What do you think of Fortune’s list this year? Do you think women have made impressive gains in corporate America, or do they have a long way to go? Are women paid fairly? Are they rewarded at work equally? Do women make better leaders? What are the biggest obstacles holding women back? What will the next generation of successful women look like?

[See update at bottom of post; Supreme Court ruled 10-1-07.]

A much anticipated Supreme Court ruling potentially impacting every personal injury suit against a medical device maker has been imperiled by a weird procedural wrinkle. Unbeknownst to the lawyers handling the appeal, known as Riegel v. Medtronic, plaintiff Charles Riegel died in December 2004, almost three years ago, and about 20 months before they filed the Supreme Court petition on his behalf.

Riegel sued after a Medtronic balloon catheter burst during an angioplasty in 1996, causing serious injuries. The Supreme Court agreed to hear the Riegel case in November 2006, because it raised the question of whether state law tort suits against medical device makers are preempted — i.e., barred — by certain language contained in the federal regulatory laws governing such devices. (The case does not directly impact suits against pharmaceutical manufacturers, who are regulated under a different federal statute that lacks the specific language in dispute.)

Often when a plaintiff in a personal injury suit dies, his case can survive him so long as the plaintiffs lawyers act promptly to substitute his estate as the new plaintiff. Under the relevant Supreme Court rule, the lawyer is supposed to do so within 6 months of the plaintiff’s death. Medtronic (MDT) is now arguing that because the plaintiffs lawyers didn’t meet that deadline, Riegel’s suit long ago “abated” (i.e., ended) and the appeal must now be dismissed. Though much of the medical device industry — which includes companies like Boston Scientific (BSX) and Johnson & Johnson (JNJ) — is eager for the case to be heard, anticipating a pro-industry ruling, Medtronic won the Riegel case in the courts below, and therefore would like to see this particular appeal dismissed (preserving their victory).

On August 1 Riegel’s appellate counsel at the Public Citizen Litigation Group, Allison Zieve, filed what’s oddly known as a “suggestion of death” motion, in which she sought to substitute Charles Riegel’s wife, Donna — the administrator of Charles’s estate — for Charles as the plaintiff. In her motion papers Zieve wrote that she first learned of Charles’s death from Donna in June of this year, and only managed to have Donna officially appointed as his administrator in late July. Zieve writes that she continually kept the Riegels apprised of the status of the case by writing to Donna, and that Donna, as a lay person, had simply not realized the impact her husband’s death would have on his suit. She argues that the Court has discretion to waive the 6-month rule and that, in any event, Donna was already a co-plaintiff in the case, suing for loss of her husband’s consortium (companionship), so her claim should go forward in any event.
Medtronic argues, on the other hand, that the abatement rule is mandatory and claims that it’s unclear under New York law whether Donna’s consortium claims survive Charles’s death. (The Court likes to hear cases that are unclouded by such state law side-issues.)

The Riegel suggestion of death motion was first reported in the Legal Times of Washington, here, and has also been noted subsequently in the blogosphere, here and here, for instance.

While pro-business bloggers have had some fun with the situation — as allegedly reflecting how distantly plaintiffs lawyers are in touch with their clients — to my ears the developments have more of a “there-but-for-the-grace-of-God-go-I” ring to them. I can well imagine a lay person, upon her husband’s death, having other things on her mind than rushing to the surrogate’s court to be formally appointed administrator of his lawsuit.

What do others think?

UPDATE (October 1, 2007, at 3:38) : This morning the Supreme Court allowed the plaintiff to substitute Donna, as administrator for the estate, for Charles. Chief Justice John Roberts and Associate Justice Antonin Scalia dissented. See Drug and Device Log post here.)

Here’s a question I’ve heard a lot more than I might’ve expected in my reporting on Gen Y. Let us know what you think, and thanks for all the well wishes. Have a great weekend!

*****

My boss is in her 30s, and I thought, since we’re close in age, that we’d get along well. Instead, she’s harder on me than my older bosses have been. What’s up with that?

When Boomer bosses complain about their Gen Y charges, says researcher Tamara Erickson, she just asks if they have any kids. “I see the difference immediately,” says the co-author of 2006’s Workforce Crisis. “But I haven’t found anything that effective for Gen Xers. When I try, I often run into a fairly grumpy reaction: ‘Well, I had to do it, and they ought to do it.’ They’re much more rigid about what they went through and not being sympathetic to Yers.”

It seems counterintuitive. These Xers are our big brothers and sisters, they taught us all our best bad behavior, we idolized them. While that appears to be true in retrospect, speaking as a big sister myself, I never miss an opportunity to remind my sibs how much they got away with because I’d paved the way. “When I was little…” has started many a bitter conversation. And we’re only talking about curfews and phone privileges.

So imagine how Xers in the workplace, where the stakes are so much higher, must feel. According to the Bureau of Labor Statistics, there are 48 million Xers to the almost 80 million of us and over 78 million Boomers. “People are paying attention to Yers to a degree that they didn’t necessarily pay to Xers, who are basically sandwiched between these huge globs of people in a very frustrating situation,” says Erickson. “They have annoying people like Tammy Erickson saying we have to retire retirement, so they’re not going to get rid of Boomers when they thought they would. And they’re already thinking that by the time Boomers actually leave, Yers will be perfectly positioned for those jobs. They’re very threatened by Yers.”

Which may help explain their sometimes less than loving attitude toward us in the office. But they needn’t depend on your empathy alone. For the Xers struggling to manage Yers — and their own emotions — more effectively, Erickson has a few thoughts. (That, incidentally, might be quite useful if e-mailed anonymously.)

Realize, she says, that Yers are very good at seeking out expertise, and they’re much more attuned to that than hierarchy, so Xers shouldn’t get offended if the Yers in their charge choose Boomers for mentors. “There’s great evidence of relationships forming between Boomers and Yers,” Erickson says. “Yers are sussing out who really knows how to do the job, and often it’s these old Boomers. But Xers can’t get caught up in that. They have to have the confidence to encourage Yers to team up with Boomers and make that an accepted part of the culture.”

And speaking of confidence, Xers also need to build some when it comes to technology. They’re very concerned about Yers’ greater technological sophistication, says Erickson, who points out that while Xers are perceived as very tech-savvy, some don’t feel as comfortable with technology as the perception indicates. Erickson recommends addressing that insecurity directly: “The Xers do really have to make sure that they’re experiencing the technology. A lot of what Yers know is not about them using the technology better, but about using it differently. Xers need to use the technology enough to develop some of that experiential knowledge.”

As an “older” Yer, even I didn’t quite understand what Facebook meant to my recent-grad sister and her friends until I finally started using it semi-regularly. Understanding how Yers use sites like this — that they aren’t just for e-mail or networking, but practically for conducting life — could go a long way to ease Xers’ technology anxiety. And insofar as that helps Xers to be more open and flexible in the way that they think about work, Erickson’s a fan: “It’d be great for Xer bosses to sit down with Yers and say, ‘Let’s think about all the time we spend scheduling meetings or doing conference calls. How much of that could we do with text messages or an internal Facebook site?’ Thinking like that will help Xers stay a step ahead.”

But whether your Xer boss is forward-thinking or as backward as Kris Kross, chances are that s/he’ll have a loopy episode sooner or later, so when it happens, don’t despair. Just remember where it’s coming from and try a little tenderness.

On Tuesday the U.S. Supreme Court quietly agreed to hear a case with tremendous potential consequences for Merck (MRK) in its pending Vioxx litigation, as well as for Big Pharma generally.

The case, now known as Warner-Lambert v. Kent (and known in the lower court as Desiano v. Warner-Lambert) specifically involves a federal preemption issue that was raised by a Michigan state law in a suit against the Pfizer (PFE) unit over the drug Rezulin. Very similar issues are raised, however, by state laws enacted by seven other states, including New Jersey, where more than half the 28,000 Vioxx personal injury suits have been filed, and Texas, where about 1,000 more are pending.

All of these state laws curb to varying degrees attempts to bring personal injury suits against drug companies relating to any drug that has been approved by the Food & Drug Administration unless the plaintiff can first establish that the manufacturer committed fraud on the FDA by, for instance, submitting false information or failing to submit relevant information during the drug approval process.

The issue that has arisen is how such statutes should be interpreted in light of a 2001 U.S. Supreme Court ruling called Buckman Co. v. Plaintiffs’ Legal Committee. In that case the Court ruled that any attempt by a state to allow a plaintiff to sue a drug company under a “fraud-on-the-FDA” theory was preempted by the federal statutory scheme that set up the FDA. In essence the Court said that the FDA and federal prosecutors were fully capable of punishing “fraud-on-the-FDA” if and when it occurred, and states had to butt out.

The question then became: How do you interpret a statute like Michigan’s, which bars bringing any action against a drug company over an FDA-approved drug unless there’s been fraud-on-the-FDA? Does the Buckman precedent mean (possibility number 1) that the exception is now preempted, but the remainder of the state law remains in effect. If so, the result is that all suits over FDA-approved drugs are now prohibited in Michigan — a pro-business result. Or does Buckman mean instead (possibility number 2) that the whole state law has to be struck down in its entirety (taking the bitter with the sweet). If so, the result is that no suits over FDA-approved drugs being barred anymore — a pro-plaintiff result. Or (possibility number 3), do you just continue to enforce the state statute as written, because it doesn’t really allow the plaintiff to sue on a fraud-on-the-FDA theory (which is what was forbidden in Buckman), but rather only allows the plaintiff to sue on more traditional theories, while conditioning that right upon the occurrence of a particular factual circumstance — which happens to be fraud-on-the-FDA? That’s another fairly pro-plaintiff result.

In 2004, in a case against Wyeth (WYE) over its Duract drug, the U.S. Court of Appeals for the Sixth Circuit, in Detroit, ruled that possibility number 1 was correct, and knocked out the exception while keeping the rest of the statute. (The pro-business result.) But in late 2006, the U.S. Court of Appeals for the Second Circuit, in New York, ruled that possibility number 3 was correct, and continued to give effect to the exception notwithstanding Buchman. (That’s a pro-plaintiff result.) Both cases involved interpretation of the exact same Michigan statute. It’s the latter case, then known as Desiano and now known as Kent, that the Supreme Court just decided to hear. (The Michigan case had been transferred to New York as a result of the multi-district litigation process.)

According to Mark Herrmann, a partner at Jones Day in Chicago who has written about these issues, of the eight laws that are implicated by the appeal, the Michigan law imposes the strongest curbs on suits over FDA-approved drugs, in that it purports to bar any such suit absent fraud-on-the-FDA. (Herrmann also co-writes the Drug and Device Law Blog, available here.)

The next strongest law, Herrmann says, is the Texas statute, which bars “failure to warn” claims absent fraud-on-the-FDA. Since “failure-to-warn” — an accusation that the drug label failed to warn doctors and patients about just how unsafe the drug really was — is by far the most common theory for bringing personal injury suits against drug companies, this law is also quite powerful. In April, in the Ledbetter case, the Texas state judge presiding over 1,000 Vioxx suits ruled that possibility number one was correct, following the Sixth Circuit, and granted partial summary judgment to Merck on the core theory of liability in all of those cases. All of those cases have been stayed pending appeal. (An article Herrmann wrote about that case on his blog at the time is available here.)

The six other states bar only the attempt to seek punitive damages in a case over an FDA-approved drug, absent fraud-on-the-FDA, according to Herrmann. These states are New Jersey, Arizona, North Dakota, Ohio, Oregon, and Utah, according to Herrmann. Judge Carol Higbee, who is presiding over many thousands of Vioxx cases in New Jersey, followed the Desiano reasoning (possibility three), and decided to let the plaintiffs seek to prove fraud-on-the-FDA and, therefore, seek punitive damages in those cases.

We’ll soon get clarity and uniformity. Some pro-business groups are already interpreting the Court’s decision to review the Desiano case as a good sign for their constituency. See, e.g., here.

The case will likely be heard early next year.

With the recent publication of the transcript of the September 18 hearing in SCO’s Chapter 11 proceeding in U.S. Bankruptcy Court in Delaware, it’s now possible to piece together what SCO’s (SCOX) legal strategy apparently was in filing for Chapter 11 protection on the eve of its scheduled trial against Novell (NOVL).

At that trial — drastically narrowed in scope by Judge Dale Kimball’s August 10 ruling throwing out most of SCO’s claims without letting them reach a jury (see earlier post, here) — Kimball would not only have determined what percentage of SCO’s revenue from its SCOsource program he thought properly belonged to Novell, but he also planned to impose a “constructive trust” on SCO to protect Novell’s recovery of that sum. It appears to have been the constructive trust that SCO feared most, since it might have taken immediate effect, even before SCO had an opportunity to appeal Kimball’s rulings. If Kimball found all or a large amount to be owing — and, with prejudgment interest, the $26 million SCO received from licensing agreements with Sun Microsystems (JAVA) and Microsoft (MSFT) could alone have run to more than $37 million — and decided to freeze SCO assets in an attempt to preserve that money, it could have blocked SCO’s ability to continue ordinary business operations. (SCO CEO Darl McBride had earlier alluded to this possibility in an affidavit he submitted in the bankruptcy court on September 14. Here’s the affidavit. See paragraphs 48-49.)

At the September 18 hearing (here’s the transcript) SCO lawyer Arthur Spector (a former bankruptcy judge in Michigan) shed light on exactly what SCO does and does not expect to achieve by having moved the case to bankruptcy court. He appeared to acknowledge that the automatic stay on the Novell trial would need to be lifted and that, when it was, the case would go back to Judge Kimball for trial. He even hinted that SCO might be willing to reach an agreed upon order to that effect with Novell. (See pages 24-25.)Judge Kimball would then arrive upon some dollar amount allegedly owed to Novell.

But Spector also said this: “Once that’s decided, whatever that number is — 10 million, 15 million — then the next question is how much of the money still in the hands of [SCO] is traceable to those, quote, ‘tainted funds.’ That, Your Honor, is the core of bankruptcy jurisdiction. What is and is not property of the estate. We think it’s going to be this, this Court’s determination on that question when the rubber meets the road.” (See page 24.)

So it is the decisions surrounding the constructive trust portion of the case that SCO realistically hopes to wrest from Kimball’s hands and place into bankruptcy judge Kevin Gross’s. Evidently, SCO’s position will be that even if Kimball computes some large sum to be owing, that Novell can impose a trust only on “tainted funds” or funds “traceable” to them, which might be a much smaller number. In other words, if SCO has already spent all the money that it received from Sun and Microsoft, or all but a small portion of it, Novell might only be able to impose a constructive trust on that amount or account, which would not prevent SCO from continuing to do business while it appealed all of Kimball’s rulings to a federal appeals court.

Evidently, SCO believes the constructive trust law in this situation favors such a narrow interpretation, and it trusts a bankruptcy judge to reach that conclusion, while it does not trust Judge Kimball to.

A little under the weather, so thought I’d spare you the Theraflu-induced haze. (As hilarious as that reflecting might be.) But back soon, and in the meantime, maybe some of you’ll take a cue from Gig reader Nick and tell us about your work spaces…

[This is a guest column by my colleague, Fortune editor-at-large Peter Elkind. Back in the September 4, 2000, issue of Fortune, when the investigation of Milberg Weiss had not yet become public, he wrote a 9,000-word profile of Bill Lerach, available here, providing a remarkably prescient overview of things to come. In November 13, 2006 he wrote a 9,000-word cover story , available here, about what the investigation had unearthed by then.]

By Peter Elkind

I guess, at bottom, no matter how clear the rules, greed, unfettered power or feelings of omnipotence will lead some people into bad conduct.
–Mel Weiss, 2005 interview with Accounting Today

Last week’s events in the slow, stunning fall of plaintiffs’ juggernaut Milberg Weiss make a handful of points painfully clear.

The first is that 72-year-old firm co-founder Melvyn Weiss, indicted Thursday on four felony counts in the long-running federal kickback probe, isn’t just going down with his sinking ship. He’s taking the ship down with him.

In a remarkable statement on the eve of Weiss’ impending indictment, the firm—which has been crippled by its own indictment—announced that Weiss, in response to the new charges, has “decided to discontinue his involvement in firm management.”

No, Weiss isn’t leaving the firm—in fact, he’s not even taking a leave of absence. Far from it. “Mr. Weiss will remain available to counsel clients and Firm attorneys,” Milberg noted, as though offering a reassuring note.

But perhaps this should come as no surprise—even now. Unlike his former colleague, Bill Lerach—who leveraged the appeal to prosecutors of his own guilty plea to strike a plea bargain that protected the new law firm he spun off of Milberg Weiss in 2004—Weiss has stubbornly refused to even step aside, a move prosecutors have long demanded as a first step to any resolution of Milberg’s case. Devastating consequences be damned! This is an enterprise, remember, that represents public pension funds and small investors—and has long trafficked on claiming the moral high ground in the fight against corporate greed and criminality. (For more on Weiss’ missed opportunity to mitigate the damage to his firm, see here.)
How could Milberg’s 25-odd remaining partners put up with such a situation? Because the founder has always had a virtual strangehold on his firm. As one former partner told me last year: Milberg Weiss “was Mel’s world, and everyone else just lived in it.”

The indictment underlines this point. For years, Mel Weiss had veto power over any decision, even as his firm grew to more than 200 lawyers. Between 1983 and 2005, his individual stake in the firm—and its profits—ranged from 13.5% to 39.4%. Weiss’ take during that span: a stunning $209.9 million, according to the government.

If Thursday’s superseding indictment against Milberg, Mel Weiss, and two other defendants is to be believed—and it clearly rests on a solid foundation of evidence from (among others) two former Milberg name partners who have agreed to plead guilty and cooperate with prosecutors—Weiss was at the very center of the firm’s long-running scheme to secretly pay plaintiffs more than $11.3 million in kickbacks in 225 lawsuits.

As the government describes it, Weiss was personally involved in dirty dealings with all three of Milberg’s showcase paid plaintiffs—Steven Cooperman, Seymour Lazar, and Howard Vogel—each of whom secretly received millions for serving as name plaintiff in dozens of Milberg class actions. (Lazar, also a defendant in the case, has pled not guilty. Cooperman and Vogel have pled guilty and are cooperating with the government.) The indictment also ties Weiss to an unnamed trio of Florida residents who were paid to serve as plaintiffs in about 60 more lawsuits.

And the allegations are ugly. Weiss is no longer thinly masked, as he was in earlier government filings, as “Partner A.” The new indictment places him at the scene of the alleged crimes from the beginning.
It has Weiss, in August 1979, informing his number-two man, senior partner David Bershad (one of the now-cooperating former Milberg lawyers) that he had struck a deal with California investor Lazar to serve as a plaintiff in Milberg lawsuits in exchange for 10% of the firm’s attorney fees in those cases.
It has Weiss, in the early 1980s, informing Bershad not to worry about violating the law by paying a Florida plaintiff because they would be making the payments in cash, and thus there would be no paper trail and little risk of getting caught. Indeed, in the mid-1980s, the indictment says, Weiss personally carried “thousands of dollars in cash” from New York to Florida to make payments to two plaintiffs.
The indictment details how Weiss—along with Lerach and Bershad—in January 1986 included a provision in the firm’s partnership agreement that would allow the “conspiring partners” to tap the firm’s coffers to reimburse themselves for cash they’d each kicked in to a slush fund for paying plaintiffs. (Some of this cash was stashed in a safe in Bershad’s office at the law firm.) In December 1987, 1988, and 1999, according to the indictment, Weiss then “caused” the firm to reimburse him a total of about $380,000 in cash for such payments.

It has Weiss, in September 2003, advising name partner Steven Schulman (whose deal to plead guilty and cooperate was also announced Thursday) that because of the ongoing investigation into Milberg Weiss kickbacks, he wouldn’t negotiate a disputed payment to plaintiff Howard Vogel over the telephone. Two months later, according to the indictment, Weiss resolved the matter with Vogel’s lawyer face to face in Milberg Weiss’ New York office.

And finally, the indictment accuses Weiss of obstructing justice and making false statements in withholding an incriminating document that had been subpoenaed by prosecutors.
Weiss’ criminal lawyer, Benjamin Brafman, insisted his client would fight the charges. “We are confident that when the evidence is carefully reviewed at a trial of these charges, Mr. Weiss will be fully exonerated,” Brafman said in a statement.

That, of course, remains to be seen—as does the question of whether Milberg Weiss can survive long enough to witness such an outcome. On that issue, the firm on Thursday issued a second, stiff-upper-lip statement that suggested the gloomy prospects of what was once the most feared law firm in America: “Despite the government’s announcement today we will continue to fight for our clients and class members and to achieve the record recoveries for which our firm has long been known. The firm’s active partners, none of whom is alleged to have been involved in any wrongdoing, will maintain responsibility for the firm’s management and litigation activities. We will not be deterred from our work and will persevere throughout this difficult period.”

Life’s never been better for some of rock’s oldest acts. Says Rolling Stones keyboardist Chuck Leavell: “Let’s face it, we all have to make a living. What do they want us to do? Go gently into that good night? Hell, no!” But while summer tours like Rod Stewart, Lynyrd Skynyrd and The Police cashed in, do any of them deserve top honors as the Greatest Band of All Time? Tell us what you think: Which band (or bands) will forever be at the top of your songlist? Are there any bands you’d like to see reunited? Which ones?

This month, a conversation with someone who’s actually making a difference in a lot of young lives. (Though maybe not in the way you’d think!) Hope this interests some of you GMAT-takers, GMAT-contemplaters, and GMAT-haters. And if you want to share your own tales of GMAT woe and triumph, we’d love to hear them. Have a great weekend!

*****

When I first heard of Bara Sapir, she had the unenviable task of getting my sister hyped about the LSAT. When I first realized how good Bara Sapir was, she had talked my sister out of law school altogether. Sounds strange — especially considering that Sapir’s tutored hundreds of young people for the LSAT, GMAT, and other major standardized tests with great results — but Sapir isn’t exactly traditional. The founder of Test Prep New York and creater of the Full Potential audio test-prep series doesn’t go in for the standard self-flaggellation. In fact, her holistic methods focus as much on personal wellness — through techniques such as hypnosis, guided visualization, and “neuro-linguistic programming” (i.e., changing your vocabulary to effect a change in your performance) — as test questions. And with B-school becoming a hot topic for many of us as we shake off the summer, I thought some of you might like to hear from her about the GMAT. (Just because those hedge fund guys from that New York Times story last weekend don’t care about MBAs anymore doesn’t mean we don’t, right?)

If you’re laughing, I hear you. Normally, I might be inclined to call this New Age tomfoolery, too. But it’s hard not to think differently once you start hearing Sapir’s stories.

Here’s the press release announcing Schulman’s agreement to plead guilty.

Here’s Schulman’s plea agreement.

Here’s the second superseding information against Schulman.

Here’s the press release announcing Mel Weiss’s indictment.

Here’s the second superseding indictment adding Mel Weiss as a defendant.