and the jurisdictional limit of those courts are $100,000.  The $287 figure was derived by adding $55 for service of process to the $232 filing fee.

** In California the jurisdictional limit of small claims court is $7,500.  Filing fees vary from county to county, but not by more than a few dollars.  I used an average fee and estimates the service of process fee of $50.00, which seems to be the going rate in most major metropolitan areas of California.  Sometimes this means using the Sheriff, other times it's a third party process server.  For more information on California court filing fees, visit http://www.courtinfo.ca.gov/selfhelp/lowcost/getready.htm#fees

A Personal Story about MICRA and Defensive Medicine

About a month ago, my mother-in-law discovered a boil under her arm.  It didn't go away after a couple of days, so she tried to pop it unsuccessfully.  The next day it had swollen up to the size of a golf ball, so she went to her doctor.  About a week after she first discovered the boil, her doctor determined it was an MRSA infection and needed to be lanced.  It was lanced around 12/20, and my mother-in-law was given antibiotics and ordered to stay in bed.

She did stay in bed, but her condition worsened over the next few days.  She was constantly tired and had no appetite.  On Christmas morning, she had chest and back pains, and trouble breathing so my brother-in-law took her to the emergency room.  The two of them spent most of Christmas day in ER, with her receiving IV fluids because she was so dehydrated.    Despite the possible signs of a heart attack, the staff didn't investigate further; they told her the chest and back pains were simply caused by a flu.  My mother-in-law was released from the ER later that evening.  Upon her return home, she was too tired to even talk to my wife.

She woke up very early in the morning, and her symptoms had worsened.  She couldn't catch her breath and was very panicky.  My brother-in-law called 911 and she was taken to the hospital via ambulance.  Despite her serious symptoms, the paramedics admitted her as a "Code 1," which is the lowest-priority.  Within an hour of her arrival at the hospital, she started to crash.  She was taken to the ER - finally - and was then intubated.  My brother-in-law called my wife and she immediately began looking for flights to see her mother. 

While we were looking for flights, my brother-in-law called again. 

He informed us that my mother-in-law's condition had stabilized and she was off the ventilator.  My brother-in-law was going to meet with a doctor shortly and he would call us to let us know what was going on.  He called about 30 minutes later and could say only, "she's gone." 

At only 53 years old my mother-in-law passed away on 12/26/2007.  The doctors told my brother-in-law that "she was so cold and dehydrated that her heart just couldn't cope."  At 3:00am on the 27th, my wife caught the first available flight to California to be with her brother and assist in settling her mother's affairs.  As an aside, almost all airlines have eliminated bereavement fares. 

I've spent the last few weeks grieving, as I truly loved my mother-in-law.  She was a kind, supportive, and funny woman who never - not once, not ever - caused me any strife or trouble.  I couldn't have asked for more.  I will miss her always.

My suffering of course pales in comparison to that of my wife and her brother.  Not a day has gone by since the 27th that my wife hasn't called me sobbing, wishing she could see her mother just once more.  A cruel coincidence is that our wedding anniversary is also the 27th; neither Christmas nor our anniversary will ever be the same.  And my poor brother-in-law: He also had the unlucky coincidence of sharing a birthday with his mother.  He's also an orphan at 22, as his father passed away a few years ago from cancer he contracted after Agent Orange exposure.

More than a few signs suggest that my mother-in-law may have been the victim of medical malpractice:

• The ER may have misdiagnosed a heart attack and released her home when she should not have been
• The ambulance didn't admit her to the ER, and in fact spent close to 20 minutes trying to get her blood pressure - before taking her to the hospital
• One of the medications she was prescribed is not supposed to be prescribed to diabetics (which she was) because it causes a loss in blood pressure

But we'll never know if she was the victim of malpractice.  Put another way, we will never know if she'd still be alive today if doctors had run more tests or taken action sooner.  That's a question that will haunt my wife, her brother, and me for the rest of our lives.  And why won't we know? 

Because California enacted the Medical Insurer's Compensation Reform Act of 1975 (MICRA) in an effort to protect doctors from rapacious insurance companies.  Among other things, MICRA caps awards for noneconomic damages at $250,000 and caps attorney fees on a sliding scale.  Because my mother-in-law wasn't providing financial support to her children and has no surviving spouse, any recovery would be purely noneconomic damages and thus limited to $250,000.  Attorney fees would therefore be limited to a maximum of $74,250. 

$75,000 in attorney fees may sound like a lot, but it really isn't when it comes to a medical malpractice case.  Especially considering potential defendants include doctors, the hospital, and ambulance company, and perhaps even a drug manufacturer or two.  It's not unrealistic to expect that an attorney could spend $50,000 building this case.  Spending $50,000 to recoup $75,000 isn't necessarily the best investment of an attorney's time and money.  And since the attorney would recover his or her expenses, that would mean it's possible the attorney would receive more of the settlement than my wife and brother-in-law - something no attorney wants to happen.  All of the above assumes that there was in fact medical negligence.  It's equally possible that an attorney would spend $5,000 or more obtaining medical records and hiring experts only to discover that there was no medical negligence.  But again, thanks to MICRA, we'll never know.

I'm no doctor, but I can't help but suspect that had the emergency room practiced defensive medicine and not released her on Christmas day, my mother-in-law would still be alive today.  Or perhaps if the ambulance company would have practiced defensive medicine and admitted her as a Code 3, she'd still be alive.  Maybe even if her doctor had practiced defensive medicine by not prescribing medicine that is contraindicated for diabetics, my mother-in-law may still be alive today.