Future Litigation Research Articles

Towards a more accurate audit assessment: can corporate social performance provide clues?

Regulators have been particularly concerned with the increased frequency of auditor's deficiencies related to material misstatement as reported in the 2017 Public Company Accounting Oversight Board (PCAOB) inspection brief. This research examines the relationship between auditor's risk of failing to capture material misstatement and the clients' social responsibility concerns. The findings indicate that clients with social performance concerns (human rights, environment, and governance) were associated with higher auditor's risk assessment, as indicated by higher audit fees. The results are consistent after controlling for various auditor and client variables. Implications of this study support the importance of incorporating social performance of clients in the auditor's evaluation since it can provide key insights into the client's underlying risk of future litigations which can arise due to socially irresponsive behaviours. In doing so, we seek to come closer to an accurate client assessment as well as respond to the call of PCAOB for minimising the deficiencies of the auditing process particular in the area of material misstatement.

Towards a more accurate audit assessment: can corporate social performance provide clues?

Regulators have been particularly concerned with the increased frequency of auditor's deficiencies related to material misstatement as reported in the 2017 Public Company Accounting Oversight Board (PCAOB) inspection brief. This research examines the relationship between auditor's risk of failing to capture material misstatement and the clients' social responsibility concerns. The findings indicate that clients with social performance concerns (human rights, environment, and governance) were associated with higher auditor's risk assessment, as indicated by higher audit fees. The results are consistent after controlling for various auditor and client variables. Implications of this study support the importance of incorporating social performance of clients in the auditor's evaluation since it can provide key insights into the client's underlying risk of future litigations which can arise due to socially irresponsive behaviours. In doing so, we seek to come closer to an accurate client assessment as well as respond to the call of PCAOB for minimising the deficiencies of the auditing process particular in the area of material misstatement.

Short interest as a signal to issue equity

We find that the level of short interest in a firm's stock significantly predicts future seasoned equity offers (SEOs). The probability of an SEO announcement increases by 34% (decreases by 49%) for firms in the top (bottom) quintile of short interest. We identify a causal impact of short interest on SEO issuance using a novel instrument for short interest based on future litigation filings in close geographical proximity to hedge fund centers. Our findings suggest that corporate decisions can be triggered by the aggregate trading activity of sophisticated outside investors.

Medical Malpractice in Neurosurgery: A Comprehensive Analysis.

Of all specialists, neurosurgeons have the highest probability of facing a medical malpractice claim. Here we report the first specialty-wide review of malpractice claims in neurosurgery performed using a well-established national online legal database. The Westlaw legal research service (Thomson Reuters, Eagan, Minnesota, USA) was queried for jury verdicts and settlements related to neurosurgery and medical malpractice between 1985 and 2015. Case files were examined, and factors recorded included the age and sex of the patient, the state and year in which the verdict was reached, defendant specialties, award payouts, and alleged reasons for malpractice. Case files were sorted into neurosurgical subspecialties based on the nature of the condition and the type of treatment administered. A total of 516 cases were identified, and 343 cases were analyzed. A defendant's verdict was reached in 165 (48.1%) cases, and a plaintiff's verdict was reached in 93 (27.1%) cases. A settlement was reached in 81 cases (23.6%). The median payout for plaintiff's verdicts was $2,550,000 (range, $80,000-$216,849,187), and that for settlements was $1,300,000 (range, $100,000-$13,300,000). Procedural error (45.5%), a failure to diagnose (41.4%), or a failure to treat (42.9%) were the most commonly cited reasons for litigation. Neurosurgeons accounted for 21.1% of defendants. The median plaintiff award payout was highest for pediatric cases ($10,100,000). A defendant's verdict was reached in nearly one-half of the cases. In instances where a plaintiff's verdict was reached, large payouts were common, especially in pediatric and cerebrovascular cases. An emphasis on reducing procedural error, and making timely differential diagnoses, may reduce future litigation.

National Tax Regulation, International Standards and the GATS: ArgentinaaFinancial Services

Can a WTO Member discriminate against foreign suppliers of services located in jurisdictions that refuse to share information with a government to permit it to determine if its nationals engage in tax evasion? Does it matter if the Member uses standards developed by an international body as the criterion for deciding whether to impose measures? In Argentina—Financial Services the WTO Appellate Body held that services from jurisdictions that share financial tax information may be different from services provided by jurisdictions that do not cooperate in supplying such information. It overruled a Panel finding that measures to increase taxes on financial transactions with non-cooperative jurisdictions were discriminatory. We argue that the AB reached the right conclusion but that an important opportunity was missed to clarify what WTO Members are permitted to do to enforce their domestic regulatory regimes, and how international standards could have a bearing on this question. By giving consideration to arguments that the likeness of services and service suppliers may be a function of prevailing domestic regulatory regimes, the AB increased the scope for confusion and future litigation.

Case-Based Instruction to Teach Educators about the Legal Parameters Surrounding the Discipline of Students with Disabilities

ABSTRACTAllegations of improper discipline are commonly the focus of special education litigation filed against school districts. Because ignorance of the law is no defense, administrators and educators must understand special education law. Yet many educators receive little to no legal training. To address the lack of training and prevent future litigation, this article describes why educators must understand the law surrounding the discipline of students with disabilities, explains the relevant legal concepts, and provides case-based instruction that can be used to teach educators how to comply with federal disability law. University instructors, special education directors, principals, and teachers—regardless of their legal knowledge—can implement the case-based instruction to teach preservice and in-service educators about the federal requirements surrounding manifestation determination, the 10-day rule, unidentified students with disabilities, IAES, emergency exceptions for immediate removal, PBIS, and restraints and seclusion.

Reading Opinion 2/15: Standards of Analysis, the Court's Discretion, and the Legal View of the Advocate General

In Opinion 2/15, the Commission, the European Parliament, the Council, and the Member States litigate whether the Union is exclusively competent to conclude the EU-Singapore Free Trade Agreement (EUSFTA) alone, or whether the EU ought to involve the Member States as independent parties to a ‘mixed’ agreement. The delineation of the material scope of EU Common Commercial Policy following the Lisbon Treaty reform of 2009 is central to this proceeding. The Court’s opinion stands in the tradition of seminal EU external competence litigation, such as Opinion 1/78 and Opinion 1/94. It is widely expected that the Court’s judgment will further clarify the Union’s constitutional identity in the area of EU external economic relations. It therefore has the potential to have profound implications for EU external economic governance. This note reviews the evolution of the Union’s Common Commercial Policy in context of the Court’s past jurisprudence and scrutinizes the relevant standards of analysis, which the Court employs in its competence enquiry. It is argued that the Court retains ample space for discretionary judicial decision-making, which surfaces at the intersection of the competence enquiry and the determination of appropriate legal bases. The clarification and further refinement of the Court’s analytical standards in its judgment and their transparent and consistent application could substantially reduce incentives for future litigation and inter-institutional political combat. The recent quarrels over the signing, provisional application, and conclusion of CETA provide sufficient emphasis to this point. Using the legal view of Advocate General as a benchmark, the paper discusses the practical implications of the Court’s judgment for EU trade and investment treaty-making. Finally, a number of institutional alternatives are proposed that may ‘save’ EU economic treaty-making from ‘mixity’ and the pitfalls of associated procedures in the EU and the member states.

The Law Regarding Pension Interest in South Africa Has Been Settled! Or Has it? With Reference to Ndaba v Ndaba (600/2015) [2016] ZASCA 162

This article reflects on the law relating to pension interest in South Africa. In particular, it assesses whether the Supreme Court of Appeal in Ndaba v Ndaba had adequately clarified how this area of law should be understood. In light of the inconsistent approaches from various divisions of the High Court, it has not always been clear how the courts should interpret the law relating to pension interest in South Africa. In this paper, aspects of this area of law which have been clarified by the Supreme Court of Appeal are highlighted. This paper further demonstrates aspects of this area of law which the Supreme Court of Appeal did not settle and would potentially be subject to future litigation. This paper is based on the premise that while Ndaba v Ndaba is welcomed, the Supreme Court of Appeal nonetheless, missed a golden opportunity to authoritatively provide a basis upon which the law relating to pension interest in South Africa should be understood. 
 

The Law Regarding Pension Interest in South Africa has been settled! Or has It? With Reference to Ndaba v Ndaba (600/2015) [2016] ZASCA 162

This article reflects on the law relating to pension interest in South Africa. In particular, it assesses whether the Supreme Court of Appeal in Ndaba v Ndaba (600/2015) [2016] ZASCA 162 adequately clarified how this area of law should be understood. In the light of the inconsistent approaches from various divisions of the High Court, it has not always been clear how the courts should interpret the law relating to pension interest in South Africa. In this paper, aspects of this area of law which have been clarified by the Supreme Court of Appeal are addressed. The paper also addresses aspects of this area of law which the Supreme Court of Appeal had not settled and which could potentially be subject to future litigation. The paper is based on the premise that while Ndaba v Ndaba is welcomed, the Supreme Court of Appeal nonetheless missed a golden opportunity to authoritatively provide a basis upon which the law relating to pension interest in South Africa should be understood.

Rule 24 Notwithstanding: Why Article III Should Not Limit Intervention of Right

Federal judges often confront cases asking them to set precedent with less-than-complete information. Given the function of stare decisis in the federal judiciary, these judgments often have far-reaching and functionally permanent consequences. At the trial level, the Federal Rules of Civil Procedure provide a partial remedy to this problem. Rule 24(a)(2) provides a party the right to intervene in ongoing litigation provided it meet three conditions. Although the text of Rule 24(a) lays out only three requirements, several circuits have engrafted the standing requirements of Article III onto the Rule, creating an additional hurdle to third-party intervention. As a result, federal courts in these circuits are denied potentially relevant information from parties not immediately bound by a given case. Those same parties are denied the ability to represent their interests in precedent-setting litigation. And because lower federal courts adhere rigidly to stare decisis, these parties are effectively prevented from challenging precedents once set. Because the purely legal debate over whether Article III standing applies to Rule 24(a)(2) is at a stalemate, this article considers a different line of argument. With the Article III debate yet unresolved, I argue that the quasi-legislative character of judicial decisions and decision-making militates against imposing Article III standing on Rule 24(a)(2) intervenors. Specifically, I argue that when judicial decision-making creates a quasi-legislative rule, as is the case with most opinions, courts’ use of Article III standing to exclude other parties from this process raises two interrelated concerns. First, excluding additional parties decreases the volume and, potentially, the quality of information entering the process, increasing the probability that the court will generate bad precedent. This is especially true when the original party’s representation is inadequate, a possibility the text of Rule 24(a)(2) openly acknowledges. Second, a court’s ruling effectively binds all future litigants within its jurisdiction. To varying extents, future litigants are thus denied the opportunity to be heard on the merits of their claims and defenses. While this denial does not violate procedural due process, it does undermine the principles underlying the doctrine.

National Tax Regulation, International Standards and the GATS: ArgentinaaFinancial Services

Can a WTO Member discriminate against foreign suppliers of services located in jurisdictions that refuse to share information with a government to permit it to determine if its nationals engage in tax evasion? Does it matter if the Member uses standards developed by an international body as the criterion for deciding whether to impose measures? In Argentina—Financial Services the WTO Appellate Body held that services from jurisdictions that share financial tax information may be different from services provided by jurisdictions that do not cooperate in supplying such information. It overruled a Panel finding that measures to increase taxes on financial transactions with non-cooperative jurisdictions were discriminatory. We argue that the AB reached the right conclusion but that an important opportunity was missed to clarify what WTO Members are permitted to do to enforce their domestic regulatory regimes, and how international standards could have a bearing on this question. By giving consideration to arguments that the likeness of services and service suppliers may be a function of prevailing domestic regulatory regimes, the AB increased the scope for confusion and future litigation.

Are All Insider Sales Created Equal? New Evidence from Form 4 Footnote Disclosures

This paper is the first to examine the information contained in executives’ voluntary supplementary disclosures in footnotes on SEC Form 4 filings that accompany stock sales. Analysing these supplementary disclosures we are able to distinguish between discretionary sales, for which insiders have discretion over the amount and timing of the sale, and nondiscretionary sales. We find that discretionary sales involve significantly larger trades and produce significantly lower abnormal announcement returns than nondiscretionary sales, particularly when internal controls are perceived to be weak. Our findings suggests that discretionary sales reveal negative information to investors who do not seem to fully impound the information into stock prices in a timely manner as these sales are predictive of negative future stock returns. Investigating the type of bad news that these insider sales predict, we find a positive association with the likelihood of future analyst downgrades, negative earnings surprises and future litigation.

When are Firms Sued for Making Optimistic Disclosures?

Recent research finds a positive association between disclosure tone and future securities lawsuits and concludes that optimistic qualitative statements subject firms to litigation risk. We examine whether this association varies between forward and non-forward-looking statements due to asymmetric legal protections related to these two types of disclosures. We find that only the tone of non-forward-looking statements is associated with subsequent shareholder lawsuits. Our results suggest that firms are not sued for optimistic statements regarding future events, consistent with the safe harbor provisions effectively mitigating litigation risk for qualitative forward-looking disclosures. Furthermore, we find evidence suggesting that the link between non-forward-looking disclosure tone and future litigation is attributable primarily to a failure of firms to adequately disclose bad news rather than by firms’ excessive positive statements or “hype”. Future research should consider managers’ divergent reporting incentives for forward versus non-forward-looking statements when correlating measures of disclosure tone with other outcomes or determinants.

Comments on Mark Seidenfeld’s “Revisiting Congressional Delegation of Interpretive Primacy as Foundation for Chevron Deference”

Comments on Mark Seidenfeld’s “Revisiting Congressional Delegation of Interpretive Primacy as Foundation for <i>Chevron</i> Deference”

The History of the Organized Pseudolegal Commercial Argument Phenomenon in Canada

This article discusses the history of the poorly understood Organized Pseudolegal Commercial Arguments (OPCA) phenomena. Drawing from various reported and unreported sources, the author begins his review in the 1950s with two distinct pseudolegal traditions that evolved separately in both the United States and Canada. Focusing on the prominent members of each era of the OPCA movement, the author explains in depth the concepts behind the movement and what it means for the legal system in Canada today. The article culminates with an analysis of the current OPCA groups and how Canadian courts should respond to future OPCA litigants, while also giving reasons as to why it is important for Canadians to take notice of this movement due to potential security risks.

Open Prosecution: Towards Ex Ante Validation of Patents

Patents are unilateral declarations by an inventor which when approved by the patent office stand unchallenged for the remainder of its life. The only way by which its credibility or truth can be questioned, is by putting forward a challenge before a court of law. This is a hugely expensive and inefficient way to find the truth about patents. Open prosecution offers an ex ante opportunity to test the validity of patents. By transposing the point at which the validity can be challenged (usually the courts) and placing it within the patent office within the grant process at the patent office (for e.g. by the introduction of pre-grant opposition), open prosecution brings in the much needed peer-scrutiny of patents. This is not an alien thing to do. Open prosecution is similar to the re-examination procedure in the United States. The new patent law in the United States, the America Invents Act also allows for post-grant review of a patent. This recognizes the fact that it is primarily the competitors who are empowered to challenge the patent. By making the analysis ex ante, open prosecution not only empowers a resource-crunched patent office, but it also saves on future litigation time and costs. The evidence from 10 years of pre-grant opposition procedure in India, which can be regarded as the first step towards open prosecution, demonstrates the high rate of success of pre-grant opposition in invalidating patents. Open prosecution could thus be a boon for improving access to medicines.

Legal Aspects in Obstetric Anesthesia

Obstetric anesthesia is a particularly high-risk sub-specialty of anesthesia and may lead to serious morbidities and even mortality. Good doctor-patient relation from the time of admission till discharge is the most important factor to avert future litigations. Any procedure done or planned should be clearly documented. Documentation should start with a valid consent in the patient’s own language, and have all three components of voluntariness, capacity and knowledge. A ‘Surgical Safety’ checklist is particularly helpful in documentation and decreasing errors. Safety of the mother (and her child) is paramount. Both regional as well as general anesthesia, either inadvertently or if not administered properly may be associated with morbidities like headache, pain and emotional distress. However, deaths do occur and general anesthesia is associated with care should be routine practice and inculcated by everyone involved in patient care.

Laryngology litigation in the United States: Thirty years in review.

Malpractice claims pertaining to laryngology procedures are a potentially important source of information that could be used to minimize the risk of future litigation and improve patient care. A retrospective review of two publicly available databases containing jury verdicts and settlements. The LexisNexis Jury Verdicts and Settlements and WestlawNext legal databases were reviewed for all lawsuits and out-of-court adjudications related to the practice of laryngology. Data including patient demographics, type of surgery performed, plaintiff allegation, nature of injury, outcomes, and indemnities were collected and analyzed. Of 87 cases meeting inclusion criteria, 56 were decided by a jury and 31 were adjudicated out of court. Vocal cord surgery was the most commonly litigated surgery. The two most commonly cited legal allegations were physical injury and negligence. No statistical difference for legal outcome was found when death or vocal cord injuries occurred. Complications in procedures that utilized a laser predicted an unfavorable outcome (P = 0.013). A payout was made in over one-half of cases, but defendants were favored in over two-thirds of cases decided by a jury. The average indemnities were significant for both jury verdicts ($4.6 million) and out-of-court settlements ($0.9 million). An awareness of laryngology malpractice litigation has the potential to provide better patient care and help laryngologists avoid potential risks for litigation. The factors determining legal responsibility in laryngology cases underscore the importance of close communication with anesthesiologists and careful evaluation of hoarseness in all patients regardless of risk factors. N/A. Laryngoscope, 126:2301-2304, 2016.

Sea Level Rise, Radical Uncertainties and Decision-Maker's Liability: The European Coastal Airports Case

Until now, most of the growing climate legal litigations mainly concern environmental associations or victims against energy of energy-users firms or States. However, in a near future, because of exacerbating sudden floods linked to climate change, future litigations could (will) concern infrastructure governance versus private companies. Indeed, sues would (will) concern the financial losses these last ones would (will) endure because the infrastructure managers did not made convenient protection choices in due time. This paper particularly investigates the case of coastal airports at the European level. It insists on the importance of climate scientists divergent opinions about the sea level rise and its consequences for decision-takers concerning their potential legal liability for negligence.

The importance and relevance of amicus curiae participation in litigating on the customary law of marriage

With the South African Constitution recognising customary law as part of South Africa's legal system, debates arose as to the application of the equality principle within custom, as many customary practices were seen as discriminatory. The Recognition of Customary Marriages Act 120 of 1998 was the first piece of legislation that was enacted to address gender inequality within customary law, specifically customary marriages. Future litigation on the topic was deemed to be straightforward, entailing the mere interpretation and application of applicable provisions. However, what has emerged from litigating on the customary law of marriage is how litigators, and especially the participating amicus curiae, diverge on the litigation strategy to use. The article explores the relevance and importance of amicus curiae participation within a constitutional framework and establishes whether such participation has contributed to ensuring that women living under customary law's claims to culture and equality are understood in the right context.