Special Report: How secrecy in U.S. courts hobbles regulators

By Mike Spector, Jaimi Dowdell and Benjamin Lesser

LEBANON, Ohio (Reuters) – Something wasn’t right with the Rhino.

Reports started trickling in to the Consumer Product Safety Commission (CPSC) in 2005 of people being killed or injured in the Yamaha Motor Co off-road vehicles when they tipped over. But no clear pattern emerged, and in the rough and tumble off-road world, accidents are common. The agency took no action.

Then, in 2007, ten-year-old Ellie Sand was killed in a Rhino when it flipped in a cornfield in Warren County, Ohio. Her father, house painter John Sand, started reading up on other Rhino crashes. He spoke to other parents whose children had died or been seriously injured in similar incidents. He became convinced that Rhinos were the problem.

Using a computer in a Cincinnati law library, Sand found more than a dozen lawsuits alleging that the vehicles were dangerously unstable. Some of the lawsuits – like the one he filed against the company in 2008 – claimed that design flaws caused the Rhinos to roll over even at slow speeds on flat ground. Sand sent the results of his research to CPSC, highlighting details from the lawsuits of the tip-overs that led to deaths and injuries.

Soon after, CPSC sent a subpoena to Yamaha, forcing it to hand over a trove of information, much of which had lain hidden under judges’ protective orders in the lawsuits against the company. By then, more than 40 people, including more than a dozen children, had been killed in Rhino crashes.

The impact of Sand’s work was confirmed in a voicemail message Sand received a few months later. Yamaha had agreed to a voluntary recall covering more than 100,000 Rhinos to fix the stability problems. “As a result of the information – a lot of the information that we received from you – we’ve gotten this far, so I wanted to thank you,” Marc Schoem, then deputy director of CPSC’s compliance and field operations, said in the March 31, 2009, message, which was reviewed by Reuters.

Five years after the recall was announced, CPSC staff noted in a 2014 briefing that crashes involving the Rhino had “decreased noticeably.”

Sand told Reuters he “was elated that the work I’d done could help stop the carnage.” Still, he was surprised that it took an “average Joe” like him to flag the lawsuits to CPSC.

A CPSC spokesman said that the agency had investigated Rhino incidents and that establishing a pattern that would have supported finding the vehicles defective proved challenging. Schoem declined to comment, as did Yamaha.

ERRORS AND INCONSISTENCIES

CPSC is one of more than a dozen regulatory agencies tasked with protecting Americans from dangerous products. And the Rhino episode reveals a troubling dynamic in the way these watchdogs do their jobs: Sometimes the only way they can learn about and act on a possible threat to consumers is from evidence produced in lawsuits, but that evidence is often hidden behind a wall of secrecy.

Most regulators have their own reporting systems for conducting oversight. But their databases can be vast and unwieldy, stuffed with thousands and even millions of consumer complaints and reports from manufacturers of safety concerns, injuries or deaths. The reports are often rife with mistakes and inconsistencies. Not all consumers even know they can file complaints. And companies regularly flout legally mandated reporting requirements.

That leaves the courts as a conduit for alerting regulators to potential harm, and it’s far from perfect. As Reuters has documented in earlier articles in this series, a thick blanket of secrecy covers product-liability litigation in the United States. In just a handful of cases over the past several decades, hundreds of thousands of people were killed or injured by defective products – cars, drugs, guns – while information about the risks was hidden from consumers and regulators, sometimes for years, behind broad protective orders.

These orders, though meant to protect specific information such as medical records and trade secrets, often give companies wide latitude to designate as confidential material exchanged between litigants in the pretrial discovery process – internal emails, data, research, meeting minutes, sworn depositions and the like. The secrecy typically persists for the life of the case, and long after, though court documents are, by law, presumed to be public.

In an analysis of some of the largest mass defective-product cases consolidated in federal courts over the past 20 years, Reuters found 55 in which judges sealed information concerning public health and safety. And among those, only three had protective orders containing language specifically allowing information exchanged by the litigants to be shared with regulators.

Regulators may subpoena information from a manufacturer after spotting a suspicious cluster of lawsuits, or after being alerted by a consumer like Sand in the Yamaha Rhino case.

But those are rare exceptions. And regulators themselves aren’t inclined to mine court records as a means of oversight. In the 55 big cases Reuters reviewed, public court filings contained no indication that regulators had requested any information arising from the lawsuits.

A few years ago, the National Highway Traffic Safety Administration (NHTSA) and CPSC issued pleas for easier access to evidence introduced in court under protective orders. But the Environmental Protection Agency, the Food and Drug Administration (FDA) and 15 other federal departments or agencies surveyed by Reuters did not point to any explicit policy or guidance on gaining access to court evidence potentially relevant to their oversight functions.

Yet regulators have repeatedly documented the failures of existing safeguards. Since 2009, NHTSA and CPSC have fined a total of at least 90 companies for failing to meet safety-reporting requirements, while the FDA has issued more than a dozen warning letters to manufacturers of drugs and medical devices for similar lapses.

Big business and its lobbyists contend that regulators have all the tools they need to do their jobs well – including the power to subpoena information subject to a judge’s protective order.

“The protective order cannot block the government,” said Victor Schwartz, a partner at law firm Shook, Hardy & Bacon LLP who has defended companies in civil litigation. “Litigation gets publicity. If the government sees something about a case … it can use its power, the subpoena power, to find out more detail,” he said.

That argument, former U.S. regulatory officials said, doesn’t hold water when litigation is cloaked in secrecy. “It’s a catch-22,” said David Friedman, a former NHTSA official. If documents and other evidence in litigation are sealed, “how are you supposed to know about them?” Friedman said. “If you don’t know about them, you can’t get them.”

DEFECTIVE SWITCH

Friedman was at NHTSA during General Motors Co’s notorious 2014 recall of millions of cars with defective ignition switches, ultimately linked to 124 deaths and 275 injuries. A 2015 deferred prosecution agreement between GM and federal prosecutors showed the company scrambled for years to make sense of mounting reports of deaths and injuries while keeping regulators and the public in the dark about the switches, even after uncovering clear internal evidence they were defective.

As early as 2003, NHTSA received complaints that Saturn Ions were stalling and, by 2004, that their airbags were failing to deploy in collisions. Similar complaints soon cropped up about Chevrolet Cobalts. In the ensuing years, the agency examined several fatal Cobalt crashes, each involving switches that slipped out of position and disabled airbags.

Yet NHTSA didn’t make the connection between the switch problem and airbag failures. That was partly because its investigators misunderstood how GM’s airbag system operated, but also because NHTSA rules gave automakers a lot of leeway in how they reported certain information regarding safety risks. As a result, similar incidents were reported inconsistently. One was listed as an “engine and engine cooling” issue, for instance, while another as an “electrical” problem. That made it difficult for regulators to detect a pattern.

From the first consumer complaints and incident reports, it would be more than 10 years and scores of deaths and injuries before NHTSA and the public learned of the link between defective ignition switches and airbag failures – and then only after evidence of what GM knew emerged in litigation and prompted the automaker to pursue a recall.

In June 2011, the parents of Jennifer Brooke Melton filed a product-liability lawsuit against the company in a Georgia state court. Melton, a 29-year-old nurse, was killed in March 2010 when her Cobalt stalled on a rainy highway, crossed into oncoming traffic, collided with another vehicle and careened into a creek.

The Melton case started, as many like it do, under a veil of secrecy. In December 2011, Judge Kathryn Tanksley approved a broad protective order, keeping from the public and NHTSA any documents that GM designated “in good faith” as confidential.

Tanksley, now retired, said she approved the order because both the Meltons’ lawyer and GM agreed to the terms. “The role of litigation is not to regulate GM,” she said. When NHTSA officials want more information, she said, they “have to pursue it not through the court, but through their own power.”

The documents GM began turning over to Lance Cooper, the Meltons’ lawyer, were damning. They showed that in 2005, for example, a company engineer suggested a fix for less than $1 per vehicle, but it was rejected as too costly and not effective enough. Cooper also obtained evidence that the company modified the switches between 2005 and 2008 to keep them from slipping. The evidence built a strong case that GM had known for years that the switches were faulty.

The Meltons were eager to go public with the evidence to prevent others from dying as their daughter had, but Cooper worried that if he challenged the protective order and regulators didn’t conclude the switches were defective, it would hurt their case. GM wanted to settle.

“We thought that people needed to know. There were still people out there driving those cars,” Beth Melton told Reuters. “It’s a real shame that these things are kept secret and other people (suffer) because of it.”

Meanwhile, a Cobalt crash in Quebec, Canada, killed another driver. The airbags did not deploy. The ignition switch was later found to be in accessory mode, the position between on and off that could cut power to airbags.

GM settled with the Meltons in September 2013 for $5 million. Five months later, after conducting its own investigation, GM recalled about 600,000 vehicles with the ignition switch.

Cooper still wasn’t satisfied, based on what he had learned in the Melton lawsuit, and having obtained a settlement for his clients, he decided it was time to share evidence with NHTSA. “I basically said: ‘The hell with it,’ ” Cooper said. “If we can get this information to the federal government, they need it. Really, it was just a strategic decision to violate the protective order.”

In a letter to NHTSA , he suggested that the automaker knew about the defect far longer than its recall paperwork said and had not recalled enough vehicles. He urged the agency to investigate, citing evidence from the Melton case that he had seen as much as a year earlier.

Eventually, NHTSA, Congress and federal prosecutors all investigated, relying heavily on evidence from the Melton case. GM increased the size of the recall, which eventually covered 2.6 million vehicles.

In May 2014, NHTSA fined GM $35 million for failing to alert regulators to the defective ignition switch in a timely manner. The next year, GM entered into the deferred prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York to settle criminal charges of concealing information from government officials and wire fraud. Under the deal, GM agreed to pay a $900 million fine and to submit to three years of oversight by an independent monitor. In 2018, a federal judge dismissed the charges against the company after prosecutors said the company had complied with the agreement.

“The most damning information came out in litigation,” said Kevin Vincent, NHTSA’s head lawyer at the time. Though the facts eventually came to light, Vincent said, initial confidentiality in the Melton case “stymied” the agency. “That was evidence the agency needed to see,” he said. “We could have acted sooner.”

In a statement to Reuters, GM said: “Since 2014, we have undertaken comprehensive reforms across the company to ensure that something like the ignition switch crisis never happens again.” The company hired additional safety investigators, created a new executive position charged with overseeing global safety and recalls, and launched a program aimed at giving employees and dealers easier ways to flag potential vehicle defects.

A NHTSA spokesman said the agency took 17 steps the U.S. Transportation Department inspector general recommended in the wake of the ignition-switch recall to improve collection and analysis of vehicle safety data.

PLEAS FOR ACCESS

In 2016, NHTSA and CPSC, seeking to address what they acknowledge is a blind spot in their efforts to safeguard consumers, issued bulletins recommending that judges and litigants agree to protective orders that would allow them to share confidential evidence pertinent to public health and safety with the relevant regulators.

“Our job is to protect consumers,” said Marietta Robinson, a CPSC commissioner at the time. “Obtaining information about an allegedly dangerous product from a lawyer representing a consumer who has been injured or killed is critically important to us doing that job.”

NHTSA’s bulletin, which cited the GM ignition-switch case, argued that keeping such information hidden from regulators clashes with federal legal requirements for courts to show “good cause” before allowing companies to keep it secret.

But the bulletins, published in the Federal Register, where the government publishes new rules, proposals and public notices, carried no enforcement power, and they have had little impact.

Judges have rarely shown willingness to grant requests from plaintiffs, expert witnesses or news organizations to share information with regulators or the public. Lawyers challenged defendants’ claims of confidentiality for material relating to public health and safety in 26 of the 55 big cases Reuters analyzed, and in most of them, judges refused to unseal the evidence. Some of those cases involved attempts to share information with the FDA.

The FDA declined to comment on specific cases for this article. In general, the agency said, its powers to inspect drug makers’ plants and launch criminal investigations, along with voluntary reporting requirements for drug makers, “provide FDA with the tools to keep patients and consumers safe and fulfill its mission to protect and promote the public health.”

However, in the case of Pfizer Inc’s popular drug Chantix, which helps people quit smoking, court secrecy excluded possibly pertinent information from the agency’s process for assessing safety.

The FDA approved Chantix in 2006. Three years later, it placed a black box warning – its strongest – on the drug’s label after receiving “reports of changes in behavior such as hostility, agitation, depressed mood, and suicidal thoughts or actions.”

Over time, Pfizer faced thousands of lawsuits blaming Chantix for such side effects. The company turned over millions of documents to plaintiffs under the condition they be kept confidential.

In 2014, after Pfizer settled most of the cases for about $300 million, two plaintiff experts decided the FDA and the public should see internal Pfizer documents and expert reports that had been introduced in litigation.

Through their lawyer, clinical psychiatrist Joseph Glenmullen and drug safety researcher Thomas Moore asked the judge overseeing the bulk of the Chantix litigation to unseal the information, which they said was important for “shedding light on Pfizer’s awareness of Chantix’s behavioral risks.”

Two days after their request was filed, U.S. District Judge Inge Johnson in Alabama rejected it. Her brief order did not address the substance of the request.

Johnson did not respond to requests for comment.

The upshot was that, two years later, an FDA advisory panel did not have access to all the information the two men had sought to make public as it considered a Pfizer request to remove the black box warning. Pfizer’s request was based on its own study claiming that Chantix did not have a significant association with depression and suicide.

The advisory panel of medical experts in September 2016 recommended in a close vote to remove the black box warning. The FDA removed the black box warning a few months later. Chantix bottles still carry a less severe warning of potential mental health side effects.

Moore acknowledged that it’s impossible to know whether the evidence he and Glenmullen sought to provide to regulators would have changed the panel’s decision. But he said he remains frustrated that information “central” to the question of Chantix’s safety never made it into regulators’ hands.

“The FDA should be able to see it,” Moore said.

Pfizer, in a statement to Reuters, said: “The FDA and its 2016 advisory panel had access to all of the data and science on Chantix, and all of the adverse events reports.” The plaintiff experts’ reports, the company noted, were not original science and instead reflected views of the underlying science that differed from the FDA and the advisory panel’s conclusions.

Members of the FDA advisory panel Reuters contacted said they were unaware of Moore and Glenmullen’s efforts.

One of them was Dr Jess Fiedorowicz, director of the University of Iowa Mood Disorders Center. He voted to remove the black box warning. He said he didn’t know whether the evidence from the two experts would have changed his mind, but, “I’m all for transparency in research.”

SEEKING SUNSHINE

In September, House Judiciary Committee Chairman Jerrold Nadler, a New York Democrat, said he planned to reintroduce the Sunshine in Litigation Act to address the problem of court secrecy. The bill would allow parties in litigation to share evidence related to public health and safety with state and federal regulators, regardless of protective orders.

Nadler’s pledge came during a hearing on courtroom transparency that was called after Reuters began publishing its series on court secrecy and its impact on public health and safety. Previous iterations of the bill introduced repeatedly since the early 1990s, despite enjoying bipartisan support, have ultimately failed in the face of sustained opposition from business groups that contend it would increase the costs and burdens of litigation for companies that are already meeting regulatory reporting requirements.

However, as the Yamaha Rhino episode and others like it show, regulators and the public can’t assume manufacturers are meeting disclosure and reporting rules.

A few months after John Sand sent a packet stuffed with his research to CPSC, the agency told Yamaha it had received information indicating that the Rhino could roll over at low speeds on flat ground, posing “an unreasonable risk of injury or death to riders.” It told the company to send it all relevant information, including documents from Rhino-related litigation.

CPSC spent the next few months trying to get Yamaha to comply, at one point complaining to the company that it was sending “duplicative” material and that “the only new item seems to be a Model Year 2009 owner’s manual for the Rhino.”

Only after CPSC subpoenaed Yamaha did the company send to the agency a 70-page written response, a hard drive and 62 DVDs that contained all of the records the company had produced in years of litigation, including company documents that had been subject to protective orders.

CPSC would have known about the Rhino much earlier if Yamaha hadn’t repeatedly violated the rules for notifying the agency of a possible defect, according to William Kitzes, a former adviser to the agency and an expert witness for plaintiffs in Rhino litigation who reviewed correspondence between the regulator and Yamaha.

Companies must report to the agency immediately upon learning that a product is defective or can cause injury or death, or when a product is subject to three or more personal-injury lawsuits in a two-year period that are settled or decided in favor of plaintiffs. From 2004 to late 2008, Yamaha faced about 250 lawsuits alleging that Rhinos were unsafe.

“Certainly no later than, and by many measures well before the end of 2005 … Yamaha had adequate information to report,” Kitzes wrote in a report for plaintiffs.

CPSC didn’t fine Yamaha for failure to report Rhino incidents. The agency and Yamaha jointly announced the Rhino recall on March 31, 2009 – referred to at the time, on Yamaha’s insistence, as a “free repair program.”

In 2011, the Ohio jury hearing Sand’s case found the Rhino defective, but awarded Sand no damages. Ellie was not wearing a helmet when she was killed, and the jury determined that she, her parents and others were negligent in her death.

Yamaha stopped making the vehicles in 2013.

(Additional reporting by Erica Evans and Dan Levine. Edited by Janet Roberts and John Blanton.)

McDonald’s faces 25 new sexual harassment complaints from workers

FILE PHOTO: The logo of a McDonald's Corp restaurant is seen in Los Angeles, California, U.S. October 24, 2017. REUTERS/Lucy Nicholson/File Photo

By Jonathan Stempel

(Reuters) – McDonald’s Corp was accused on Tuesday in 25 new lawsuits and regulatory charges of condoning sexual harassment in the workplace and retaliating against employees who speak up.

The cases announced by the American Civil Liberties Union (ACLU), the labor group Fight for $15, and the Time’s Up Legal Defense Fund cover alleged misconduct at McDonald’s locations in 20 U.S. cities, including groping, indecent exposure, propositions for sex, and lewd comments.

McDonald’s is one of the world’s most recognizable brands, and the cases make the fast-food chain a primary target of a campaign to extend the #MeToo movement, which sprung from sexual harassment cases in Hollywood, to the workplace.

The Chicago-based company said it has more than 14,000 locations in the United States with some 850,000 workers.

More than 90 percent of the locations are franchised, and McDonald’s has long maintained it should not be liable for how employees in franchised restaurants behave.

Chief Executive Steve Easterbrook said his company has improved and more clearly defined its harassment policies, has trained most franchise owners, and will be training front-line employees and setting up a complaint hotline.

“McDonald’s is sending a clear message that we are committed to creating and sustaining a culture of trust where employees feel safe, valued and respected,” Easterbrook wrote in letters this week to Illinois Senator Tammy Duckworth and “Top Chef” host Padma Lakshmi, who supports the workers’ cause.

The 25 cases include three new lawsuits, two by workers who previously filed charges, and charges filed with the U.S. Equal Employment Opportunity Commission (EEOC).

McDonald’s has faced more than 50 such charges and lawsuits in the last three years, the ACLU said. Last September, McDonald’s workers in 10 cities staged a one-day strike to protest alleged sexual harassment.

Jamelia Fairley, a single mother who makes $9.60 an hour at a corporate-owned McDonald’s in Sanford, Florida, told reporters she went to the EEOC after a co-worker began groping her, rubbing against her and saying he could “give me a ride.”

She said that after she reported the harassment, McDonald’s transferred but did not fire her harasser, while her boss cut her weekly hours to seven from 25,

“Trying to raise a 2-year old on $67 a week is, well, I can’t do it,” Fairley said.

Sharyn Tejani, director of the Time’s Up fund, which is part of the National Women’s Law Center, said having to put up with workplace harassment should not be a cost of making a living.

“For McDonald’s, time is past up,” she said.

(Reporting by Jonathan Stempel in New York; editing by Bill Berkrot)

Spurned students sue U.S. colleges in admissions scandal

By Jonathan Stempel

(Reuters) – The U.S. college admissions scandal that erupted this week has spawned lawsuits accusing rich, well-connected parents and prestigious schools of conspiring to admit those parents’ children at the expense of the less affluent.

Lawsuits began emerging on Wednesday, a day after federal prosecutors said a California company made about $25 million from parents seeking spots for their children in top schools including Georgetown University, Stanford University, the University of Southern California and Yale University.

Fifty people, including 33 parents, have been criminally charged in the nation’s largest known college admissions scandal. The accused mastermind, William Singer, pleaded guilty to racketeering charges.

In one civil lawsuit, Stanford students Erica Olsen and Kalea Woods said they were denied a fair opportunity to win admission to Yale and USC because of alleged racketeering, and said their degrees from Stanford will be devalued.

Singer and eight schools, including Stanford, were named as defendants in the lawsuit, which seeks unspecified damages.

Another lawsuit by Joshua Toy and his mother said he was denied college admission despite a 4.2 grade point average, and seeks $500 billion of damages from 45 defendants for defrauding and inflicting emotional distress on everyone whose “rights to a fair chance” to enter college was stolen.

The defendants, in that case, include Singer and accused parents, including actress Felicity Huffman, actress Lori Loughlin and her fashion designer husband Mossimo Giannulli, and TPG private equity partner William McGlashan Jr.

“These class-action cases are opportunistic creatures of lawyers trying to obtain a windfall,” Donald Heller, a lawyer for Singer, said in a phone interview.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

Both lawsuits were filed in California. More lawsuits are likely.

Prosecutors said Singer used his Edge College & Career Network and an affiliated nonprofit to help prospective students cheat on college admission tests and bribe coaches to inflate their athletic credentials.

The Stanford case is notable because that school is among the country’s most prestigious and selective, admitting just 4.3 percent of its applicants last year.

But Olsen and Woods said their degrees are “now not worth as much” because prospective employers might question whether they were admitted on merit, or had parents whose bribes got them in.

A Stanford spokesman said the university is reviewing the lawsuit.

(Reporting by Jonathan Stempel in New York; Editing by Scott Malone and Susan Thomas)

Exclusive: OxyContin maker Purdue Pharma exploring bankruptcy – sources

FILE PHOTO: Bottles of prescription painkiller OxyContin pills, made by Purdue Pharma LP sit on a counter at a local pharmacy in Provo, Utah, U.S., April 25, 2017. REUTERS/George Frey

By Mike Spector and Jessica DiNapoli

(Reuters) – OxyContin maker Purdue Pharma LP is exploring filing for bankruptcy to address potentially significant liabilities from thousands of lawsuits alleging the drug manufacturer contributed to the deadly opioid crisis sweeping the United States, people familiar with the matter said on Monday.

The deliberations show how Purdue and its wealthy owners, the Sackler family, are under pressure to respond to mounting litigation accusing the pharmaceutical company of misleading doctors and patients about risks associated with prolonged use of its prescription opioids.

Purdue denies the allegations, arguing that the U.S. Food and Drug Administration-approved labels for its opioids carried warnings about the risk of abuse and misuse associated with the drugs.

Filing for Chapter 11 protection would halt the lawsuits and allow the drugmaker to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge, the sources said.

More than 1,000 lawsuits accusing Purdue and other opioid manufacturers of using deceptive practices to push addictive drugs that led to fatal overdoses are consolidated in an Ohio federal court. Purdue has held discussions to resolve the litigation with plaintiffs’ lawyers who have often compared the cases to widespread lawsuits against the tobacco industry that resulted in a $246 billion settlement in 1998.

A Purdue bankruptcy filing is not certain, the sources said. The Stamford, Connecticut, drug maker has not made any final decisions and could instead continue fighting the lawsuits, they said.

“As a privately-held company, it has been Purdue Pharma’s longstanding policy not to comment on our financial or legal strategy,” Purdue said in a statement.

“We are, however, committed to ensuring that our business remains strong and sustainable. We have ample liquidity and remain committed to meeting our obligations to the patients who benefit from our medicines, our suppliers and other business partners.”

Purdue faces a May trial in a case brought by Oklahoma’s attorney general that, like others, accuses the company of contributing to a wave of fatal overdoses by flooding the market with highly addictive opioids while falsely claiming the drugs were safe. The court proceedings will be televised.

Purdue tapped law firm Davis Polk & Wardwell LLP for restructuring advice, Reuters reported in August, fueling concerns among litigants including Oklahoma Attorney General Mike Hunter that the company might seek bankruptcy protection before the trial.

(Reporting by Mike Spector and Jessica DiNapoli in New York)

California tells Trump that lawsuit over border wall is ‘imminent’

FILE PHOTO: The prototypes for U.S. President Donald Trump's border wall are seen behind the border fence between Mexico and the United States, in Tijuana, Mexico January 7, 2019. REUTERS/Jorge Duenes/File Photo

By David Morgan and David Lawder

WASHINGTON (Reuters) – California will “imminently” challenge President Donald Trump’s declaration of a national emergency to obtain funds for a U.S.-Mexico border wall, state Attorney General Xavier Becerra said on Sunday.

“Definitely and imminently,” Becerra told ABC’s “This Week” program when asked whether and when California would sue the Trump administration in federal court. Other states controlled by Democrats are expected to join the effort.

“We are prepared, we knew something like this might happen. And with our sister state partners, we are ready to go,” he said.

Trump invoked the emergency powers on Friday under a 1976 law after Congress rebuffed his request for $5.7 billion to help build the wall that was a signature 2016 campaign promise.

The move is intended to allow him to redirect money appropriated by Congress for other purposes to wall construction.

The White House says Trump will have access to about $8 billion. Nearly $1.4 billion was allocated for border fencing under a spending measure approved by Congress last week, and Trump’s emergency declaration is aimed at giving him another $6.7 billion for the wall.

Becerra cited Trump’s own comment on Friday that he “didn’t need to do this” as evidence that the emergency declaration is legally vulnerable.

“It’s become clear that this is not an emergency, not only because no one believes it is but because Donald Trump himself has said it’s not,” he said.

Becerra and California Governor Gavin Newsom, both Democrats, have been expected to sue to block Trump’s move.

Becerra told ABC that California and other states are waiting to learn which federal programs will lose money to determine what kind of harm the states could face from the declaration.

He said California may be harmed by less federal funding for emergency response services, the military and stopping drug trafficking.

“We’re confident there are at least 8 billion ways that we can prove harm,” Becerra said.

Three Texas landowners and an environmental group filed the first lawsuit against Trump’s move on Friday, saying it violates the Constitution and would infringe on their property rights.

The legal challenges could at least slow down Trump’s efforts to build the wall but would likely end up at the conservative-leaning U.S. Supreme Court.

Congress never defined a national emergency in the National Emergencies Act of 1976, which has been invoked dozens of times without a single successful legal challenge.

Democrats in Congress have vowed to challenge Trump’s declaration and several Republican lawmakers have said they are not certain whether they would support the president.

“I think many of us are concerned about this,” Republican Senator Ron Johnson of Wisconsin, who chairs the Senate Homeland Security Committee, told NBC’s “Meet the Press.”

Trump could, however, veto any resolution of disapproval from Congress.

White House senior adviser Stephen Miller told Fox News on Sunday that Trump’s declaration would allow the administration to build “hundreds of miles” of border wall by September 2020.

“We have 120-odd miles that are already under construction or are already obligated plus the additional funds we have and then we’re going to outlay; we’re going to look at a few hundred miles.”

Trump’s proposed wall and wider immigration policies are likely to be a major campaign issue ahead of the next presidential election in November 2020, where he will seek a second four-year term.

(Reporting by David Morgan and David Lawder; Editing by Lisa Shumaker)

PG&E, owner of biggest U.S. power utility, files for bankruptcy

FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

By Subrat Patnaik

(Reuters) – Power provider PG&E Corp filed for voluntary Chapter 11 bankruptcy protection on Tuesday, succumbing to liabilities stemming from wildfires in Northern California in 2017 and 2018.

The owner of the biggest U.S. power utility has filed a motion seeking court approval for a $5.5 billion debtor-in-possession financing, it said in a statement.

PG&E listed assets of $71.39 billion and liabilities of $51.69 billion, in a court document filed in the U.S. Bankruptcy Court for the Northern District of California.

“Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires,” PG&E interim Chief Executive Officer John Simon said.

The company said it intends to pay suppliers in full under normal terms for goods and services provided on or after the date of the Chapter 11 filing.

Separately, PG&E shareholder BlueMountain Capital Management LLC said it was “deeply disappointed” that the company’s board ignored calls from multiple parties to abandon its “reckless and irresponsible plan to file for bankruptcy.”

The investment firm said it would propose a slate of board directors no later than Feb. 21, and urged all PG&E stakeholders to support change at the company.

PG&E, which had a debt burden of more than $18 billion, said earlier this month it would need to pursue a court-supervised reorganization in the aftermath of the blazes, including November’s so-called Camp Fire.

The Camp Fire broke out on the morning of Nov. 8 near the mountain community of Paradise, sweeping through the town and killing at least 86 people, in the deadliest and most destructive wildfire in state history.

Reinsurance company Munich Re termed the Camp Fire as the world’s most expensive natural disaster of 2018 and earlier this month pegged the overall losses from it at $16.5 billion.

PG&E, which filed for bankruptcy once before in 2001, warned in November it could face “significant liability” in excess of its insurance coverage if its equipment was found to have caused the Camp Fire and other destructive wildfires.

Earlier this month, a state fire agency said PG&E equipment was not to blame for a 2017 wildfire in California’s wine country, but the company faces dozens of lawsuits from owners of homes and businesses that burned during that and other 2017 fires.

The San Francisco-based company provides electricity and natural gas to more than six million customers in Northern California. Last year, lawmakers gave it permission to raise rates to cover wildfire losses from 2017. But elected officials this month showed little appetite for new rate hikes or other maneuvers to prevent a bankruptcy filing.

(Reporting by Subrat Patnaik in Bengaluru and Jim Christie in San Francisco; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty)

Big claims strain senior living market for U.S. insurers

FILE PHOTO: A senior citizen, walks down the hallway with the aide of her walker to visit a neighbor at her independent living complex in Silver Spring, Maryland April 11, 2012. REUTERS/Gary Cameron/File Photo

By Suzanne Barlyn

(Reuters) – Last March, a 103-year-old resident of a Sunrise Senior Living facility in Willowbrook, Illinois, went on a field trip to the movies.  Ruth Smith, who used a walker, fell down two concrete steps in the theater and died about six weeks later. Now Smith’s estate is suing Sunrise, saying that aides did not properly watch her.

As the U.S. society ages, senior living communities are on the rise. So are claims and lawsuits against them. And when they lose, it is usually down to insurers to pay up.

“It’s a tremendous opportunity that has pretty specific challenges,” said Brendan Gallagher, who heads the senior care business at insurance broker Arthur J. Gallagher Co.

Some senior living facilities could see insurance rate hikes in 2019 as high as 30 percent, according to insurance broker Willis Towers Watson.

Fewer insurers are offering coverage today than they were five years ago and some Lloyd’s of London members stopped writing the coverage during the past year, said John Atkinson, managing partner at Willis.

Some insurers are dropping coverage of those communities entirely while others are avoiding litigious locations such as Kentucky, Illinois and Florida, said insurers and brokers.

While the pullback threatens to raise costs for families, other insurers are expanding, betting on the industry’s strong growth prospects.

The number of people living in U.S. residential care facilities has grown by over 10 percent to 812,000 between 2010 and 2016, according to the most recent data from the U.S. Centers for Disease Control and Prevention.

As the industry gears up for the arrival of the greying 74-million baby boom generation, senior living facilities have grown even faster. The number of rooms in those centers has risen up by a fifth since 2013, according to the National Investment Center for Seniors Housing & Care (NIC), which collects data for the 99 largest U.S. metro areas.

While aging is a global phenomenon and the U.S. society is relatively younger than those in Europe and North Asia, its greater dependence on senior centers confronts it with challenges other nations may yet have to grapple with.

More so than previous U.S. generations, today’s elderly often live far away from their children. In Europe, seniors tend to live much closer to their relatives or in communities that provide generous government services for the elderly. In many Asian and African communities, multiple generations commonly live together.

Not only do more people move into retirement communities, but they tend to do it later than they used to, resulting in more frequent and severe injuries, insurance professionals say.

“People are living longer and they are frailer,” said Gloria Holland, vice president of finance at Capital Senior Living Corp, a Dallas-based company that runs 129 communities across the country.

A spokeswoman for Sunrise Assisted Living, where Smith lived, said the company had policies and procedures in place to help promote resident safety. “Anytime we lose a member of our community we are deeply saddened,” she said.

Falls are the biggest risk. Allegations of falls account for nearly half of all assisted living claims that insurer CNA Financial Group closed in 2016 and 2017, the company said.

Another source of insurance claims are “memory care” centers, which cater to people with Alzheimer’s disease and other types of memory problems.

The nascent sector has grown 52 percent since 2013, according to NIC. A big issue there: residents who wander away.

Last year, the body of 77-year-old Audrey Penn was found in a ditch after she left a senior living community in Allentown, Pennsylvania. A lawsuit filed by her family settled for an undisclosed amount.

A CHANGING AMERICA

Capital Senior Living’s Holland said the average age of residents who moved to its facilities was between 78 and 80 when she joined the company in 2004 and has risen to between 82 to 84 by now. That makes individual claims more expensive to settle. The company anticipates a 5 percent rate increase when it renews its insurance in 2019, Holland said.

Higher rates and deductibles are more likely to affect smaller facilities, which may lack robust compliance programs for preventing accidents and other problems, insurers and brokers say. Smaller centers often “struggle to keep up with changing regulations,” said Caroline Clouser, who heads the healthcare industry practice at insurer Chubb Ltd.

Insurance premiums for senior facilities vary by state. Premiums for each assisted living apartment range from $150 to $600 annually, insurers and brokers say.

Insurance for those facilities makes up less than 1 percent of the $558 billion property and casualty insurers collected in net written premiums in 2017. Yet it is likely to grow as aging boomers fill up senior communities, industry insiders say.

Nationwide is among the companies that have been growing their senior living insurance business while being selective, said Jeremy Moore, senior living underwriting manager.

“You have to understand what the exposures are and the controls in place,” he said.

Nationwide has a team of former senior living executives and administrators who visit communities and look at everything from building maintenance to evacuation procedures, Moore said.

Wisconsin-based Church Mutual Insurance Company, which writes coverage for the industry in 49 states, is planning to expand into Florida, the remaining state, in 2019, according to Jim Ketterson, who heads the insurer’s senior living practice.

Brokers are also working to help senior living communities better manage their risk. Willis recently launched a program to help facilities learn how to more safely lift residents.

Willis also runs a webinar on active shooter events, including tips such using beds to block doors that do not lock, a common feature in memory care facilities.

Senior living companies also keep reviewing their facilities and procedures, they say. For example, Capital Senior Living is gradually replacing carpet flooring with laminate, which is less of a trip hazard, Holland said. It is also considering a technology that can help track residents’ movements to determine if they are at risk of a fall.

(Reporting by Suzanne Barlyn. Editing by Neal Templin and Tomasz Janowski)

Trump questions 3-D gun sales as U.S. states sue

FILE PHOTO: U.S. President Donald Trump speaks about the economy while delivering remarks on the South Lawn of the White House in Washington, U.S., July 27, 2018. REUTERS/Carlos Barr

WASHINGTON (Reuters) – President Donald Trump on Tuesday raised concerns about the sale of plastic guns made with 3-D printers, a day after several U.S. states sued his administration to block the imminent online publication of designs to make the weapons.

Eight states and the District of Columbia on Monday filed a lawsuit to fight a June settlement between the federal government and Defense Distributed allowing the Texas-based company to legally publish its designs. Its downloadable plans are set to go online on Wednesday.

The legal wrangling is the latest fight over gun rights in the United States, where a series of mass shootings in recent years has re-ignited the long-simmering debate over access to firearms.

“I am looking into 3-D Plastic Guns being sold to the public,” Trump said in a Twitter post that referred to the powerful National Rifle Association lobbying group. “Already spoke to NRA, doesn’t seem to make much sense.”

Representatives for the U.S. State Department, which signed off on the settlement allowing publication of the designs to go forward, did not immediately reply to a request for comment. The U.S. Department of Justice, which also signed off on the settlement, said the issue was a matter for the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, a spokeswoman said.

NRA officials were not immediately available for comment.

The states are asking a U.S. judge to issue an injunction to block the online distribution of the gun blueprints. They say the U.S. government has failed to study the national and state security implications of the decision and violated states’ rights to regulate firearms.

Josh Blackman, a lawyer for Defense Distributed, said the case was not about guns but instead about protecting the constitutional free speech rights of his client.

“I don’t care what President Trump says. I will be arguing to protect my client’s First Amendment rights,” he said in an interview on Tuesday.

Defense Distributed’s website said it would publish the files on Wednesday but blueprints for seven guns already were available for download on Tuesday. The company’s founder, self-declared anarchist Cody Wilson, told media outlets on Monday that the files went up late Friday evening.

Mark Kelly, who co-founded a gun reform group with his wife, former Democratic U.S. Representative Gabby Giffords, who was wounded in a 2011 shooting, criticized Trump for his tweet.

“He should go to the State Department, not the NRA,” he said.

Kelly said Trump should tell the department the blueprints should remain restricted under international arms trafficking regulations.

The states, in their filing on Monday, argued the online plans will give criminals easy access to weapons by circumventing traditional sales and regulations.

Gun rights groups have been largely dismissive of concerns about 3-D printable guns, saying the technology is expensive and the guns unreliable.

The gun plans were pulled from the internet in 2013 by order of the U.S. State Department under international gun trafficking laws. Wilson sued in 2015, claiming the order infringed his constitutional rights.

Until recently, the government argued the blueprints posed a national security risk. Gun control groups said there had been no explanation for the June settlement and the administration’s abrupt reversal on the issue.

Wilson said in an online video that the blueprints were downloaded more than 400,000 times before they were taken down in 2013.

(Reporting by Susan Heavey, Tina Bellon in New York and Jon Herskovitz in Austin, Texas; Editing by Bill Trott)

TSA screeners win immunity from flier abuse claims: U.S. appeals court

FILE PHOTO: A Transportation Security Administration (TSA) official's wears a TSA badge at Terminal 4 of JFK airport in New York City, U.S., May 17, 2017. REUTERS/Joe Penney/File Photo

By Jonathan Stempel

(Reuters) – Fliers may have a tough time recovering damages for invasive screenings at U.S. airport security checkpoints, after a federal appeals court on Wednesday said screeners are immune from claims under a federal law governing assaults, false arrests and other abuses.

In a 2-1 vote, the 3rd U.S. Circuit Court of Appeals in Philadelphia said Transportation Security Administration (TSA) screeners are shielded by government sovereign immunity from liability under the Federal Tort Claims Act because they do not function as “investigative or law enforcement officers.”

The majority said it was “sympathetic” to concerns that its decision would leave fliers with “very limited legal redress” for alleged mistreatment by aggressive or overzealous screeners, which add to the ordinary stresses of air travel.

“For most people, TSA screenings are an unavoidable feature of flying,” but it is “squarely in the realm” of Congress to expand liability for abuses, Circuit Judge Cheryl Ann Krause wrote.

The decision, the first on the issue by a federal appeals court, was a defeat for Nadine Pellegrino, a business consultant from Boca Raton, Florida.

She and her husband had sued for false arrest, false imprisonment and malicious prosecution over a July 2006 altercation at Philadelphia International Airport.

Pellegrino on Wednesday said she was reviewing the decision. A lawyer who helped with her appeal did not immediately respond to requests for comment.

According to court papers, Pellegrino had been randomly selected for additional screening at the Philadelphia airport before boarding a US Airways flight to Fort Lauderdale, Florida.

Pellegrino, then 57, objected to the invasiveness of the search, but conditions deteriorated and she was later jailed for about 18 hours, the papers show. Criminal charges were filed, and Pellegrino was acquitted at a March 2008 trial.

Circuit Judge Thomas Ambro dissented from Wednesday’s decision.

“By analogizing TSA searches to routine administrative inspections, my colleagues preclude victims of TSA abuses from obtaining any meaningful remedy for a variety of intentional tort claims,” he wrote.

Torts are civil wrongs that can result in damages.

A spokesman for U.S. Attorney William McSwain in Philadelphia, whose office represented TSA officials, had no immediate comment.

The appeals court ruled 11 months after throwing out a First Amendment claim by an architect, Roger Vanderklok, who said he was arrested in retaliation for asking to file a complaint against an ill-tempered TSA supervisor.

The case is Pellegrino et al v U.S. Transportation Security Administration et al, 3rd U.S. Circuit Court of Appeals, No. 15-3047.

(Reporting by Jonathan Stempel in New York; Editing by David Gregorio)

J&J Baby Powder litigation takes new focus with asbestos claims

FILE PHOTO: Bottles of Johnson & Johnson baby powder line a drugstore shelf in New York October 15, 2015. REUTERS/Lucas Jackson/File Photo

By Tina Bellon

NEW YORK (Reuters) – A $117 million verdict against Johnson & Johnson and a supplier in favor of a man who said his asbestos-related cancer was caused by long-term use of J&J’s Baby Powder could open a new front for thousands of cases claiming the widely-used product caused cancer, legal experts and plaintiffs lawyers said.

J&J has been battling some 6,000 cases claiming its baby powder and Shower to Shower products cause ovarian cancer. The $117 million verdict by a New Jersey jury last week, however, involved a different form of cancer that is clearly linked to asbestos.

Plaintiffs lawyers claim that internal J&J documents seen in that trial show that baby powder had been contaminated with asbestos. They now plan to use the documents in upcoming ovarian cancer trials to allege that the asbestos contamination also caused that form of cancer.

J&J and Imerys Talc America, a unit of Imerys SA, have vowed to appeal the New Jersey verdict and deny asbestos has ever been present in their products or that their talc can cause any form of cancer.

The case of Stephen Lanzo, a New Jersey resident who claimed he developed mesothelioma after using baby powder since his birth in 1972, was the first time a jury saw the internal J&J documents which plaintiffs claim show that J&J knew since the 1970s that the talc in its baby powder was contaminated by asbestos during the mining process.

J&J says the documents present no such evidence, but merely show the company’s caution.

Peter Bicks, a lawyer leading J&J’s talc asbestos defense, said that in the early 1970s, the company was looking at how it could potentially remove asbestos from talc if the two became intermingled in the mining process. He says no contamination was ever found, citing decades of testing by independent laboratories and scientists.

Bicks called the claims of a link between talc and asbestos “junk science.”

Mesothelioma, a rare and deadly form of cancer closely associated with exposure to asbestos, affects the delicate tissue that lines body cavities.

While the link between asbestos and mesothelioma is sufficiently established, scientists are divided on whether asbestos exposure can cause ovarian cancer. Some studies have shown an association between the two, while other studies have found no such link.

Elizabeth Burch, holder of the Charles H. Kirbo Chair of Law at the University of Georgia, said it remained an open question whether talc contained asbestos and that each case would turn on the facts.

But J&J, which had $76.5 billion in sales in 2017, gives the plaintiffs’ bar an enticing new target, said Nathan Schachtman, a lecturer at Columbia University who used to defend asbestos cases.

Some 3,000 people are diagnosed with mesothelioma each year, according to the American Cancer Society, a number that Howard Erichson, a law professor at Fordham University who specializes in mass tort litigation, called significant from a legal standpoint.

But the roughly 22,000 women who were diagnosed with ovarian cancer last year, according to the National Cancer Institute, provide lawyers with a potentially much larger pool of plaintiffs to tap.

“This is just the tip of the iceberg,” said Mark Lanier, one of the lawyers representing consumers, who said plaintiffs would file thousands of additional mesothelioma and ovarian cancer cases.

New Jersey-based J&J in a statement after the Lanzo verdict said plaintiffs’ attorneys had shifted their strategy to focus on asbestos after a series of losses at trial and in court rulings over previous allegations that the talc itself causes cancer.

Of the six ovarian cancer trials to date, juries found J&J liable five times, but a Missouri appellate court threw out the first verdict and a California judge tossed another. Appeals of the other cases are pending.

J&J in November also won the first trial over allegations that its talc contained asbestos and caused a woman’s mesothelioma. Plaintiffs lawyers say the jury in that case did not see the documents presented during the Lanzo trial.

But Erichson said the widespread use of J&J’s consumer products generally make the company an attractive litigation target.

“Baby powder is as ubiquitous a product you can think of and there are lots of people who can testify they’ve been exposed to it,” he said.

(Reporting by Tina Bellon; editing by Noeleen Walder and Leslie Adler)