THE LIFEBOAT STRATEGY. Mark Nestmann
you can count on the judge in a lawsuit to be “fair?” Then consider this quote from former West Virginia Supreme Court Justice Richard Neely:
As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone else’s money away, but so is my job security, because in-state plaintiffs, their families, and their friends will re-elect me. It should be obvious that the in-state local plaintiff, his witnesses, and his friends, can all vote for the judge, while the out-of-state defendant can’t even be relied upon to send a campaign donation.9
Are You the “Deep Pocket?”
In every legal dispute, lawyers look for “deep pockets” to sue. A textbook example of this phenomenon occurred in 2003, when fire raced through the Rhode Island Station nightclub, killing 100 people and injuring more than 200. The fire started when the manager of the band playing at the club set off fireworks and other pyrotechnics onstage. The open flames ignited soundproofing foam, and the fire quickly spread throughout the club.
In the blizzard of lawsuits that followed, members of the band that set off the fire paid out $1 million. The owners of The Station reached an $813,000 settlement. But that was just the tip of the iceberg.
• Beer sponsor Anheuser-Busch and a local beer distributor were sued because they sold beer and promoted the nightclub. They paid out $21 million.
• Sealed Air, a company that manufactures polyethylene foam for packaging material, was sued because lawyers alleged that such foam in the soundproofing contributed to the rapid spread of the fire. However, lawyers presented no evidence that Sealed Air manufactured the foam used in the club. In addition, Sealed Air's foam is designed for packaging, not for soundproofing. Nonetheless, the company paid out a $25 million settlement.
• Home Depot was sued for not warning of the potential hazards of the insulation they sold the club, despite the fact that the insulation Home Depot sold is different from the foam ignited by the pyrotechnics. Home Depot paid $5 million to make the lawyers go away.
• A television station that filmed the fire paid out $30 million.
• The state of Rhode Island and the town of West Warwick agreed to a $10 million settlement.
• The bus company that provided transportation for the band paid out $500,000, because it transported the fireworks
• The manufacturer of the speakers used at the club settled for $815,000. Lawyers accused it of using flammable foam inside their speakers.
Other defendants included fire inspectors, along with the architect who designed the building 40 years ago, along with the construction company that built it.
In all, the victims of this tragedy and their families received about $175 million. Yet, those individuals most responsible for it—the nightclub owner and the band—paid only about 1% of this amount. Companies that only had remote connections to the calamity paid out the remainder.10
If You Hire an Obese Worker, You May Have to Pay for Their Weight-LossSurgery
Here’s another insane result of America’s lawsuit epidemic.
Let’s say you operate a restaurant. Now, restaurants fail at a high rate in even the best of times, but in an economic downturn, they fail in droves. And if the following incident happened to your restaurant, I suspect you’d shut it down the next day.
A prospect applies for a job as a cook at your pizza shop. Sure, he weighs 380 pounds, but since the Americans with Disabilities Act forbids discrimination against the “morbidly obese,” you hire him.
All goes well for a time. Then one day, a freezer door hits your cook in the back. Your worker’s compensation coverage is adequate to pay for the cook’s back surgery. But what happens next is a classic example of American lawsuit mania.
Naturally, the cook hires a lawyer. A few days before the cook’s surgery, his lawyer calls. It seems the cook must undergo weight-loss surgery before the back surgery. Doctors have advised him the weight loss surgery is necessary to ensure the success of the back operation. And, his lawyer says, you must pay the $20,000 cost for the weight loss surgery, since it exceeds your worker’s compensation insurance limits.
Now, you hire a lawyer. Your lawyer tells you that you shouldn’t have to pay. So, the cook sues you and your business for $20,000. You lose the case, but your lawyer tells you that you can appeal. You appeal the decision, and lose again.
In a nutshell, that’s what’s happened to an Indiana pizza shop in 2009. And, on Aug. 6, 2009, the Indiana Court of Appeals ruled the shop must pay the cost of lap-band surgery for an obese cook injured at work.11
Only three weeks later, the Oregon Supreme Court issued a similar ruling.
First, We Led Your Husband to Suicide. Now, We’re Coming for Your Property
Mara Lynn Williams is a widow and cancer survivor. She lost her husband, Royce, in 2009. Then the government tried to seize her hardscrabble 40-acre farm in Chilton County, Alabama.
You see, Royce smoked marijuana. Not because he was trying to get high, but because it was the only substance that relieved his chronic pain after multiple surgeries.
However, in the government’s War on (Some) Drugs, persons who smoke marijuana for any reason are considered criminals. And that’s particularly true if they cultivate it, as Royce did on the couple’s farm.
In 2009, as a jury was deliberating marijuana cultivation charges against Royce, he climbed into the family car and shot himself. His suicide ended the criminal case, but prosecutors decided to seize the couple’s property, even though they never accused Mara Lynn of any crime. Asset Forfeiture Coordinator Tommie Brown Hardwick said, “The bottom line is, we don’t want people to benefit from criminal activity.”
Let’s count all the ways that Mara Lynn Williams has benefited—or not—from criminal activity.
First, prosecutors never accused Royce—or Mara Lynn of actually selling marijuana. They only accused Royce of cultivating it with the intent to sell it. So, Mara Lynn didn’t receive a penny in “criminal proceeds.”
Second, during a raid on the couple’s farm, police seized firearms, $18,400 in cash, vehicles, computers, and other personal belongings. Mara Lynn got some of the vehicles back, but not the cash.
Third, Mara Lynn had to hire an attorney to represent her in the forfeiture case. I’m not privy to the fee arrangements, but typically, attorneys defending civil forfeiture cases receive a retainer of $20,000 or more.
In the meantime, she continued to work as a nurse at Jackson Hospital in Montgomery. The government through its insane drug war had already taken her husband and $18,400 of the couple’s savings. Now it wanted to make her homeless.
In the end, the government settled for the cash. In 2010, it closed civil forfeiture claims against Mara Lynn in exchange for the $18,400 it had already seized. As is typical in civil forfeiture cases, the settlement stipulated, “The parties shall bear their own costs.”12
Far from benefiting from criminal activity, Mara Lynn is out $18,400 in cash, plus attorney fees!
The Riskiest Activity My Clients Engage in Is…
Marriage. That’s right. Marriage.
I’m not talking about physical risk here (although some marriages do involve physical abuse), but financial risk. That’s because marriage, or more specifically the end of marriage, or divorce, can pose an unprecedented risk to your wealth.