So as we start another year there is some worthwhile reading in the National Center for State Court’s report Examining the Work of State Courts (2008 Data). It is a report on case filings and caseloads in our states, for the last year where complete data was available. As you might imagine the statistical information available from state to state varies. However a number of states keep detailed reports on the types of cases being filed. Some interesting facts emerge.

Reading Table 4, a report on annual new tort filings in state courts from 1999 to 2008 you can see that tort filings were down in 2008 compared to the average tort filings over those 10 years in 25 states. The 2008 filings were more than 20% below the 10 year average in California, Idaho, Kansas, Michigan, Mississippi, Missouri, New Jersey, New York, North Dakota, Ohio, and Texas.

Over all tort filings fell 5 percent in the general jurisdiction courts in 13 states with the most detailed recordkeeping practices.

During 2008 the number of contract filings increased dramatically, a sign of our economic times. North Dakota lead the nation in 2008 in the ratio of incoming contract suits to tort suits. They had 320 tort cases and 19,590 contact cases, a 98% ratio. Kansas had 155,756 contract cases filed to 3,342 tort suits. The farming states weren’t the only ones with this ratio. In New Jersey there were over 9 times as many contact suits filed as tort suits and in Connecticut there were 8.2 times as many contact suits as tort suits. In fact, in 11 states there were better than 8 times as many contract suits filed as tort suits, in 2008.

In the tort arena, in 17 states, with better data compilation systems,  55% of the tort cases were automobile cases. North Carolina leads the list with 69% of their tort filings in 2008 being automobile cases, but with a very low ratio of tort suits, 94 cases per 100,000 of population. That compares to New Jersey where 627 cases per 100,000 populations were filed with 52% of them being auto cases. Connecticut’s new filings show 435 cases per 100,000 in population, with 68% being automobile torts.

Don’t worry about docket delays in New Jersey. They terminated 27% more tort cases in 2008 than were filed. 16 other states joined them in keeping ahead of the tide of tort cases with dispositions.

So if you do Medical Malpractice cases the news isn’t good. During the 10 years measured new filings were down 15% in the seven states which collected that data over the period, Arizona, Connecticut, Mississippi, New Jersey, New York, Rhode Island and Oregon. So where was the best place to have been in 2008? In Kansas, where 7.4% of the new tort cases were classed and medical malpractice followed by Puerto Rico with  6% of the new cases being medical malpractice. If you were in Wisconsin, Connecticut, Oregon or Minnesota doing medical malpractice work, life was tough in 2008 since less than 2% of the tort cases were medical malpractice In fact if you were in Oregon only 49 cases were filed and in Minnesota only 37 were filed.

So what does all this mean? It looks like that data confirms there are fewer tort cases being filed. Historically, when bad economic times hit, tort filings increase and verdicts tick up as well. Whether the data for the last two years, when available, will bear this out remains to be seen. For now its is clear we continue to live in interesting times and hopefully there will be plenty of new, challenging and interesting cases coming our way in the new year.

If you play baseball for an Ohio college, come about March you look forward to a trip to Florida to start the season. The Bluffton University team did just that in 2007, with tragic results. Five players and their bus driver and his wife were killed when he mistook an exit ramp for another highway lane and drove off the end of the ramp and onto the highway below. 

Finding enough insurance to cover those losses and to cover the injuries suffered by the coaches and players who survived was a challenge. Today, Ohio’s Supreme Court, in Fed. Ins. Co. v. Executive Coach Luxury Travel, Inc., 2010-Ohio-6300, overruled the trial court and Court of Appeals to find that  the university’s own commercial automobile policy, its commercial umbrella policy and its excess follow-form policy do cover these losses. Justice Paul Pfeiffer wrote today’s decision, with three other members of the court accepting his reasoning. One additional justice concurred in the judgment, without opinion, producing a 5-2 decision. 

Doing so the court found a bus driver employed by the owner of the charter bus was an insured under the three university policies. That result is explained as follows. The baseball coach hired a charter bus service to provide a bus and driver to take the team and coaches to Florida. The coach asked for a bus equipped with a DVD player and large enough to haul them. He also was asked to approve the assignment of the driver to this bus, a driver who had taken to coach on other trips. The coach testified he had the authority to tell the driver to stop if his was driving dangerously and he could request the driver to stop for rest breaks and meals. This participation by the coach was sufficient evidence of control and possession to implicate the university polities, but that wasn’t the basis adopted for finding coverage under those policies. 

The Court had to determine what a “hired” vehicle was and what “permission” means in the context of the Omnibus Clause. Relying on Black’s Law Dictionary, the opinion finds “hire” means “procure the temporary use of property, usually at a set price.” And that “permission” means authorization. In doing so the Court ignored the case law from elsewhere which relies upon a more detailed analysis of whether possession and control of the vehicle passed to the insured. The defendants also argued that the driver who was employed by the bus company, and not the university, was an agent for the owner of the vehicle, and as such not entitled to coverage. The cases adopting that reasoning involved the transportation of cargo, not people, so they did not control this decision and over look the fact that the bus was hired according to the definition above. So the question turned to whether the driver was covered while driving the hired vehicle. There are five exclusions in the omnibus clause which could have prevented his being covered, however, none apply, 1) the driver didn’t own the charter bus, or rent or lend it to the university. 2) the driver wasn’t driving his own vehicle or that of a family member, 3) he wasn’t selling, servicing, repairing, parting or storing the bus, 4) he wasn’t moving property to or from the bus, and 5) he wasn’t a partner or member of an entity which owned the bus. As a result, he is one of the “anyone else” who is covered while driving a hired vehicle.

Needless to say, this decision received a strong dissent, which noted one of the carriers arguments, suggesting the strange results which this decision may produce, such as a law firm’s policy being required to cover compensation to victims of an accident caused by a taxi driver taking a lawyer to the airport, or a bride and groom’s insurance may have to cover a crash caused by their limo driver taking them to a reception, or the bus driver hauling a group to a social event. 

Only time will tell if this decision will produce another series of decisions like Ohio saw in the Scott-Pontzer era, when the employers underinsurance policies were found to cover accidents suffered by employees driving their own autos off duty. For now the victims of this tragedy will have a larger fund out of which to recover compensation.

Yesterday's Wall Street Journal had three stories on the Marketplace page about events which will influence the practices of DRI members and the lives of all of us over time.

First, Continental Airlines was found criminally liable for apparently improperly maintaining an airliner resulting in the crash of a Concorde outside Paris in 2000. Second, GNC an American vitamin retail chain is on the verge of being bought by a Chinese state backed company for more than $2 billion. Finally, Wal-Mart will receive a hearing at the Supreme Court which will address whether class action litigation is appropriate for employment cases where individual acts predominate.

In the first case, it's the criminalization of acts where there is was no criminal intent when the plane was maintained. Our tort system was designed to address private wrongs and seldom has the criminal process been used to punish mere negligence. We are seeing increased efforts in financial cases, products cases, and in other controversial situations to involve criminal prosecution to precede or augment tort suits. The Dodd-Frank act has put even more muscle behind criminal and civil suits involving financial fraud and at the same time it has created an even greater arena for whistle blowers and their lawyers to profit from uncovering questionable acts. The linking of criminal and civil proceedings isn't new, but it is becoming more prevalent, as evidenced by the Continental case.

If foreign governments take a greater stake in our businesses, on top of buying our debt, will our dispute resolution system survive? How will our regulatory system work with increased foreign ownership of companies which dominate the American marketplace? These foreign influences can impact our commercial and tort systems and bring new interests to the table when decisions need to be made. This is what can happen when more acquisitions like GNC occur.

Finally, if the scales shift the balance in dispute resolution to the aggregation of claims as opposed to a fact by fact, case by case, method of evaluating causation and damages, our system of justice will also change in ways never imagined when we were in law school. That is what is at stake in the Wal-Mart case.

These changes are going to affect all of us, our firms and our practices.  We should all work within DRI to be sure to share what we know and develop effective strategies to effectively represent our clients in the coming years in this very changed world. DRI has been very effective at helping its members do just that for the past 50 years and with your interest and commitment together we can make sure DRI help us all meet these new challenges, too.

The July 2010 Exposure Draft, Contingencies (Topic 450): Disclosure of Certain Loss Contingencies, which would require enhanced and more detailed disclosures about litigation involving public traded businesses entities, will not take effect this year. The Financial Accounting Standards Board (FASB) has now received 347 letters from a wide range of affected or interested parties generally opposing important aspects of the liberal disclosure standards.

Lawyers for Civil Justice (LCJ), a coalition of DRI, FDCC, and IADC, submitted Comment Letter 283 opposing the proposed changes.

FASB posted their decision to delay implementation of this standard and to re-deliberate the standard on their Website today. The July draft, itself, was the refinement of a 2008 proposal, which also was met with considerable opposition.

Watch this blog, it will keep you informed of further developments on this important issue.

On behalf of DRI Leadership, I would like to thank you for your efforts in submitting a blog post to the DRI Blog. As a token of appreciation, DRI would like to invite you to meet your fellow bloggers at the 2010 Annual Meeting in San Diego on Friday afternoon, October 22 at 4:30 p.m. in the Columbia 1 Room, on the North Tower Lobby Level.

As you may know, DRI recently established a new website, DRI Today, replacing For the Defense. It is designed to be one of the tabs on member desktops as a source of current news affecting members and their clients, and a quick resource for other information including postings by other DRI bloggers.

We are looking for volunteers to enhance the DRI Blog by making periodic postings to keep the blog lively and timely. Are you willing to continue to submit periodic postings to the DRI Blog as well as promote the DRI Blog to other bloggers you know? If so, please respond to driamblog@dri.org and let us know.  We’d like to organize a small group of bloggers to improve the DRI Blog with useful commentary for members and to spread the word that it is one of the best sites on the Web for defense oriented blogging.

You can continue to contribute to DRI Today by sending your blog posts to today@dri.org. Please be certain to include the article title and any tags you would like to use for the post.
We thank you again for your contributions to DRI, and look very much forward to hearing from you again soon.

Lawyers for Civil Justice (LCJ), a coalition of DRI, FDCC, and IADC has opposed a proposed Financial Accounting Standards Board Accounting Standard FASB Topic 405 Disclosure of Certain Loss Contingencies which would require wide ranging additional disclosures by corporations about pending and potential litigation, including more information obtained from outside counsel about their assessment of strategy and litigation risk in ongoing litigation. Action by FASB is expected before the end of the year.

These proposed changes have far reaching ramifications, not the least of which is the threat to the attorney client privilege and disclosure of strategic information which would benefit counsel suing corporations, even when the loss would be fully insured.  LCJ's position is set forth in a letter to the FASB by its President John Martin, a former DRI President. See LCJ Comment Letter 283.
 
In addition to the opposition by LCJ, over 300 other comments were received, generally in opposition to the changes; see Comments on Proposed Changes to Loss Contingency Disclosures.

Watch this blog, it will keep you informed of any action by FASB on these proposals.