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It is the uncommon occasion when creditors seek the Bankruptcy Court's assistance to impose a settlement that compromises the debtor's asserted rights to recovery against third parties. While settlements are typically preferable to the debtor's engagement in contested and costly litigation, it is a challenge to convince a court to compromise a debtor's asserted claims. In a recent case in the United States Bankruptcy Court for the Southern District of New York, a settlement was negotiated and ultimately approved by the Bankruptcy Court over the vigorous objection of the debtors-in-possession (the "Debtors"), resolving a hotly contested adversary proceeding and third party claims.
The April and May issues of <i>The Bankruptcy Strategist</i> featured a scholarly, interesting, and informative article by Michael L. Cook and William R. Fabrizio on the recent Seventh Circuit <i>Kmart</i> Opinion (<i>In Re Kmart Corporation</i>, 359 F. 3d 866 (7 Cir. 2004)) in which the Circuit Court affirmed the District Court's reversal (<i>Capital Factors, Inc. v. Kmart Corporation</i>, 291 B. R. 818 (ND Ill. 2003)) of four "critical vendor" orders entered by the Bankruptcy Judge. In all respects but one, Cook and Fabrizio concisely and accurately analyzed the Opinion as well as the history and basic flaws of the so-called "Necessity" Doctrine. Moreover, we agree not only with their conclusion that "the [Necessity] Doctrine ... lacks explicit Code authorization," but also with their flat rejection of such erroneous (and insulting) comments as that of the unnamed practitioner who was quoted by Reuters as stating that the District Court Opinion was "[A] tremendous blow to the efforts of the Chicago bench and bar to fashion their bankruptcy court system in the mold of Delaware and New York." <i>The Bankruptcy Strategist</i>, April 2004, p. 2. Unfortunately when they come to the Opinion of the Court of Appeals, Cook and Fabrizio overstate the case.
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Across the nation, readers of this publication are plagued daily with myriad problems associated with "megabankruptcies" and complex reorganization cases, and sometimes with Chapter 11s that are just large enough to be cumbersome and unwieldy, but too important and/or lucrative to pass up. Notwithstanding what is generally the statutory clarity of the Bankruptcy Code, many of the solutions to these nettlesome issues have evolved on an ad hoc basis, and are often the creatures of local customs and practice, if not the rules and procedures of individual judges. Putting aside the natural peaks and valleys of Chapter 11 filings, these issues persist, no matter the economic climate.
On a procedural vote on July 8, the U.S. Senate declined to move forward a bill that would have limited the use of class-action lawsuits. Although the Class Action Fairness Act reportedly had the support of at least the 60 Senators needed to take up the bill, efforts by some to attach unrelated provisions to it led to its doom.
Frivolous lawsuits are one of the most problematic issues facing drug and medical device companies today. Many frivolous lawsuits are either ultimately dismissed for lack of causation after years of litigation and the expenditure of exorbitant sums of money in defense costs, or settled by corporations that are not culpable, but "litigation-weary." This waste of time and resources easily could be avoided if plaintiffs were required to submit an affidavit of merit with respect to product defect and/or causation at the inception of the case. Part One of a Two-Part Article.
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There's a newly urgent push from outside the pharmaceutical research and development community to get drug firms to disclose the results of all tests conducted on new drugs, even those that don't lead to the marketing of new medications.
Recent rulings of interest to you and your practice.
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In last month's newsletter, we looked at the problems posed by online pharmaceutical distributors that do not follow good pharmacy practice. These "rogue" pharmaceutical sites may be buying expired, substandard, contaminated or counterfeited products. Some sell without requiring customers to present prescriptions. The consumer may not be receiving proper medical oversight, which can result in administration of incorrect dosages, wrong or contraindicated drugs, or medication without adequate directions for use. These activities risk the reputations of pharmaceutical manufacturers and put them in greater peril of being sued by consumers whose adverse medical reactions could have been avoided. So, what can be done about it? Part Two of a Two-Part Article.
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Air quality standards are frequently not satisfactorily addressed in leases, if they are addressed at all. Most sophisticated office leases will require a landlord to provide certain temperature and humidity levels during specified times. A typical clause provides that the landlord will provide HVAC service from 8:00 a.m. to 6:00 p.m., Monday through Friday, and perhaps from 8:00 a.m. to 12:00 p.m. on Saturdays. Sometimes the actual dry and wet bulb temperature and humidity levels will be specified, and in other instances the lease will simply provide that temperature and humidity levels will be in accordance with first-class standards. These provisions, however, do not address air quality, including cooking odors or exhaust fumes which may infiltrate the building's air system and end up in a tenant's space.