Vested Interest - Tort Briefs - March 2005 Issue

McKesson Agrees to Settlement in Class Lawsuits

In one of the largest securities class action settlements ever, McKesson Corp. agreed to pay $960 million to end litigation in federal court. Institutional investors filed the federal suits in 1999 when McKesson revealed accounting irregularities that triggered a $9 billion drop in the value of its stock in a single day. The company still faces plaintiff suits in San Francisco Superior Court, as well as cases filed outside California. (ATLA Law News Digest – January 21, 2005)

Mississippi No Longer a Mass Tort Haven

Several actions last year by the Mississippi Supreme Court scaled back the state’s joinder rules, which have attracted mass tort plaintiffs nationwide. As a result, three trial court judges issued orders last month that may lead to the dismissal of thousands of asbestos claims by plaintiffs from other states. Many other mass torts will likely be affected, according to defense lawyers. (ATLA Law News Digest – January 21, 2005)

Contingent Fees Taxable to Client

The Supreme Court has ruled that the contingent fee portion of lawsuit settlements and awards is taxable to the client, even if the money goes directly to the attorney. While the cases, Commissioner of Internal Revenue v. Banks and Commissioner of Revenue v. Banaitis, were pending last fall, Congress passed a provision allowing taxpayers who win awards in employment, whistleblower and civil rights litigation not to count attorneys’ fees and court costs as taxable income. Congress already allows this for lawyer fees in personal injury cases. (ATLA Law News Digest – January 27, 2005)

McDonald’s Settles Trans Fat Suit

McDonald’s settled a lawsuit by nonprofit BanTransFats.com which accuses the fast-food giant of failing to inform consumers of delays in a plan to reduce fat in the cooking oil used for its french fries and other foods. The agreement requires McDonald’s to pay $7 million to the American Heart Association to educate the public about trans fats in foods. The company is also required to spend $1.5 million to publicize the delays. (ATLA Law News Digest – February 17, 2005)

Ruling Puts Fast-Food Litigation on Front Burner

A controversial ruling by the 2nd Circuit reinstated a suit filed on behalf of two overweight New York teenagers who accused McDonald’s of deceptive practices. The 2nd Circuit said the district court erred in dismissing the case because Section 349 of New York’s consumer law, which makes it illegal to commit deceptive acts or practices, "does not require proof of actual reliance." The plaintiffs allege that as a result of McDonald’s deceptive practices, the teens were "led to believe that McDonald’s foods were healthy and wholesome, not as detrimental to their health as medical and scientific studies have shown." (ATLA Law News Digest – February 17, 2005)

California Court to Take up Teen Smokers

The California Supreme Court agreed to decide whether four tobacco companies can be sued under the state’s unfair competition law for allegedly targeting teens with provocative and deceptive cigarette ads. The suit alleges that each company had its "youth brand strategy" targeting "Rebels," "Edge Kids," "Punkers," "Rockers," and "Skaters." (ATLA Law News Digest – February 24, 2005)

Medical Malpractice Verdicts Drop Nationwide

Despite the insistance of tort reformers that runaway jury awards have spurred a medical malpractice crisis, a review of the 100 largest jury verdicts seems to indicate otherwise. The total amount awarded in medical malpractice cases has generally decreased over the past three years, although the number of cases is nearly static. The largest of these verdicts are predominantly birth-related cases, and have been since 2001. (The National Law Journal - February 21, 2005)