March 27, 2008

Of Zyprexa

The State of Alaska just resolved its claims against Eli Lilly & Company over Zyprexa.

I admit that I’m not really qualified to pass judgment on the State’s decision to settle. The only information I actually have about the case is from watching the TV news, unless you count eavesdropping on other non-involved lawyers at the next table while I was eating lunch at the Sandwich Deck.

monsterundies.jpgI can understand the State’s discomfort about the case. The 8,000 pound elephant in the courtroom was the U.S. Supreme Court. The High and Mighty Court earlier this year ruled that defective product claims against medical device makers had to be given the big “No Way Jose!” under the Medical Device Amendment to the Food, Drug and Cosmetic Act. The creeping fear amongst the plaintiff-type lawyers is that the High and Mighties may well extend this same reasoning to another pending case that, like the Zyprexa lawsuit, involves drug labeling under the Act. (The High and Mighties should not be confused with the Tighty Whities, which can ride up, creating a whole different kind of “creeping fear.”)

Still, settling is never an easy thing to do when a lot is at stake, especially without a jury verdict. A favorable jury verdict -- assuming the trial was headed that way -- could have meant a bit more consideration in any final deal.

[FULL DISCLOSURE: I'm originally from Indianapolis (Lilly's HQ) and I own a small position in Lilly. My equity interest is so small that the bump up in Lilly stock the settlement provided today was less than nominal.]

March 21, 2008

The Vulcan Salute

The court system is a very strange place. Too often people put themselves inside it when they have no business being there. They start out all revved up about righting some perceived injustice. But they quickly discover that they have just placed their foot on the first step down into Hades and they cannot back out. They’d be much better off steering clear of the courts altogether.

Many years ago, I had an odd encounter when I was clerking for a federal judge in Portland, just after I graduated from law school. The Portland federal courthouse in those days had nothing like the security the courthouses now have. Anyone could get inside the courthouse and walk right up to the door of the judge’s chambers, if so inclined. The door to our chambers was kept locked, though. There was a camera and an intercom system just outside the door. Visitors had to push the buzzer to connect with the judge’s secretary before she would admit them through the door. The secretary was a formidable old battleaxe, who disliked me and all other pipsqueak law clerks something fierce. But the whole security set up was nothing that a determined nutjob could not have gotten past if he was bent on getting revenge against the judge.

There weren’t many people who actually bothered trying to be admitted to chambers. But we did get a regular visitor to the checkpoint right outside the door. Every month or so an older looking gentleman would show up. He was always dressed neatly but he was clearly not quite all there mentally. He would walk up to the security camera and, without pushing the buzzer to connect on the intercom, he would hold up a hand-written piece of paper. He would stand there for maybe 15 minutes, holding his paper up to the security camera. If he stood there too long, the battleaxe would call someone to come up from the clerk’s office to get rid of him, but he would always wander off before anyone actually showed up to escort him out.

One day curiosity got the better of me. After the guy had been standing there with his paper up to the camera for maybe 15 minutes, I went out to see what this fellow was all about. The battleaxe growled at me but I went out nonetheless. The guy was turning to leave just as I walked out the door. He was shocked to see me; it must have been like one of the gods had just descended from Olympus to mingle with the mortals.

“Can I help you?” I asked. The guy stared at me all wide-eyed and held out his piece of paper. I looked at it but I couldn’t make out what it was trying to say. The words were in English but they made no sense at all.

“I don’t understand,” I said. He started talking in a strange language that I had never heard before. “Prosim zabramit mi,” he said. It could have been Czech or another Slavic tongue, but to me it made as much sense as Klingon.

He gestured emphatically to the paper. “Prosim zabramit mi!” And he held it up in front of my face. The old battleaxe, who had been watching on the security camera, barked over the intercom: “I’m calling the U.S. Marshal!”

The guy seemed harmless enough so I didn’t want to see him dragged away in handcuffs. I put my hand on his shoulder and lead him back down the hallway to the elevator. As we were waiting for the elevator to show up, he was jabbering away in that strange lingo of his.

The elevator arrived finally and I gently nudged him into it. He held up the paper to my face again, through the open door. Right then it occured to me that this guy just wanted someone to hear about his plight. He had a grievance and he wanted to petition the government for redress, just like it says in the Constitution. He thought that holding the paper up to the camera was the way you asked for relief from the court.

spock_giving_vulcan_salute_286x215.jpg As the door started to close I said to him: “Sir, we have heard your complaint and we will look into it.” I gave him the Vulcan salute that Mr. Spock used on Star Trek. The guy put his hands down and, as the door closed, he smiled so brightly it was like a Roman candle went off in that elevator car.

The guy never showed up outside our chambers again. I guess he was content that his grievance had been heard, whatever it was. And, although I couldn’t be sure, it kind of seemed like the old battleaxe was just a wee bit nicer to me afterwards.

Now when I have clients who are bound and determined to file a lawsuit and sue the evil snakes on the other side, I always caution them about getting in over their heads. I’m also tempted to take them over to the courthouse and have them just tell their tale to one of the security cameras there, instead of actually filing a lawsuit. They would probably feel better afterwards and in most cases it would save them a lot of money and anguish in the long run.

* * * *
Read up on the Czech language here.

You can buy a Klingon dictionary and other useless stuff through the Klingon Language Institute.

The U.S. Marshals Service has its own website with a lot of interesting things on it, including their "Most Wanted" list. And don't try to sneak a cell phone past them at the federal courthouse because they still have the legal authority to form a posse to hunt down outlaws.

March 14, 2008

Beware! The Ides Of March Has Come But It Has Not Passed

Mark Twain said, “The difference between the right word and the almost right word is the difference between lightning and a lightning bug.” I’ve been mulling over Twain’s words as I sit here at the Commercial Law Juggernaut that is the southwest corner of Atkinson, Conway & Gagnon.

It is appropriate that this topic comes up just before the fateful Ides of March because any number of misfortunes can befall the hapless, gentle businessperson who ends up using the wrong set of words. Like a big unexpected expense, if the gentle businessperson who is selling a few truckloads of logs uses the phrase “FOB” when she meant to say “FAS.” I had a client actually do that once. By chance, I got a look at the contract right before it was to be signed. I was just in the nick of time to explain that “FOB” means “free on board” and that the client had to pay for the cost of loading the logs. This is in contrast to “FAS,” which means “free alongside” and obligates the buyer to pay for the loading. The client was glad there was a Commercial Law Juggernaut backing her up on that day.

There can be any number of ways of saying the same thing, but the words used can give a completely different sense to it. For instance, let’s take the beginning of William Shakespeare’s famous funeral oration from Julius Caesar. In the oration, Mark Antony is eulogizing Caesar, who Brutus and others murdered on the Ides of March (depicted below in a painting by Vincenzo Camuccini).

VincenzoCamuccini-The-Ides-of-March-1800.jpg

Shakespeare started the oration this way:

Friends, Romans, countrymen, lend me your ears;
I come to bury Caesar, not to praise him.
The evil that men do lives after them;
The good is oft interred with their bones;
So let it be with Caesar.

Contrast Shakespeare's words with those of Beat Generation cult figure Lord Buckley, who re-wrote the passage this way:

Hipsters, flipsters, and finger-poppin’ daddies,
Knock me your lobes.
I came here to lay Caesar out,
Not to hip you to him.
The bad jazz that a cat blows,
Wails long after he’s cut out.
The groovey, the groovey is often stashed
With their frames.
So don’t put Caesar down.
To swing, or not to swing, that is the hang-up!

(That last line is, of course, a take off from a different Shakespeare play, Hamlet. But you can’t expect an inventive mind like Lord Buckley's to always color inside the lines.)

Now Shakespeare -- who Buckley called “Willie the Shake” -- and Buckley were both writing about the exact same thing. The words each chose, however, gave the oration an entirely different tenor. The same thing can happen with commercial contracts. You might mean to say that your obligation to deliver that load of logs is conditioned on the weather allowing you to cut the timber, but it might not come out that way on paper. If you use the almost right word instead of the right one, your contract could excuse you from performing when a plague of lightning bugs descends rather than when unusual lightning and rainstorms occur.

So whether you are a gentle businessperson, or a Roman, or a finger-poppin’ daddy, beware the Ides of March and the opacity of the English language. The jazz a bad contract blows can wail long after the deal has been cut out.

* * * *
Brush up on your Shakespeare! You can read all of Willie the Shake’s plays in their entirety on-line: Shakespeare On Line.

Information on the one and only Lord Buckley can be found here: Dig Lord Buckley!

A short biography of Neoclassic painter Vincenzo Camuccini is posted on Wikipedia: Camuccini Bio.

March 2, 2008

Tell 'Em Large Marge Sent Ya!

The Alaska Supreme Court’s decision last week in Mullins v. Oates is a cautionary tale for those selling real estate in Alaska. The case shows that you have to be careful about how your deal gets put together. For just this reason, its always helpful to have a pessimistic, worrywart real estate lawyer in your corner who can point out the pitfalls up ahead.

In the Mullins case, Alice Oates, the owner of some land and a building in the burgeoning metroplex of Tok, Alaska, sold the property to Margret Mullins. Mullins apparently lacked the ability to get a bank loan so Oates engaged in a form of owner financing for the deal. Oates sold the property to Mullins under a contract of sale. (The phrase “contract of sale” should mean that red lights are flashing for all the cynical real estate lawyers out there. The red lights are also probably flashing even for the optimistic, sunny-side-of-the-street real estate lawyers out there, if there actually are any such creatures.)

You see, a sale on a contract means that the seller hangs on to the title to the real estate until the seller is paid in full. The buyer gets the immediate right to occupy the property and can even make improvements to it while its being paid off. But if the buyer fails to make the required payments, the contract says that the seller can take the property back and throw the buyer out into the street. At least, the contract gives the seller that right in theory.

The problem with this arrangement is that the law does not know what to do when a default occurs. Equity abhors a forfeiture and so do most judges. The courts don’t like to see the poor buyer get stiffed on the property after perhaps making years of payments and even erecting a building or two. To complicate matters further, there is no easy remedy available to the seller to enforce the requirement that the buyer get lost after failing to make the payments. The non-judicial foreclosure procedure that is available for deeds of trust does not apply to contract deals. The contract seller ordinarily has to go to court for a judicial foreclosure to actually terminate the buyer’s rights.

(As an aside, I will point out that on occasion one comes across a lower court judge who has no problem enforcing a contract as written, even if it means a forfeiture occurs. These rare and enlightened beings -- who are like a fresh summer breeze blowing through the mausoleum that is the courthouse -- are almost certain to have the highest reversal rates in the appellate courts.)

So poor Alice Oates had to go to court to throw out Margret Mullins when the required payments were not made. It turned out that the sweet, hard-working Maggie Mullins who Oates originally made her deal with later changed into the buyer from hell. The transformation was one worthy of Large Marge in the movie Pee-Wee’s Big Adventure.

Large Marge Mullins represented herself in the lawsuit and battled over nearly everything. The parties eventually struck a settlement, but Mullins disavowed it and went as far as accusing the Magistrate who brokered the deal of coercion. Large Marge also wrapped herself in the Constitution, desperately claiming that she was being deprived of equal protection of the law and due process by being held to the deal she had made.

The Alaska Supreme Court rejected Large Marge’s arguments and upheld the lower court’s judgment in favor of Alice Oates. The end result was a judgment confirming the property belonged to Oates. The only problem was that the confirmation finally came more than six full years after Mullins stopped making payments on the property. This is in contrast to the four or five months that a non-judicial foreclosure would have taken if the original deal had been structured correctly.

But have we heard the last of Margret Mullins? Perhaps not. Its unclear whether the judgment in Alice Oates' favor is really an order for judicial foreclosure or not. The argument can be made that it has to viewed that way. In a judicial foreclosure setting, Mullins would have a one-year right of redemption through which she could regain the property. We can only hope that Large Marge Mullins does not tumble to this issue.

By the way, the best line from Pee-Wee's Big Adventure comes when Pee-Wee is talking with the cafe waitress, Simone, about her dream to live in Paris one day. Pee-Wee encourages Simone to just go for it, at which point the following dialogue occurs:

Simone: I know you're right, Pee-Wee. But, . . .

Pee-Wee: Everyone I know has a big "But." (Sigh.) C'mon, Simone, let's talk about your big "But."