Category Archives: Courts

Who’s Responsible?

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The company who made and sold the product, or the company that bought the product from a third party which actually did the development?

That’s a somewhat convoluted statement of the question, isn’t it?  Maybe that’s what confused the Alabama Supreme Court.

This body of judges has decided that brand-name drug makers can be held liable for injuries caused by the generic versions of their products.  The particular case has a plaintiff buying a generic drug—a copy of a patented drug—developed and originally manufactured by Wyeth.  Pfizer Inc later acquired Wyeth, and Schwarz Pharma Inc also acquired rights to the drug.  The plaintiff sued, among others, Pfizer and Schwarz Pharma, and the Alabama Supremes let the suit against these two go forward.

Imagine that.  They didn’t make the product, but they’re responsible for anything that goes wrong.

As Pfizer notes,

Alabama’s decision would allow generic-drug makers “to reap the profits of drug sales while leaving brand manufacturers with the liability” and violate the basic legal tenet that a manufacturer is liable only for its products[.]

Chris Hood, plaintiff’s lawyer said, without a particle of irony,

The Alabama Supreme Court is the first and only supreme court of any state to adopt the theory of liability we advocate.  It correctly identified and applied basic tort principles overlooked by numerous lower courts which rejected similar theories.

A Blow for Responsibility

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The Wall Street Journal described one.

The court of the European Free Trade Association on Monday said Iceland didn’t breach European Economic Area directives on deposit guarantees by not compensating UK and Dutch depositors in Landsbanki’s online savings accounts, known as Icesave accounts.

The beef was this:

The EFTA Surveillance Authority, or ESA, which brought the case against Iceland, had claimed that Iceland should have made sure UK and Dutch savers who lost money on Icesave got repaid from deposit insurance.

UK and Dutch authorities compensated their own savers.

The EFTA ruled that EEA directives don’t

lay down an obligation on the State and its authorities to ensure compensation if a deposit guarantee scheme is unable to cope with its obligations in the event of a systemic crisis[.]

And that’s entirely appropriate.  A nation’s taxpayers should not be held liable for the failure of foreigners’ investment decisions, whether those failures stem from poor judgment, bad luck, or anything else.  A nation’s taxpayers should not be held liable for the failure of its own citizens’ investment decisions, come to that.

Investing is a risk, and it’s the degree of that risk that prices the return on the investment.  To destroy that pricing mechanism is both immoral and fiscally unsound.

Charles Duxbury and Charles Forelle do put up an interesting question in their article at the link above.

If deposit-guarantee programs don’t protect everyone, are they really effective?  That issue was raised by the European Commission, the EU’s executive arm, which joined the case against Iceland.  European deposit-guarantee programs, if they have any funds at all, hold a tiny fraction of the insured deposits in the system.

The interest, though, is in the lack of understanding of the nature of insurance and of the distinction between insurance and welfare that the existence of the question exposes.  Insurance is a risk-transfer for a fee proposition, and nothing else.  The insurer agrees to assume a part of the risk surrounding an event (a decision to place funds with an external agency, in this case), and in return for that assumption, the insured pays the insurer a fee commensurate with the risk being assumed: how much of the value is to be repaid in the event of a loss and the likelihood of that loss.  Of course, the fee to be paid varies with that risk.  Want more protection—want to be made completely whole in the event of a loss?  Pay a higher fee.

Welfare is the function of dinging taxpayers to make whole an individual who suffered a loss, regardless of the amount placed with an external agency (in this case) and regardless of the likelihood of any such loss.  Welfare in this sort of case is nothing more than a “I hurt, and you have money—pay me” government-enforced demand.

When even the Courts

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…ridicule Progressives.

From Bloomberg comes this item.  Our illustrious regulatory engine, the Environmental Protection Agency, has (rather, had) a rule that required refiners to mix 8.65 million gallons of cellulosic ethanol into their gasoline output last year.  In light of the fact that last year’s actual US production was 20,000 (!) gallons, all of which was exported to Brazil, the American Petroleum Institute went to court to get the mandate overturned.

Last week, the DC Circuit agreed.  In the court’s ruling is this gem:

Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry.  “Do a good job, cellulosic fuel producers.  If you fail, we’ll fine your customers.”

Of course, the court also was serious in its ruling.  Citing Railway Labor Executives’ Ass’n v. Nat’l

Mediation Bd in the bowlegs, the court noted

(“Were courts to presume a delegation of power absent an express withholding of such power, agencies would enjoy virtually limitless hegemony….”).  Yet that is precisely what EPA appears to have done in projecting cellulosic biofuel production for 2012.

The case is American Petroleum Institute v U.S. Environmental Protection Agency, and the ruling can be seen here.

Naturally, in response to the ruling, Progressive whining has begun.  Bloomberg reports this, as well.

As a result of the ruling and uncertainty, investments in the nascent industry may fall, said Michael Frohlich, a spokesman for Growth Energy, which represents ethanol producers.

“It dampens any future investment, and creates a further level of vulnerability[.]”

Never mind that if the “nascent industry” can’t stand without government favoritism, it’s not ready for market in the first place.  But the collective views of individual Americans—free market imperatives—don’t count.  Only the collective views of Big Government do.

Too Many Laws

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Here’s an example of the over-complexity that results from too many laws on our books, and of the injustice that is inflicted as a result of that over-complexity.  Jacob Gershman, writing in The Wall Street Journal‘s Law Blog describes an instance of rape that isn’t rape.

Here are two cases.  In one, a man has sexual intercourse with a woman by tricking her into believing he was, in fact, her boyfriend.  In another, a man has sexual intercourse with a woman by tricking her into believing he was, in fact, her husband.

A lower court convicted the man in the first case of rape, and an appellate court reversed—no rape had occurred.  Here’s the law on that, as described by that appellate court:

…a victim of a crime is deemed “unconscious” when he or she is “not aware, knowing, perceiving, or cognizant of the essential characteristics of the act due to the perpetrator’s fraud in fact.

But pretending to be someone else is a fraud of “inducement” not “fact.” That means that the jury couldn’t convict [the…man] on that basis[.]

A married woman, similarly tricked (differing only by the…man…pretending to be husband rather than boyfriend), would get the rape conviction, as the appellate court also pointed out in its ruling in the first case.

…California’s penal code “provides that rape includes an act of sexual intercourse ‘[w]here a person submits under the belief that the person committing the act is the victim’s spouse, and this belief is induced by any artifice, pretense, or concealment practiced by the accused, with intent to induce the belief.'”

California’s Attorney General Kamala Harris is on the case, though.

The evidence is clear that this case involved a nonconsensual assault that fits within the general understanding of what constitutes rape.  This law is arcane, and I will work with the Legislature to fix it.

Look for yet another law on the books, rather than a merging of these two laws into a single one with a unified definition of rape.

Obama’s Freedom

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From a person calling herself Jezebel comes this:

Ugh, you rubber cement-huffing nincompoop….

Anyway, I’m all for Hobby Lobby (and all other organizations that think birth control is totes gross) ignoring the law.  If they keep this up for long enough, we won’t have to worry about the fiscal cliff.

And I suppose that now’s as good a time as any to confess publicly that “Hobby Lobby” is the nickname I’ve given my vagina.

Name calling as pseudo-logic.  How very Progressive of her.

And this pseudo-argument from Think Progress, in their post misleading titled “Hobby Lobby To Deny Contraception To Employees, Ignoring Court Order:”

This ignores two obvious points—first, that Plan B is not an ‘abortion-inducing’ drug, as Hobby Lobby claims, and second, that the company may well end up paying more to avoid covering contraception than they would simply providing access.  It also takes a twisted view on the ‘Freedom of Religion’ argument; the company is actually forcing its owner’s religious beliefs on all employees, no matter their personal religious views.

I’ll ignore their first point as irrelevant (Look! Shiny!) and proceed to their second, which is blatantly cynical.  Think Progress actually is arguing in all seriousness that religious freedom—any freedom—is solely a pecuniary, fiscal thing, having nothing to do with principle or morality.  How little the Left understands individual liberties and duties.  How little the Left understands the threat to their own freedoms Big Government represents.

But their argument begins and ends with a disingenuously false premise.  Of course, the owners of Hobby Lobby are not at all denying contraception to their employees, nor are they imposing their own religious beliefs on anyone.  Those employees remain free to obtain birth control on their own, to obtain contraceptive “coverage” from other insurers, to engage in any other activity, all in accordance with their own religious beliefs.

Moreover, this refusal to participate in the HHS intrusion inflicts no other harm on their employees, either, including the costs of contraception now to be borne by those employees.  Sandra Fluke’s foolish remarks notwithstanding, contraception is freely available, and nearly free, for instance for $7/mo at any Walmart.  Condoms (the forgotten contraceptive) are just as cheap.

Hobby Lobby’s owners are simply exercising their 1st Amendment rights (that conveniently ignored clause that says, “Congress shall make no law…prohibiting the free exercise [of religion].”)  They’re simply declining to participate in a market for materials their religious beliefs hold to be immoral, while not at all impacting the ability of anyone else to participate in exactly that market.

But there’s another problem here.  When Supreme Court Justice Sonya Sotomayor refused a request from Hobby Lobby for a temporary injunction staying enforcement of HHS’ contraception insurance rule pending adjudication of the primary case, she continued the injustice rather than mitigated it.  In the balance was whether Hobby Lobby’s owners should be forced to suffer enormous economic damage or to violate their religious teachings, and so to suffer enormous moral damage, against whether Hobby Lobby’s employees should be required to go elsewhere for extremely low cost contraception and emergency contraception.  And this balance would have been purely temporary: resolution through the courts is in progress.

Sotomayor’s reasoning is instructive.

While the applicants allege they will face irreparable harm if they are forced to choose between complying with the contraception-coverage requirement and paying significant fines, they cannot show that an injunction is necessary or appropriate to aid our jurisdiction[.]

No.  $1.3 million in daily fines aren’t at all “irreparable harm.”  The moral damage of violating religious principles isn’t harmful at all.  After all, holding at bay that irreparable harm isn’t at all necessary or appropriate to aid the Court’s jurisdiction.  Never mind that it is the purpose of the Court to decide cases in accordance with the law—here the Constitution—and so to minimize overall damage.

And

Even without an injunction pending appeal, the applicants may continue their challenge to the regulations in the lower courts.

But pay, in the meantime, the frightful fiscal or moral cost that Sotomayor so casually dismisses.

Instead, Justice Sotomayor’s ruling said, “Kneel and bend your neck, sucker.  We already know the right answer.”  She carefully chose not to take the low cost—morally, fiscally, or legally—path.

But that’s freedom, Progressive style—Obama style.  Do it our way; we’ll take care of you.  But if you’re really so stupid as to disagree with us, we’ll vilify, demonize, you.  Because, in the first place, logic has no place in the discussion, and in the second place (yes, as in secondarily), your freedom is ours to determine.

Update: A Federal district judge appears to have a better understanding of relative costs and legal efficiency than does our Supreme Court Justice:

US District Judge Lawrence Zatkoff ruled Sunday in favor of Tom Monaghan and his Domino’s Farms Corp., near Ann Arbor.  Monaghan, a devout Roman Catholic, says contraception isn’t health care but a “gravely immoral” practice.

Zatkoff granted Monaghan’s emergency motion for a temporary restraining order until a final decision is made in the case.