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Lunch Seminar – Don’t Lose Your Shirt and Your House: What Professionals Must Know About the Tricky Area of Foreclosure Defense

Burlington County Bar Association’s
CLE Luncheon Seminar Series

‘Don’t Lose Your Shirt and Your House: What Professionals
Must Know About the Tricky Area of Foreclosure Defense’

Thursday, June 6, 2013 12-1:15pm
Bar Headquarters, 137 High Street, 3rd Floor, Mount Holly
Cost – $40 per person, includes lunch, seminar and any materials provided
For more information: http://burlcobar.org/wp-content/uploads/2011/06/Foreclosure-Defense-Luncheon-Flier.pdf

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Consumer’s Victory Against Defective Drug

On March 4, 2009, there was a tangible shift in the playing field between consumers and big business. Consumers have always faced a steep uphill climb when fighting corporate America and defective products. This month, the Supreme Court of the United States thankfully offered a rope to make that climb a little easier when it allowed injured persons to sue for injuries caused by defective drugs.

Wyeth v. Levin

The tale of Diane Levin is truly disturbing and highlights the massive loopholes created by the FDA regulations that the drug companies have driven countless profits through. In 2007, Levin, a professional musician, went to the hospital to treat a migraine headache. After being injected with a drug manufactured by Wyeth, she left with injuries that led quickly and irreversibly to the loss of her right arm. Specifically, Levin’s arm was amputated because Wyeth’s drug Phenergan, prescribed to alleviate nausea associated with a migraine headache reached her arteries. Phenergan was given to Levin using a method of administration that was permissible under Wyeth’s labeling instructions, even though Wyeth knew this method increased the risk of contact with arteries and serious injuries.

The drug was administered intravenously through a technique known as an “IV push.” In this method, a syringe pushes medication directly into the patient’s veins. Wyeth had known for decades that if Phenergan is administered by the “IV push” method, even by experienced clinicians, inadvertent arterial contact can result. This is in contrast to administration through a free flow IV bag, which reduces the risk of inadvertent arterial injection because the nurse or physician can be more certain that the needle has been placed in the vein.

Wyeth had known that when Phenergan comes into contact with an artery, the artery dies, necrosis, gangrene and amputation will result. Four experts testified at the state court level that if Phenergan is used intravenously it should be done only through a hanging IV bag and the labels should have warned against the use of IV push. However, Phenergan’s label did not contain any such warning regarding using of the IV push method. The Vermont Supreme Court held that the FDA never made any determination as to whether the label should have warned against the IV push method.

Because the IV push method was used to administer Phenergan to Levin, the drug penetrated her artery. For seven weeks after the injection, she suffered unimaginable physical and emotional pain as she watched her right hand turn black and die. In short as a result of being subjected to an unsafe and unnecessary method of administration of a drug to curb nausea, Levin endured two amputations. First, she lost her right hand and then her right arm up to the elbow harming her profession and life-long passion to be musician and play the guitar.

Background of FDA Labeling

The FDA’s labeling rules require a prescription drug or medical device manufacturer to make any changes to its label and to add or strengthen a warning about a possible adverse reaction as soon as it has reasonable evidence that the drug or device causes an adverse reaction. The importance of this rule was underscored in congressional debate regarding the passage of the Food and Drug Administration’s Amendments Act of 2007, which gave the agency additional authority to better regulate prescription drug approvals. When Congress passed this law, it understood the FDA’s rules to impose a duty on drug manufacturers to update their labels when they became aware of potential hazards.

Consumers who have been hurt by drugs and other dangerous products will now have more latitude since the Supreme Court has ruled that Federal Regulations do not always preempt state law. It is clear and the Supreme Court reaffirmed that Congress never intended to give the FDA full and total authority over drug labeling. Rather, state courts have had the right to hear cases in which people have been injured by drugs. And further, drug companies have the responsibility to fix their labels and keep them current with the latest warning information. Drug companies, the Court said, must also inform the doctors of dangers of drugs through their ubiquitous sales forces or by sending out letters to physicians. In this technology driven market economy this is certainly a simple endeavor. Wyeth, backed by the Bush administration, argued that once drug warning labels get FDA approval, the label does not need to be changed unless the FDA expressly asks for it. Part of Wyeth’s argument was that it was more efficient for Federal Regulations to take precedence because state laws vary so much. Anyone who has had any experience with these regulatory agencies knows that they move at a glacial pace. Science and technology are quickly evolving and it makes sense for drug companies to disseminate new information as soon as its available.

The Court also rejected Wyeth’s claim that allowing juries to entertain such claims would hamper the broader objectives of the Federal Statute. Indeed, the Court noted that the FDA had always welcomed state common law actions right up until it recently changed its position in 2006. Throughout its opinion, the Court stressed that the manufacturer bears responsibility for the contents of its label at all times. In our civil justice system, the Court noted, innocent people generally have recourse in state courts to hold companies accountable when they shirk their legal responsibilities. Drug companies are no different.

In his dissent, Justice Alito, who was joined by Chief Justice Roberts and Justice Scalia, started by writing “this case illustrates that tragic facts make bad law. The Court holds that a state tort jury, rather than the FDA is ultimately responsible for regulating warning labels for prescription drugs.” To the contrary, the state tort system picks up when federal regulators fall down on the job. Can anyone really say with a straight face that they have complete and total confidence in the job the federal regulators are doing? If so, countless defective drugs and consumer products would never make it to market. We all know that is not the case.

In fact, serious data has found that side effects regarding prescription drugs are at a near epidemic rate. Consumer Reports recently reported that one in six Americans who have ever taken a prescription drug experiences side effects serious enough to send them to a doctor or hospital, but the majority of consumers don’t know that they can report these side effects to the FDA which are responsible for tracking drug safety problems.

Legislation on the Horizon

Recently, Democrats in Congress just introduced a measure to allow consumers harmed by medical devices approved by the FDA to sue the device manufacturer in state court. This is in response to the Supreme Court in Reigal v. Medronic. In Medronic, the Supreme Court allowed the dismissal of a lawsuit involving a ruptured catheter. In that case, the Supreme Court ruled that the FDA approval preempts state courts from hearing liability suits against the makers because such suits could minimize devices FDA determined benefits and risks. Medronic and the Bush administration asserted that “allowing state personal injury lawsuits against the makers of defective medical devices amounts to a state court requirement” different from the FDA requirements because such complaints are based on state laws. There is now legislation being funneled through Congress, that tries to further even the playing field with regard to making sure defective medical devices are also subject to state tort laws. Congress should act quickly to close up these loopholes as well.

It has often been said that the role of government is to fill the void when citizens acting individually cannot bridge the gap. This is the reason we have regulatory agencies that try to ensure that our roads are safe, the environment is protected and the food we eat is safe to name just a few. However, our government is under a tremendous amount of pressure and cannot meet the demands to ensure that the public is safe from defective products. That is why the avenue to the Court’s must remain open so injured citizens can seek redress against companies that manufacture, market, sell and , of course, profit from defective and unsafe products. If this important constitutional right is abrogated, the onslaught of dangerous and defective products hitting the market will have no limitation.

A Good Day in Cape May County

We had a foreclosure case come up for trial last month in Cape May County, New Jersey. The plaintiff was Fannie Mae, and they had bought the loan from my client’s federal credit union. There was significant fraud in the way the Lender lied to my client in order to get him to take the mortgage loan in the first place. I retained an expert witness, a former mortgage broker with 20+ years of experience, to testify at trial. As in a lot of my cases, the expert wrote a narrative report which outlined the fraud that was committed by the lender.

With the trial quickly approaching, the bank filed a motion asking that the judge not allow my expert to testify asserting two main points: 1) if fraud was committed, it was done by others, not Fannie Mae, and 2) the foreclosure lawsuit was simple enough that an expert witness was not required. I filed a Reply Brief demonstrating that Fannie Mae has a duty to evaluate a loan before it buys it, and my expert demonstrated the ways the lender manipulated the loan documents, eventually causing my client to spend $75,000 more than he should over the 30 year term of the loan.

After oral argument, The Honorable William C. Todd agreed with me and denied the bank’s motion. My expert can testify, and is ready and willing to do so at trial.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Restatement – Third – of Torts : Not So Fast

In 1998, the American Law Institute (ALI) issued the Third Restatement of Torts which contained several changes to product liability. These changes of the Third Restatement do not represent Pennsylvania jurisprudence. Some of these changes are a drastic departure from existing law and do not reflect a consensus of other jurisdictions and is certainly a step in the wrong direction.

The Pennsylvania Supreme Court is currently considering the application of the Restatement (Third) of Torts §2 (1998) in Bogush v. IU North America. The Bogush case involves Edward Bogush who died due to mesothelioma which, of course, was caused by asbestos. At trial, Defendants offered no testimony or argument to the jury that the asbestos products were safe or not defective (frankly, how could they proffer that type of testimony.) To the contrary, Defendants only offered defense expert testimony that the Plaintiff/Decedent’s mesothelioma was idiopathic and not caused by asbestos. Plaintiff offered experts to establish that the asbestos products were defective and caused Decedent’s fatal condition. The jury awarded Plaintiffs $1.4M.

On appeal to the Pennsylvania Supreme Court in Bogush, Defendants are arguing for the wholesale rejection of product liability law and the standards of Section 402 (a) which have been uniformly adopted throughout almost every jurisdiction. Instead, Appellants are pushing for the Restatement (Third) of Torts regarding product liability. The Restatement (Third) addresses, among other things, the failure to provide an adequate warning for products. Under the revised Restatement, a product is defective when, at the time of sale or distribution, it has inadequate instructions or warnings when a foreseeable risk of harm that is posed by the product could have been reduced or avoided by reasonable instructions or warnings by the seller or other persons in the chain of distribution. Restatement (Third) of Torts – Product Liability §2 ( c).

The plain meaning of the Restatement (Third) clearly mandates that if there was a foreseeable risk to anyone, all persons in the chain of distribution would bear responsibility. However, in Bogush, Defendants are trying to argue that foreseeable risk means foreseeable to them, only. This is not what the Restatement provides and the Pennsylvania Supreme Court must reject that broad interpretation.

This proposed interpretation and application of §2 of the Restatement (Third) will result in a fundamental shift in Pennsylvania law which is not justified by any change in policy rationale. Pennsylvania product liability law is deeply rooted in the concept that the manufacturer who places a product in the commercial stream is in a better position than the consumer to take steps to reduce the risk of injury from its product or the accept the costs of injuries that result from its product. The axis of product of liability law has always been a cost shifting analysis. Pennsylvania law has long required a manufacturer/seller/distributor to be liable although it may not have been at fault. Of course, Plaintiff was not at fault either since contributory negligence is inapplicable in a product liability action. The roots of strict liability require that if that there is a split between two faultless entities, the party who caused the injury, who designed the product, who manufactured the product, who sold it and who profited from it, should pay for the injuries caused by the defective product.

The Appellants argument in Bogush for an expanded application of §2 of the Restatement (Third) will change strict liability for design defects in warning cases for a broad “foreseeability test.” As commentators and Courts have pointed out, a foreseeability test effectively eradicates the distinction between strict liability and negligence. A return to a negligence based system is clearly contrary to the law as it has developed in Pennsylvania since the adoption of §402(a). As the Pennsylvania Supreme Court has long recognized, negligence concepts have no place in strict liability. Azzarello v. Black Brothers Company, 391 A.2d 1020 (Pa. 1978) and this separation of negligence concepts from strict liability actions was reaffirmed recently Pennsylvania Supreme Court. Phillips v. Cricket Lighters, 841 A.2d 1000 (Pa. 2003). Such a division between negligence and strict liability is not a senseless exercise in semantics; rather, it is dictated by the very underpinnings of a strict liability action. The adoption of these broad foreseeability concepts for all parties across the chain of distribution, would inject impermissible negligence concepts that have been routinely rejected by the Pennsylvania Courts. The abandonment of current strict liability law would present a reversion to a society that no longer protects the innocent consumer but rather the responsible manufacturer/ supplier of the defective product. Certainly, the latter is more able to bear the burden in our society. As such, the Pennsylvania Supreme Court must reject the proposed changes of the Third Restatement because a foreseeability test will not protect innocent parties injured by defective products.

Big Banks Get a Slap on the Wrist

In 2011, Federal regulators told the nation’s big banks to investigate themselves because of the shoddy foreclosure practices that took place in 2009 and 2010. The banks were forced to hire consultants and if violations were found, they were supposed to reimburse homeowner victims for amounts found “as appropriate.” After spending an estimated $1.5 billion dollars on consultants, big banks found little wrong-doing which provided any significant relief for homeowners. Homeowners received next to nothing when compared to the soaring profits the banks continued to reap during that period of time. In essence, it was left up to each bank to decide what constituted both a wrongful foreclosure and “appropriate” compensation.

Yet, the banks got their way because in January, 2013, Federal regulators (The Federal Reserve and The Office of the Comptroller of the Currency) reached a deal with 10 big banks which effectively ended the review and required the banks to provide $8.5 billion in aid to borrowers. The investigation could have been more expensive, but the deal also resolved any uncertainty or risk—which big banks no longer enjoy. Of the $8.5 billion, $3.3 billion is ear-marked for cash payments to borrowers who lost their homes and $5.2 billion is for various loan modification programs. The foreclosure abuses were obvious and caused not only the disruption of entire neighborhoods, but also depressed home values, caused children to relocate to different schools and forced seniors to move to housing that is not well suited for them. Given the extent of the crisis, Federal regulators could be questioned why they ended the review process with a settlement that may not give the required relief.

For their part, federal regulators are proudly claiming that the goal in ending the reviews was to provide borrowers relief in a more-timely manner, which begs the question why the flawed review process was instituted in the first place. There is, however, no reliable analysis to figure out which borrowers were victimized, so there really is no fair way to apportion the $3.3 billion among the 4 million borrowers who could be affected. Simple math bears out that if half of the eligible borrowers received the payment, each would get roughly $1,700 on average – a paltry sum for suffering through a wrongful foreclosure.

The $5.2 billion in loan modification relief can be effective as long as the banks keep the goal in mind – keeping families and individuals in their homes. There may be help, however, because the Consumer Financial Protection Bureau is expected to issue new rules shortly to reign in the risky and abusive mortgage practices of the past. These new rules are needed to ensure that all eligible borrowers facing foreclosure receive modifications according to specific publicly available criteria.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

A Good Way to Start Getting Ready For Trial

We filed a lawsuit against a well-known Philadelphia law firm for not honoring a written agreement to pay a referral fee for our client, another lawyer. Referral fees are a common practice, and the defendant law firm would not honor its own written agreement. The case is set for trial in April in the Philadelphia Court’s Commerce Program.

In my view, the written contract is clear and unambiguous, so no oral testimony is needed to interpret the contract. This was the key to the whole trial and, of course, the Defendant disagreed, and wanted to explain his way out of honoring his own written words. I also didn’t trust my adversary from bringing in inflammatory and irrelevant testimony at the trial, so I filed four pre-trial motions (called motions in limine) for the Court to rule on before the trial started.

I am pleased to report that on February 15, 2013, Judge McInnerny granted all four of my motions.

The most important of these orders precludes the defendant from introducing any oral testimony to give his version of the contract. Upon receiving these orders, I recalculated my settlement demands, and I expect the defendants to come to the table with a reasonable offer.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Private Attorney – Client Conferences During Depositions

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Billions of Dollars in “Aid” – But no Meaningful Relief

In 2012, five of the nation’s biggest banks reached an agreement with state and Federal officials that addressed the foreclosure abuses over the last several years. The banks agreed to give roughly 46 billion dollars in relief to distressed homeowners, much of it through principal reductions of mortgage amounts. What the banks did with this mandate is proving worthless. Here’s why.

Despite these banner numbers, much of this relief is coming in the form of reducing principal on second mortgages, not on first mortgages. While addressing the second mortgage can offer some relief, it is the primary mortgage that leads to the foreclosure lawsuit. That means homeowners are still in jeopardy of losing their homes, even though the big banks get credit for restructuring the second mortgages. The banks get credit towards fulfilling the $46 billion relief package, but the homeowner still gets foreclosed on.

What happens is that a homeowner will be notified that their second mortgage has been reduced, giving false hope that their housing problems are behind them. What ends up happening, however, is that the first mortgage holder has not reduced the principal, and they are free to foreclose and take the home. This does little, if anything, to help the homeowner. It is important to note that when a house is sold in foreclosure, there is typically no money to pay the second mortgage anyway, and the second mortgage holder usually gets nothing. Under the terms of the settlement, though, the banks are receiving credit for giving the second mortgage, even though they most likely would have not have gotten any money for it anyway.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Lunch and Learn Seminar Series: ‘Don’t Lose Your Shirt and Your Home – What Professionals Must Know About the Tricky Area of Foreclosure’

Lunch and Learn Seminar Series:

Click Here to Register:
‘Don’t Lose Your Shirt and Your Home – What Professionals Must Know About the Tricky Area of Foreclosure’

Foreclosure Defense Workshop July 23

foreclosure-defense-workshop

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

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