While debate over the proposed $700 billion Wall Street bailout continues, class-action securities attorney Jeffrey Zwerling says shareholder lawsuits are almost certain to follow. Zwerling, of New York-based Zwerling, Schachter & Zwerling, LLP, says disgruntled shareholders who were misled by financial institutions will be filing litigation

trying to recover their substantial losses.

"Because the executives at some of these financial institutions, investment banks and mortgage houses were treating their businesses as if they were their own personal casinos, the investors didn't receive the value they thought they paid for," he says. "All they received was an illusion."

Zwerling is already actively involved in litigation related to the collapse of the auction-rate securities sector earlier this year. He represents the lead plaintiff in a securities class-action against Citigroup in auctions it managed. After the market for auction rate securities shut down early this year, investors were left with no access to their money. Since then, New York Attorney General Andrew Cuomo has forced Citigroup and other institutions to make good on the auction rate securities, but still unknown is whether pension funds and the individual workers they represent will receive any money.

Zwerling also represents the Wayne County Employees Association in a class-action against MGIC Investment Corporation, a provider of private mortgage insurance. The lawsuit claims that MGIC failed to warn investors of large financial losses it was experiencing as a result of the worsening credit crisis and problems in the home mortgage industry.

For more information or to speak with Jeffrey Zwerling about the financial crisis, call Mark Annick at 800-559-4534 (office) or mark@androvett.com.

Remember when e-mail first became popular and warnings abounded about the self-policing nature of the World Wide Web? Early e-mail spammers found their e-mail mailboxes crammed with hate mail from folks who wanted to keep commerce out of the ether. Regrettably, spammers won that battle, but Web 2.0 and its myriad social media networks still have a Wild West feel, and cautionary tales are emerging for those who attempt heavy-handed solicitations.

Consider Twitter, an often maddening medium that gives you an opportunity to send out short messages accompanied with a Web site link to targeted groups. Seattle law firm Hagens Berman Sobol Shapiro and their marketing firm suffered widespread wrath when they used Twitter in an attempt to recruit class-action plaintiffs for a case against Verizon Wireless. The blunder got the attention of the Wall Street Journal and many, many others.

While the ubiquitous `I'm stuck in traffic on the way to the airport' Twitter posts that I typically receive are about as useful as spam and good examples of useful Twittering remain rare, the takeaway here is to think a little before you step out and pursue Web 2.0 marketing. Legal blogger Kevin O'Keefe nailed it with his recent post, Be smart. Just because your law firm, marketing company, or PR agency heard of a new communication tool that others have found powerful, doesn't mean you should start using it tomorrow. You need to know how to use tools like Twitter. This means getting out and playing with Twitter. Use it for personal use. Look at how others are using Twitter. Twitter on training wheels if you will. Then start using Twitter in business settings - after you feel very comfortable with how Twitter works. If you don't feel comfortable, don't start.

Lawsuit filed by Houston attorney Mark Lanier questions whether Rice University adequately screens its young athletes
A simple blood test by the Rice University athletic department would have revealed that a young football player should not have been given a nutritional shake containing

creatine, according to a lawsuit filed by Houston attorney Mark Lanier. Dale Lloyd II's 2006 death after drinking the shake during a conditioning workout is now putting a spotlight on whether college athletic departments are properly screening college athletes.

At issue is whether Rice coaches should have known that Lloyd had a blood condition common to African-Americans that placed him at greater risk of suffering from rhabdomyoloysis by injesting the shake containing creatine. Creatine is a naturally occurring organic acid that supplies energy to muscle and nerve cells, but it also causes dangerous side effects, including rhabdomyoloysis, a breakdown of muscle fibers that causes the release of harmful substances into the bloodstream. Medical literature has long warned about the increased risk of rhabdomyoloysis for those who use nutritional supplements and also have the trait for sickle-cell disease.

Lloyd collapsed after he was given a nutritional shake by Rice football coaches and ordered to finish a conditioning workout. Despite having trouble breathing and in obvious pain, coaches ordered other players not to help him and forced him to complete the workout, according to the lawsuit. Lloyd was hospitalized and never regained consciousness. Although African-Americans comprise a large number of student athletes at U.S. universities, very few schools test for the sickle cell trait, exposing thousands of young people to the conditions that lead to Lloyd's death. "If Rice University had conducted simple blood tests on African American student athletes, then they would have seen that Dale had the sickle cell trait and that he should never been given a creatine-based supplement directly before being forced to complete such a brutal workout," Lanier says.

 

Plaintiffs' attorney Mark Werbner dubious of pending Texas Surpreme Court review
As challenges mount to the 2003 tort reforms, the Fort Worth Star-Telegram outlines how backers of Texas tort reform are taking an unusual step and seeking out a direct appeal of a case to the Texas Supreme Court for a ruling on whether the reforms comply with the state constitution. Plaintiffs' attorneys like Mark Werbner of Dallas-based Sayles Werbner question the strategy used by supporters of tort reform, telling the Star-T that the unusual direct

appeal to the Texas Supreme Court appears to be an attempt to prevent other cases that promise a stronger challenge to the reforms. "This is another way to put more nails in the coffins of people who are dying because of medical malpractice," he says, adding that tort reform has created a system that has taken away the ability of most Texans to seek legal recourse for medical errors.

Supporters of tort reform, meanwhile, describe how changes in the system in Texas have made the state a more friendly economic environment for doctors.

The Star-T sums it up:  The debate pits two sides with starkly different takes on the effects of the cap. To the medical groups, the $250,000 cap on "noneconomic" or compensatory damages for pain and suffering has helped high-risk patients because doctors are now willing to accept complex cases. Proponents say the cap has also made it easier to recruit new physicians - Texas has almost 300 more licensed doctors than it did a year ago. What's more, medical liability rates have dropped by 26.6 percent overall since 2003, when the cap became law, according to the Texas Department of Insurance. Critics say the cap dealt a crushing blow to patients' rights because many of those who suffered life-threatening injuries effectively have no legal recourse. That's because of the economics of the lawsuits.

Cowles & Thompson Antitrust attorney Jim Chester: curious timing for probe
It's become a toss up for many lately as to which monthly bill is more unpleasant to open...the electricity bill or the cel phone. For those who have embraced text

messaging, costs have doubled since 2005 to a whopping 20 cents per message. 20 cents here, 20 cents there...if you have a teenager, pretty soon you're talking about some real money(insert emoticon here).

The Dallas Business Journal analyzes the issue and efforts by Senate antitrust subcommittee chairman Herb Kohl to get some answers from the four major wireless phone companies. DBJ reporter Jeff Bounds explains in the piece that Kohl finds the hike curious because text messages cost little to transmit because they are small and that the four carriers each raised rates with identical spikes almost simultaneously. Kohl has asked the four carriers -- AT&T, Sprint, Verizon and Nextel -- to justify their rates by Oct. 6.

Jim Chester, chairman of the international business and trade practice at Dallas' Cowles & Thompson, explains that politicians are obligated to enforce antitrust statutes, but he finds the timing of the probe _ at the height of the political season _ a little curious. 

More than five years after the Sarbanes-Oxley Act was created following a wave of major corporate scandals, whistleblowers have not received the protections that many expected when SOX was first created. According to the Wall Street Journal, whistleblowers prevailed in only 17 of the 1,273 cases filed since 2002. The result: a chilling effect on whistleblower complaints and increasing boldness by employers facing such complaints, says attorney Wade McClure, who handles complex business litigation at Dallas-based Gibson McClure Wallace & Daniels. "The protections in Sarbanes-Oxley are minimal, and whistleblowers are suffering as a result," he says. "People are ‘blowing the whistle' thinking they will be protected by the Act, but instead they are terminated and ridiculed. They incur substantial time and expense only to be left with no remedy or recourse." To interview Mr. McClure about whistleblower trends and business litigation, contact Robert Tharp at 800-559-4534 or robert@androvett.com.

Young Dalton Sherman is on a roll. After winning the the 16th annual Gardere Martin Luther King Jr. Oratory Competition with a speech about community involvement that ended with the closing line: "...a drum major with no band is just a

fool dancing on the football field," the Charles Rice Learning Center fifth-grader has already appeared on the front page of the Dallas Morning News and served as the warm-up speaker for Maya Angelou. His YouTube video has been seen more than 150,000 times, and he was tapped to give an inspirational speech for teachers and administrators at the Dallas school district's start-of-school pep rally at the American Airlines Center a few weeks ago. Now Dalton is set to appear on the Ellen Show this Thursday.

The number of immigrants applying for U.S. citizenship has plummeted in response to higher application fees, the economic downturn and efforts to toughen the naturalization exam, says immigration attorney Irina Plumlee of Dallas' Gardere Wynne Sewell. Plumlee, who focuses on a wide range fo business and personal immigration issues, has strong opinions about the trend and says the country stands to suffer when its immigration population doesn't have a straightforward manner to achieve citizenship. "It's in everyone's best interest to fully integrate the immigrant population into our political and economic structures, but these changes are likely to impact the number of non-U.S.-born voters at the polls," she says. "Citizenship proceedings should be offered in a straightforward manner, without unnecessarily complex tests and burdensome charges." The number of applicants has dropped by about one-half since a 70 percent fee increase was instituted last year. To speak with Ms. Plumlee about immigration issues, contact Rhonda Reddick at 800-559-4534 or rhonda@androvett.com.

Attorneys survive on their ability to nimbly react to the legal task at hand. If they hadn't done so already, lawyers and law firms along the Texas and Louisiana Gulf Coast got a lesson in the importance of being able to adapting to a changing physical environment as well, returning to work in a region paralyzed by Hurricane Ike. From solo attorneys operating from their cars to international firms like Thompson & Knight, attorneys returned to work this week to ravaged landscape with unique logistical challenges. As Texas Lawyer reported, Thompson & Knight LLP was functioning and touching base with Houston-area clients by Monday morning. The firm quickly pulled together a task force to responsd to issues posed by the storm's destruction, such as insurance claims, landlord-tenant provisions and labor and employment maters.

"I'm very pleased that we have been able to move quickly to resume a level of normal business operations," Houston managing partner Dallas Parker said. "Our attorneys already have been able to respond to some pressing business demands of our clients related to the current issues in the financial markets as well as to offer counsel on matters stemming from Hurricane Ike. Like thousands of others in the areas affected, many of our Houston employees are coping with the personal needs of their homes and families... We are encouraging our workforce to continue working remotely and follow the direction of local and state officials in safely returning to downtown."

Pension funds and ordinary investors appear to have the most to lose in the federal bailout of Fannie Mae and Freddie Mac,

says attorney Jeffrey Zwerling, whose work includes securities class actions and mortgage banking. There's been much discussion about the bailout's effect on homebuyers and taxpayers, but investors are on the hook to lose the most, Zwerling says. "It seems the U.S. government intervened to keep foreign investors from pulling their money," says Mr. Zwerling, of New York's Zwerling, Schachter & Zwerling, LLP. "Treasury Secretary Henry Paulsen has said ‘the government will be repaid... before the shareholders of these companies get a penny,' and that just means that the pension funds and ordinary folks that invested hard-earned money may end up bearing the risk for the rest of the country." To interview Mr. Zwerling about the Fannie Mae bailout and the credit-market crisis, contact Mark Annick at 800-559-4534 or mark@androvett.com.  

While the airline industry contracts, consolidates and generally struggles to find a way to survive, niche aviation businesses are thriving as they nimbly fill the gaps, says aviation attorney and pilot David Norton of Shackelford, Melton & McKinley in Dallas. Most recently, Miwok Airways began an air-taxi service in California, shuttling

people on "ultra short haul" from place to place on demand. As the LA Times describes it:

Harking back to the early days of aviation when pilots in biplanes picked up passengers on farm fields, the flights on Miwok Airways are not scheduled. They fly on demand and can take off from any of the more than three dozen airstrips in the region. Passengers can set their own flight time and then be flown in four-seat Cirrus propeller planes with fares as low as $82 one way. The fare will depend on the distance between airports and on how many people are sharing the plane, rising to more than $300 if no other passengers are on the plane. The plane can seat three paying passengers. By comparison, chartering a plane can cost more than $600 an hour.

These kinds of services will no doubt only become more common as large carriers cut costs by abandoning or drastically reducing service to mid-sized and less-profitable airports. "We're seeing the evolution of the air travel business," says Norton, who helps clients navigate laws and regulations involved in leasing corporate jet aircraft, also sat on the panel advising the FAA regarding on-demand air travel rules. "The airlines are never going away, but very soon this kind of air taxi service is going to be more and more common."

As the music industry's aggressive legal crackdown on file-sharing turns five this week, there's little to celebrate, says attorney William Munck of Dallas-based Munck Carter. Peer-to-peer file-sharing remains as popular as ever, despite more than 30,000 complaints filed by the Recording Industry Association of America against what Wired magazine describes as the elderly, students, children and even the dead. "Despite this crackdown, billions of music files are still being shared," he says. "The industry has had some success, but it is modest compared to the losses that continue to mount."

Lots of factors figure into your chances of prevailing in a court before a jury of your peers, but it's a little surprising that a plaintiff's facility to speak English appears to play such an important role. That's the conclusion of a soon-to-be-published academic study by Dallas attorney Angel Reyes and Texas Tech University Rawls College of Business professors Bradley T. Ewing, Ph.D., and James C. Wetherbe, Ph.D. Among Hispanic plaintiffs, the study found that English speakers had better success in court than their non-English-speaking counterparts. In fact, Hispanic plaintiffs who relied on an interpreter during testimony were 15 percent less likely than an English speaker to obtain a jury verdict that exceeded the settlement offer. "What this study shows is that while Lady Justice is blindfolded, she certainly is not deaf," Reyes says. "This raises profound questions about the right to a fair trial and the impact of language differences."

The term `cloud computing' conveniently lacks a certain intuitiveness. It's a hot topic in lots of industries; Dell even tried unsuccessfully to trademark the term. For now, Google's aggressive embrace of the cloud computing concept is having the most direct impact for most of us out there on the interweb. Anyone who uses Google's Gmail and Google Docs is essentially benefitting from cloud computing. But wouldn't ya know there had to be a potential dark side to all this `free' stuff that many don't consider when using these services. Consider this fascinating story in the Houston Chronicle, describing how under the services' terms of use, Google reserves unlimited rights to use your content. E-commerce attorney and Vogel IT Law Blog author Peter Vogel says attorneys should think twice about communicating via gmail accounts because the terms could be interpreted as waiving the attorney-client privilege.

According to the Chronicle: Google, which prides itself on not being evil, offers a few more protections in its online legal agreement that everyone accepts before using its products. The agreement states that users retain the copyright to content they post, submit or display using Google's services. But Google gets "perpetual, irrevocable, worldwide, royalty-free and nonexclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute" any of the content. What's more, Google can make that content available to any companies or organizations it chooses.

"Most people do not pay any attention to what the terms of use are, but courts all over the world enforce those terms of use," said Peter Vogel, an attorney with Gardere Wynne Sewell in Dallas who teaches a course at Southern Methodist University on the law and e-commerce.

So the problem remains: What you put in cloud services such as Docs and Gmail, Google's free Web-based e-mail, isn't really yours anymore. Google doesn't make money by giving us gigantic e-mail accounts. Its profit comes in part from selling ads tied to the content of messages sent with those accounts. In other words, it's sifting through our messages, looking for sales leads. And it's not just Google. "When one uses an online service - Google, Yahoo, AOL - there's a click agreement that nobody ever reads. Somewhere embedded in the agreement you waive all sorts of ownership issues," Vogel said.

Wasn't that long ago that advertising was off limits to lawyers and law firms. The prevailing thought was that lawyer ads somehow demeaned the profession. That stodgy attitude started to change with the Supreme Court's 1977 Bates vs. Arizona Bates vs. Arizona ruling that the First Amendment allows lawyers to advertise, provided the message is not misleading to the public.

Thirty-one years later, some firms are really embracing creative advertising(other firms, not so much). Gardere Wynne Sewell, for example, understands that such a campaign can go hand in hand with being a big, internationally respected firm. Gardere was recently singled out to receive the prestigious "Award of Distinction" from the International Academy of the Visual Arts Communicator Awards for its smart "They call it/We call it" campaign.

There was plenty of finger pointing when a popular engine used in small airplanes began to fail, causing deadly crashes and a worldwide recall. Lycoming, a susidiary of Textron, had a legal strategy that amounted to diverting blame at all cost, claiming that tiny Navasota, Texas-based Interstate Southwest, Ltd., was responsible for supplying defective crankshafts that caused the engines to fail.

After an exhaustive investigation and legal battle in which attorneys from the Dallas law firm Rose•Walker became experts in the intricacies of plane engine design, a Grimes County jury sided with Interstate Southwest, dinged Lycoming for fraud and handed Interstate Southwest a $96 million verdict in 2005. The verdict was later reduced by an appeals court, but the Supreme Court of Texas this week upheld the trial court's key rulings that Lycoming alone is responsible for the design defects that caused the engine failures. The appeals court's decision effectively closes the door on any legal attempts to hang blame on Interstate Southwest and also wipes out Lycoming's $186 million counterclaim against Interstate Southwest.

The ruling should end six years of litigation, says attorney Marty Rose of Rose•Walker. "This Supreme Court decision means Interstate Southwest wins and Lycoming loses - it's as simple as that," Walker says. "A jury of 12 people looked at this and said that Lycoming was to blame. This decision affirms that."

KXAS reporter Brett Johnson found the perfect man-on-the-street interview for his story about the aggressive position taken by Sprinkles Cupcakes to protect their high- dollar cupcake empire: "You wouldn't really think that something so little and so minor on top of a cupcake would be part of a trademark," the unidentified patron said, contemplating the circle-within-a-circle icing design on top of each Sprinkles cupcake.

Indeed. This summer alone, Sprinkles has warned one rival to discontinue using a similar circle motif in its packaging. Most recently, it threatened a cupcake peddler called "Sprinkled Pink Cupcake Couture" and ordered that the business change its name. As Munck Carter intellectual property attorney Dyan House put it, protecting Sprinkles' distinctive niche is a fight worth having and goes to the core of trademark law, whether you're talking about cupcakes or technological innovation.

Among medical malpractice attorneys, few consider the Supreme Court of Texas a friendly venue when it comes to reviewing jury awards. That's why Friday's ruling upholding the punitive damages in a big medical malpractice verdict is so significant.

The ruling stems from a 2001 verdict by a Dallas County jury awarding $9.2 million in compensatory damages and $21 millin in actual damages to the family of a man who died of a heart attack after waiting 12 hours for treatment after complaining of chest pains at the Las Colinas Medical Center. The 5th Court of Appeals in Dallas previously reduced the total award to approximately $5.4 million based on existing Texas laws limiting damage awards in health care claims. Given the Supreme Court of Texas' reputation, there was concern that justices would further reduce the award. Instead, the Supreme Court upheld the award against Columbia Medical Center and also reversed an award for loss of inheritance damages.

"We are extremely pleased to finally have this case resolved through this just, but infrequent affirmance of punitive damages," says attorney Mark Werbner, co-founder of Sayles Werbner and trial counsel for the Hogue family. "This opinion is especially gratifying because the Hogues have had to wait so long for the court to rule. The Supreme Court of Texas is known far and wide for reversing court judgments favoring plaintiffs, particularly in medical malpractice cases, and it is important that this decision is perhaps putting a halt to that trend."

Under the court's ruling, defendant Columbia Medical must pay the Hogue family approximately $10 million when the amount of pre- and post-judgment interest is included with the $5.4 million award of actual and punitive damages.

An interesting trend story in this week's National Law Journal describes how the business world and law firms are increasingly turning to former federal agents and prosecutors at sophisticated investigation firms for help with high-stakes matters like corporate espionage, trade secret theft and workplace discrimination claims. Firms like Stroz Friedberg, LLC, which has just opened a Dallas office, are primarily staffed by former federal investigators and high-level federal prosecutors. Stroz Friedberg's Erin Nealy Cox tells the NLJ that clients value their expertise and ability to work behind the scenes.

"Part of our value to our client is being able to work with and solve really big problems without anyone knwoing about it. We can't go out like law firms tha splash their verdicts across the front pages of newspapers. We just can't do that." Behind the scenes, Cox said. firms like hers are helping law firms win lawsuits, settle lawsuits and avoid them altogether. They help in-house counsel investigate internal problems, such as data breaches and intellectual property theft, to determine whether legal action needs to be pursued. "The law firms don't have the forensic laabs that we have," she said. "They don't have the private inestigator experience that we have. We look for that smoking-gun e-mail or document"