In 2012, a major outbreak of fungal meningitis was traced to drugs compounded by New England Compounding Centers. The outbreak included approximately 750 confirmed cases and has resulted in 64 deaths to date. Tragedies of this scale have often been the impetus for major changes to federal food and drug laws in the past; the FDCA itself was enacted in 1938 in response to a tragedy in which the use of an improperly manufactured drug (elixir sulfanilamide) led to over 100 patient deaths.

Drug compounding is a process of combining different ingredients to create customized pharmaceutical products for patients.  The practice predates the rise of mass-produced drugs in the United States, and was essentially unregulated by FDA for 50-plus years after passage of the FDCA.

In a Client Alert titled, "Major Changes in Drug Compounding and Drug Distribution Requirements (Part 1 of 2)", Epstein Becker & Green health care practice partners, James A. Boiani (D.C.) and Kim Tyrell-Knott (San Diego), provide an insightful analysis of the Drug Quality and Security Act (H.R. 3204). 

According to Jim and Kim, the bill is compromise legislation crafted by the Senate Health, Education, Labor, and Pension (“HELP”) and House Energy and Commerce Committees, and is expected to pass the Senate soon after it reconvenes today. Once signed into law, H.R. 3204 will fundamentally change the regulation of drug compounding and drug distribution in the United States.

We look forward to the publication of Part 2 of their Alert concerning this important piece of legislation.

This blog was originally posted on October 28, 2013 by William A. Ruskin on the Toxic Tort Litigation Blog. Click here to read the original entry.


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The U.S. Supreme Court’s decision in Mutual Pharmaceutical Co., Inc. v. Bartlett, No. 12-142, decided June 24, 2013, may assist defense counsel in defending product liability cases involving FIFRA-regulated products such as herbicides and pesticides. Although Bartlett involved design defect claims against manufacturers of generic drugs, which are regulated by FDA, the principles enunciated in Bartlett potentially have much greater application.

In Bartlett, the court held that the Federal Food, Drug and Cosmetic Act preempts state-law design defect claims against manufacturers of generic drugs. The court rejected outright plaintiff’s contention that under the so-called “stop-selling” theory, a generic manufacturer could comply with both federal and state law merely by removing its drug from the market.

In rejecting that argument, Justice Samuel Alito, writing for the majority, held that “the incoherence of the stop-selling theory becomes plain when viewed through the lens of our previous cases. In every instance in which the court has found impossibility pre-emption, the ‘direct conflict’ between federal and state law duties could easily have been avoided if the regulated actor had simply ceased acting.”

Thus, in reversing the First Circuit decision, the court slammed the door on plaintiffs hoping to circumvent the preemption defense by contending that a manufacturer might merely stop selling the product.

In an article in Law360 titled, “Bartlett’s Benefits Will Extend Beyond Generic Drug Makers,” 6/28/13, commentators offer the view that pesticide manufacturers may now be protected from plaintiff alleging a stop-selling theory of liability.  If the case’s holding is so extended, plaintiffs should no longer be able to allege that an herbicide manufacturer should not have placed a pesticide into commerce in the first instance. In essence, this is a variation of the often espoused argument that a product should not be marketed because its risks outweigh any potential benefits.  After all, the whole point of federal regulation is the underlying assumption you are going to market the product. 

This blog was originally posted on July 2 by William A. Ruskin on Toxic Tort Litigation blog. Click here to see the original post. 


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Plaintiff Susan Early was allegedly injured while a passenger on one of Carnival Corporation’s ships.  A claim was initiated, then (apparently) resolved.  The mediator in the matter filed his report on November 21, 2012.  That report stated that the parties had settled subject to the condition that the Court retain jurisdiction to enforce the terms of the settlement and determine the issue of a possible LMSA if one were needed.  Early motioned the Court for Determination of Whether a Medicare Set Aside is Required.  The terms of the settlement negotiations were:

1) Carnival will pay Early an undisclosed sum;
2) Each party will pay its own attorney’s fees and costs;
3) Early will execute a release for Carnival;
4) Carnival will be responsible for the mediator’s fees; and 
5) The parties DISAGREE on whether an LMSA was required, but agree to submit the issue to the Court and to abide by its determination.

Early’s motion argued that an LMSA was not required under the Medicare Secondary Payer (“MSP”) Act.   Carnival filed its response, urging the Court to conclude that an LMSA was required.

Analysis.
The Court begins by providing a succinct recitation of the MSP Act. Then, the Court describes how MSA analysis has emerged as means to address the future medicals issue.   After detailing what actually constitutes a settlement in Florida, the Court turns to the question of whether the parties have an agreement to settle the claim.  
The Court concludes that the parties agreed on four out of five essential terms.  The term the parties could not agree upon was the LMSA issue, and asked the Court to fill in the blank on their behalf.  The Court declined the opportunity to do so.  
The Court distinguished this fact pattern from two others which appear routinely in other opinions addressing LMSA issues: 1) cases where the parties have a settlement agreement and agree that an LMSA is required, but cannot obtain review and approval of the LMSA from the Centers for Medicare & Medicaid Services (“CMS”); and 2) cases where the parties have a settlement agreement but disagree as to whether those terms included the creation of an MSA.  Here, the parties did not ask the Court to enforce a settlement agreement; they asked the Court to assist with a critical term of a potential settlement agreement.  While the Court noted the “conscientious and diligent” efforts of counsel to uncover the issue, it was not within the Court’s dominion to gap fill with respect to this essential term of the potential settlement agreement.  

Takeaway.
This case is another example of the LMSA issue derailing what is (otherwise) a perfectly acceptable settlement agreement.  These issues should become much less obtrusive after CMS issues final guidance about liability settlements and future medical expenses under the MSP Act.  That guidance is expected to be released later this year.  Until then, the best approach is to proactively address the issue, and evidence exactly how you have arrived at your conclusion on the future medicals issue.  That approach, coupled with the Court’s conclusion in Guidry v. Chevron , highlights the importance of utilizing a formalized approach to MSP compliance.  When addressing future medicals issues under the MSP Act, a formalized approach will yield complaint results every time.    
Having a formalized settlement process that integrates these core concepts will achieve efficiencies and enhance the effectiveness of settlement programs while ensuring closure on the file.  Such a formalized settlement process should take into account the timing and coordination issues which may hinder successful LMSA analysis.  Thus, screening a case up front to verify entitlement and identifying a claimant as an MSA candidate early on is the proper launching point for any LMSA analysis.  As parties move towards resolution and identify the prospective gross award, they can then determine (consistent with CMS’s basic rules issued in the workers’ compensation settling) if a future medical allocation exists within the gross award, either in the form of a specific carve out or implicitly contained within the one undifferentiated lump sum.  

The DRI MSP Task Force continues to track relevant judicial opinions and guidance from CMS in order to ensure compliance for you and your clients.  We continue to stress the importance of utilizing a formalized approach in addressing the LMSA issue on every single claim, as that process will, in and of itself, ensuring compliance on the LMSA issue. 

[1] Early v. Carnival Corporation, No. 12-20478-CIV-Goodman (S.D. Fla. February 7, 2013).

[2] 42 U.S.C. §1395y(b)(2).

[3] The Court cites to a recent article published by the American Bar Association which was co-authored by John V. Cattie, Jr., DRI MSP Task Force Vice Chair.  See also Medicare Set-Aside Arrangements Under the Medicare Secondary Payer Act, 42 The Brief, n. 10, Fall 2012.

 

[4] Guidry, et al. v. Chevron USA, Inc., Civ. No. 6:10-cv-00868, 2011 U.S. Dist. LEXIS 148942 (W.D. La. December 28, 2011).  

 

 

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Nevada Gambles on Online Poker

Posted on March 6, 2013 02:12 by Joseph M. Hanna

On February 21, 2013, the Nevada State Legislature passed Assembly Bill 114, a measure which allows state Governor Brian Sandoval to enter into contracts with other states permitting individuals to gamble in online poker games across state lines.

In theory, the law was passed to protect consumers and reduce the amount of illegal online gambling.  In pertinent part, the bill states: “A comprehensive regulatory structure, coupled with strict licensing standards, will ensure the protection of consumers, including minors and vulnerable persons, prevent fraud, guard against underage and problem gambling, avoid unauthorized use by persons located in jurisdictions that do not authorize interactive gaming and aid in law enforcement efforts.”  Later, it reads, “The state of Nevada leads the nation in gaming regulation and enforcement, such that the state … is uniquely positioned to develop an effective and comprehensive regulatory structure related to interactive gaming.”

The law effectively acts as an end-around certain laws prohibiting the practice – previously, the Nevada Gaming Commission was not allowed to issues licenses for operating online poker facilities without some form of permission by the federal government (i.e. through explicit legislation allowing the practice or by seeking approval from the U.S. Department of Justice).  Now, the commission can not only issue these licenses, but is given the authority to regulate and vary license renewal rates.  A.G. Burnett, chairman of the Nevada Gaming Board, believes that the move could be very profitable for the state – he estimates that a global market for licensing online poker games could amount to tens of billions of dollars.

As originally published at www.sportslawinsider.com

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It was reported on February 20, 2013, that President Obama appears to have selected federal air regulator, Gina McCarthy, to take over for Lisa Jackson as head of the EPA.  The news indicates that the executive branch intends to build upon the agency’s recently-validated efforts to regulate greenhouse gas (GHG) emissions, in the face of persistently anemic congressional action on the issue.

The likelihood of increased regulatory, as opposed to legislative, involvement is further evidenced by the reactions of various legislators who oppose GHG controls.  For example, Sen. David Vitter (R-La.) was quoted as saying, “[t]he administration should be looking for someone who will end the standard of ignoring congressional requests, undermining transparency and relying on flawed science…Instead, it looks like they may double down on that practice.”  “Obama Expected to Tap McCarthy for EPA, Moniz for DOE,” http://www.law360.com/articles/417045.

In other words, if President Obama is going to make climate change a legacy issue for his second term—which seems to be the case based upon statements made in his inaugural  and State of the Union addresses—he is going to have to revisit his previously-stated aversion to doing so primarily through top-down regulation.  But how is he going to go about doing that?  The issue of climate change was conspicuously absent from the topics discussed during the 2012 presidential campaign, and any increased attention it has received in recent months might deservedly be credited in significant part to Hurricane Sandy.  Nor does it help that the administration has offered up few, if any, real details about its future climate-change-related regulatory agenda (see, e.g., http://www.whitehouse.gov/energy/climate-change).

Until that plan is made public, outside observers must rely on a review of EPA’s past successes and ongoing initiatives in order to predict what the future has in store.  However, it seems clear that an emboldened EPA will likely pursue all or some of the following initiatives with increased vigor and political support in the coming months and years.

·         New Power Plants:  EPA is expected to finalize a rule, originally proposed in 2012, requiring new fossil-fuel-fired power plants to be constructed with carbon capture and sequestration technology.

·         Existing Power Plants:  Finalization of the rule governing CO2 emissions from new power plants will force EPA to address the same issue with respect to existing facilities.  EPA is expected to address this by requiring each state to adopt its own emission standards pursuant to guidelines issued by the federal agency.

·         Refineries:  The terms of a 2010 settlement agreement required EPA to issue a GHG rule for refineries by November 2012.  The agency did not comply with that deadline and expected to act on the issue this year.

·         Oil & Gas Operations:  EPA finalized emission standards for oil and gas operations in 2012.  Several states subsequently filed a notice of intent to sue the agency for its failure to include provisions that directly regulate methane.  EPA has indicated that it will revise the final rule in 2013.

·         Mobil Sources:  EPA has proposed a rule designed to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel.

·         Climate Adaptation Plan:  EPA released its draft Climate Adaptation Plan this month, which discusses the impact of climate change on the agency’s ability to fulfill its mission and describes how EPA will factor climate change adaptation into new regulations.  The public comment period runs through April 9th.

DRI’s Climate Change Task Force will continue to monitor developments in this evolving area of the law, and will submit regular blog postings and articles discussing relevant events.

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The recent experience of the passengers the Carnival Triumph debacle once again raises the question of remedies sought and available for cruise passengers who suffer harms while at sea.  As with the Costa Concordia shipwreck a year ago, and with most hospitality-related providers, there are limitations on how and what guests can recover.  Forum selection clauses, of a similar type to what most of our clients use, frequently limit where suits can be brought.  For cruise passengers, who frequently travel from another location to the port city, the limitation on permissible fora can be an insurmountable hurdle to bringing suit.  For the passengers on the Triumph, any claims face the additional obstacle that recoveries are likely limited to only those individuals who suffered some physical harm as a result of the incident. 

These limitations are once again causing outrage among some who believe that the recourse of cruise passengers is too limited.  But before jumping on that bandwagon, it is important to consider the consequences of opening the floodgates to more claims.  For example, invalidating the forum selection clauses on cruise ship agreements could also open up hospitality providers like ski resorts or amusement parks, to claims far outside their operating jurisdictions. 

Extending the ability of a party to recover damages for emotional “injuries” without any physical harm could also dramatically change the legal landscape.  Would that allow individuals who claim to receive a “bad” dinner or view an “offensive” show the ability to recover damages for their claimed emotional injuries even without a physical harm?  Even with limitations for only egregious conduct, the implications could be far-reaching for those throughout the hospitality industry and beyond.

It seems as though Carnival is attempting to thwart the legal onslaught, and possibly the push for legal changes, by offering full refunds to passengers plus cash and a voucher for future travel.  We will see if it is enough.  In the meantime, I wonder if those vouchers are transferrable? 

Cynthia P. Arends, carends@nilanjohnson.com


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Rule 403 of the Federal Rules of Evidence governs the admissibility of demonstrative evidence at trial, assuming that evidence is determined to be relevant under Rule 401. Pursuant to Rule 403, a demonstrative exhibit may be excluded from the courtroom if its probative value is substantially outweighed by its unfair prejudice, its cumulative nature or if it is confusing or misleading.

Does the exhibit (1) relate to a piece of admissible substantive proof; (2) fairly and accurately reflect that substantive proof; and (3) is it sufficiently explanatory or illustrative to assist the jury? These are the questions used to establish a proper foundation for use at trial.

In addition, the exhibit should convey what it is designed to convey. For example, a computer enhanced photograph should not make an accident scene look better or worse than it actually was. Similarly, the demonstrative evidence should convey representational accuracy. The scale, dimensions and contours of the underlying evidence should all be accurately depicted. Today more than ever, the creative use of software permits trial counsel to manipulate demonstrative exhibits in ways often difficult to spot.

In an excellent article titled, “5 Demonstrative Evidence Tricks and Cheats to Watch Out For,” Ken Lopez, fouinder of A2L Consulting, provides a useful guide for spotting misleading charts and explains why they are misleading. Lopez discusses five such tricks (which are somewhat difficult to convey without having all of the graphics Lopez uses in his article to illustrate his points):

1. The Slippery Scale. This trick involves setting the the vertical y-axis on a graph in a narrow range that does not include “0.” By not including “0,” it is easy to make a relatively small change look enormous.

2. Compared to what? If the trial lawyer seeks to demonstrate a small change on a percentage basis, all he needs to do is carry the horizontal x-axis so that time is literally “on his side”

3. The Percentage Increase Trick. How many times have you heard someone talk about a 200% or 300% increase and really wonder what they mean? 

4. Tricking the Eye with 3D Charts. Flat charts with no depth or 3D aspect are harder to trick the viewer with, so always scrutinize your opponent’s charts when a third dimension is introduced. On a pie chart, when a slice of the pie (e.g., the percentage of customers injured by a purportedly defective product) is closer to the viewer, it looks much bigger.

5. Misleading Emotional Imagery. Putting an image of a homeless person in the background of a chart about increasing homelessness is designed to evoke emotion. Similarly, showing an oil-covered bird in the background in an explanation of how much oil was spilled in an accident does not add to one’s understanding of the amount of oil spilled, but seeks to trigger an emotional response in the viewer.

Perhaps the single most important Rule 403 objection you can make in a jury trial is the exhibit’s capacity to generate an emotional response such as pity, revulsion or contempt. Under these circumstances, the capacity to evoke emotion far outweighs the value of the evidence on the issues before the court and exclusion is appropriate.

As originally posted on January 9, 2013 in Toxic Torts Litigation Blog
 
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Our Role as Lawyers in the Aftermath

Posted on December 19, 2012 03:37 by Stacy Moon

As parents, or friends of parents, the last weekend has been exceptionally difficult.  Friends have debated whether to tell their children what happened in Newtown, Connecticut, and, if so, how to explain what happened.  Many of us likely have friends calling for greater gun control, and others calling for greater access to guns for protection, all referencing the Second Amendment.  I, personally, have a difficult time with both sides of the issue.   On the one hand, I do not understand why a civilian needs an automatic or assault weapon.  On the other hand, the founding fathers put the right to bear arms in the Second Amendment, even before protecting the right against unreasonable search and seizure.  And the answer to my question can be answered by the question, "Why do you have to be able to say something offensive?" Some reenacting weapons are considered assault rifles because they have sniper scopes too. I know any number of responsible and irresponsible gun owners who take weapons into entirely inappropriate circumstances, but legally. Then again, it took three seconds to reload a rifle in 1787, when the constitution was written.  The issue of original intent versus modern circumstances is one that occurs in all constitutional issues, but seems to be more intense in these discussions of gun control, or not, and gun safety.  In short, the questions and issues are numberless, and a discussion covering all of them is coming.  We will be asked questions by friends because we are lawyers.  And we will not necessarily have all of the answers.

However, because we are attorneys, we will be asked our thoughts regarding the Second Amendment; gun control; gun access; gun safety; and other issues related to forceful treatment of mental health.  And we, as attorneys, will have varied opinions and varied strength of opinions.  But, the one thing we are uniquely qualified to do, by virtue of our training and professionalism, is steer the conversation to a respectful tone, with reasoned opinions.  We can ensure that all sides are heard, rationally.  We can ensure that the discussion is held without unchallenged hyperbole.  We are in possibly the best position to analyze the data that all sides will be throwing at us, to find flaws, and strengths, in the various arguments, and to present them, calmly and professionally to other people.

We, as lawyers, will not have, and should not think we have, all the answers.  But we can and should ensure that the upcoming discussions recognize the legitimacy of the various points of view and are held rationally, without rancor.
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On Tuesday October 30th, the NCAA Board of Directors announced the adoption of a new enforcement structure that, among other things, creates additional levels of infractions, enhances accountability for head coaches, and seeks to punish violators with sanctions that more appropriately align with the actions that occurred.  The most striking of these new initiatives, to be implemented beginning in August of 2013, is the creation of the new four-tiered structure for violation classification.  

Under the current model, violations are classified as either major or secondary.  The new system sets forth violations as follows: Level I, Severe breach of conduct; Level II, Significant breach of conduct; Level III, Breach of conduct; and Level IV, Incidental issues.  A copy of the NCAA’s press release may be found here.  This new structure is the product of a year-long effort by the thirteen-member Board comprised of presidents, athletic directors, and conference commissioners.   President Mark Emmert described the changes as part of a devotion to “protecting the collegiate model,” in part by “remov[ing] the ‘risk-reward’ analysis that has tempted people.”   

These changes come on the heels of increasing external pressure for a more consistent and transparent process, with a number of major infractions cases serving as the backdrop for this magnified criticism.   Greater accountability and stricter sanctions is undoubtedly a step in the right direction when it comes to enforcement of what would be considered major infractions under the current framework.  The NCAA should be applauded for taking measures to ensure consequences for coaches who plead ignorance while violations blatantly occur on their watches.  But at the same time, the new violation structure is troublesome.   Despite admirable efforts to construct a better system, this new four-tiered structure for violation classification fails to ameliorate many of the common concerns expressed with respect to NCAA Bylaws and enforcement of the same.  Hopefully, this will be cleared-up with the upcoming changes to the substantive “rules” in the Bylaws.    

The NCAA Bylaws are often denounced as too lengthy and too complex, and deservedly so.  Moving from a two-tiered violation structure to a four-tiered system, if not matched-up with more common sense in rule substance, is an obvious step backward, and is counterintuitive if the desired outcome is a more workable framework.  Increased confusion is even more likely when one considers the near endless interpretations that could be attributed to the definitions describing each tier.  For example, consider the difference between a violation that “threatens the integrity of the NCAA,” versus a violation that merely “provides more than a minimal, but less than a substantial…advantage.”  One definition classifies a Level I violation, while the other corresponds with Level II, but is there really a difference?   The definitions may mean something different to a coach versus someone in compliance at a school or enforcement at the NCAA, so how then is the goal of deterrence met for the problem that President Emmert describes as a calculation of risk vs. reward made by coaches who currently do not have sufficient risk to their livelihoods or respective programs.

Under this system, inconsistencies may abound to an even greater degree than under the current model.  This is likely to complicate the NCAA’s investigative measures, which is problematic given the Association’s already limited resources; resources so limited that some have even suggested that the NCAA get out of the enforcement business altogether (for a more in depth discussion of this proposal, see this well-done piece by Attorney Stephen A. Miller, recently published in The Atlantic).  Finally, if the NCAA is really student-athlete first, then this measure does nothing to address the countless Bylaws that punish student-athletes for technical violations that provide no competitive advantage, and do little more than burden an already overwhelmed enforcement staff.  Again, it is worth pondering, is an “incidental issue” even worth sanctioning?  I hope that reforms not just in terms of a scholarship enhancement, but in terms of rules affecting student-athletes’ behavior on a day-to-day basis are addressed in the coming months.

Since the NCAA has chosen to divert its attention first to the method in which these intricate and often superfluous regulations are classified, my worry is that dealing with the substance later will lead to a continuance in seeing violations shoe-horned into a rigid framework that sometimes, but does not always fit.  For those that desire more consistency in results, do you want the NCAA to have something akin to Federal Sentencing Guidelines, or more common sense in results?  I am not yet convinced that the new enforcement structure will get us more common sense in results, which many (myself included) would like to see as opposed to more rigidity.

Over time, perhaps this will prove to be a positive step toward a streamlined, consistent, and fair process.  For now though, a more detailed systemization of the NCAA’s enforcement structure only seems to complicate matters further if there is not significant overhaul to the substance of the rules themselves.  While my experiences may leave me a bit biased, until we see a comprehensive reassessment of the actual Bylaw language (promised in the next few months), I foresee this self-proclaimed “overhaul” as little more than a re-branding exercise.

Originally published on Sportslawblog *Hat tip to Brian Konkel for his work on this piece.

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An astounding four out of ten Americans have been invited to participate in a class action suit. Fifteen percent, the equivalent of 36 million people, actually participated in one, and most do not appear to be doing it for the money. Of the 70 percent receiving a financial award, 73 percent termed it insignificant. Their motivation might lie in the fact that 65 percent thought class action suits made corporations more responsible. These are some of the surprising results from the DRI National Poll on the Civil Justice System.

The poll also showed that large numbers of Americans doubt the fairness of civil courts and a majority— sometimes substantial majorities— admit that personal biases could affect their decisions as jurors.

In terms of confidence in the civil courts, only nine percent of respondents indicated that they were very confident that the results in civil courts are “just and fair” while 16 percent expressed no confidence that the results were fair. Eighty-three percent say that the side with the most money for lawyers usually wins. This holds true for all demographic groups: Democrats, Republicans, Independents, liberals, and conservatives. On the other hand, the 58 percent who expressed confidence in court decisions places the civil courts far ahead of Congress, the presidency, and even the church in other recent confidence polls.

Perhaps more troubling is the fact that majorities of respondents freely admitted that, in certain instances, their personal biases could affect their decisions as jurors. For instance, 57–59 percent say they would be inclined as jurors to favor individuals in cases against an insurance, oil, or financial company. Fifty-two percent said that if they had a bad consumer experience with a litigant, it could influence their decision as a juror.

In an interesting and perhaps counterintuitive response, the poll found that 64 percent prefer jury trials to bench trials even though 48 percent feel juries make decisions based upon personal opinion rather than facts and the law. Alternatively, 69 percent feel that judges base their decisions on facts and the law rather than personal opinion.

In an encouraging response, 75 percent of Americans see jury service as a civic duty rather than a burden and of those who had served, 81 percent say the experience was a positive one.

The above findings come from an independent, nonpartisan, national telephone survey conducted in August 2012 among a random scientific sample of adults. It employed rigorous methodology and balanced question wording to assess public attitudes on issues in civil law. It was conducted by Langer Research Associates, New York. Gary Langer is the former head of polling for ABC News and subscribes to the Code of Professional Ethics and Practices of the American Association for Public Opinion Research and the Principles of Disclosure of the National Council on Public Polls.

For the full report of the national survey as well as downloadable graphs and charts, please click here to go to the website for DRI’s Center for Law and Public Policy. For purposes of transparency and accessibility, a full data set of the survey and methodology will be available to journalists and researchers through the Roper Center for Public Opinion Research at the University of Connecticut.

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