Knave of Torts

Cooler coffee for $3 million and other lawyer bargains

Michael McMenamin from the August/September 2002 issue

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Parloff explains that the consequences of such suits for those few who have been stricken with asbestos-related cancer is a dwindling number of solvent manufacturers able to pay any adverse verdicts. Fifty-five asbestos defendants have filed for bankruptcy since 1979, 16 in the last two years alone. The sheer greed of tort lawyers who represent unimpaired clients has driven asbestos lawyers who represent only very sick plaintiffs to support tort reform designed to curb this abuse -- if only to make sure there are some solvent defendants left standing at the end of the day. Parloff writes that such tort reform legislation would require plaintiffs to prove actual injury based on objective medical criteria before they could sue. It would also require them to file their suits where they lived or where they were exposed to asbestos, a provision that would discourage forum shopping.

It's difficult to imagine writing a book touting tort law as a regulatory regime and opposing all tort reform while avoiding any reference to the organized plaintiffs' bar, the American Trial Lawyers Association (ATLA), especially when you're constantly bashing the less politically influential American Tort Reform Association. But Bogus has done it. Not to mention (which Bogus doesn't) the astounding growth in class action litigation that has made many ATLA members wealthy and, in the process, the single biggest benefactor of the Democratic Party, surpassing even organized labor.

The only plaintiffs' lawyers Bogus writes about as a group are those poor souls who early on sued evil tobacco companies that vengefully "pursued a deliberate strategy of litigating so fiercely as to drive plaintiffs' attorneys into bankruptcy." You won't find out from Bogus that Democratic Party committees in 2000 received $11.6 million in contributions from well-off trial lawyers and their lobbyists, eclipsing the $11.3 million the Democrats received from labor unions.

Where did all this trial lawyer political money come from? That's something else Bogus doesn't mention: huge attorneys' fees from class actions typically filed in state courts. Curbing class action abuse is one of the hottest areas of tort reform, but Bogus doesn't mention that either. So you don't learn from Bogus why class action reform would be bad for America.

Here's how one federal appellate judge, John Nangle, described the current class action problem in a concurring opinion he filed as part of a recent decision that reluctantly sent a large interstate class action back to state court. "Plaintiffs' attorneys," he wrote, "are increasingly filing nationwide class actions in various state courts, carefully crafting language...to avoid ...the federal courts. Existing federal precedent [permits] this practice..., although most of these cases...will be disposed of through 'coupon' or 'paper' settlements...virtually always accompanied by munificent grants of or requests for attorneys' fees for class counsel....[T]he present [jurisdictional] case law does not...accommodate the reality of modern class action litigation and settlements."

You would think that Bogus, as someone whose thesis is that tort law should be viewed as an adjunct regulatory system, would be eager to tell us about the selfless efforts of the plaintiffs' class action bar over the past decade to establish nationwide standards using the juries of Madison County, a small rural area in southwest Illinois. The largest towns in Madison County are Granite City (31,301) and Alton (30,496). Yet it is a mecca for lawyers far and wide. As a recent Manhattan Institute report by John Beisner and Jessica Miller notes, "of the 66 plaintiffs' firms that were listed on the Madison County case files, 56 (or 85 percent) listed office addresses outside Madison County. These attorneys reside and practice in far-flung locations, such as New Orleans, Louisiana; Lexington, Mississippi; Washington, D.C.; Houston, Texas; San Francisco, California; and Mobile, Alabama."

As Beisner and Miller report, 70 class actions were filed in Madison County between 1990 and 2000, a 1,850 percent increase over the previous decade. These lawsuits, all with national implications, dealt with issues such as automobile repair (30 million consumers); telephone bills (20 million consumers); cell phone connections (10.8 million consumers); clogged drains (consumers in 31 states); auto insurance (4.7 million consumers in 48 states); Barbie dolls ("thousands" throughout the country); cable late fees (7 million consumers in 40 states); fiber optic trespassing (millions of property holders nationwide). That the juries of Madison County should be establishing national standards in all these industries is a bad joke.

Most lawyers outside of the ATLA agree that federal courts are better equipped than state courts to handle national class actions in a competent and consistent manner. Proposed tort reform legislation, supported by the Bush administration, would amend current law to permit any defendant to transfer a large, multistate class action from a state court to federal court when 1) at least one plaintiff and one defendant are from different states and 2) the total amount in controversy is at least $2 million. (Current law bars federal courts from hearing class actions where any of the named plaintiffs and named defendants are from the same state and requires that each proposed class member have a claim exceeding $75,000.)

The proposed reform also would require federal judges to scrutinize settlements where coupons are offered instead of monetary damages; where plaintiffs suffer a net loss; and where named plaintiffs receive larger recoveries than other class members. In addition, class action settlement notices would have to be written in "plain English," a foreign language to most lawyers.

As you can tell, Bogus doesn't trust Corporate America. Nor does he trust free markets, and he doesn't much like libertarians either. He sets up this straw man to explain why: "The libertarian view is: let the free market reign. If consumers want style rather than safety, let them have it. It should not be government's role to force people to buy what they do not want. The market decides whether cars have contiguous frames, shatterproof windshields, protected gas tanks, air bags or seatbelts, and what the height of SUV bumpers ought to be. But of course, it is more complicated than that."

Considerably more complicated. As Richard Epstein explains in Simple Rules, "the American experience with product liability law turned bad when judges and legislators lost faith in the ability of consumers to deal competently with the mix and quality of ordinary products. No longer is it sufficient to provide a consumer with enough information about a product to decide whether or how to use it, or indeed whether to inquire further before making that decision. There has been no acknowledgment of the mistaken assumptions on which the modern edifice rests.

Instead of seeking to supply information, product liability law, with legislative support, still seeks to govern production, but always after the fact and in a standardless way. In its former role, the law aided the operation of the market by helping market actors make informed decisions. In its modern incarnation, the law has powerful antimarket origins and consequences. The rules are designed to override consumer preferences and to allow judges and juries to assume the role of design and warning experts. They have not been good at their job; nor could we expect them to be."

The Bogus hostility to libertarians manifests itself in other ways as well. He contends GOP senators engaged in "loathsome...racial politics" by opposing two black Clinton nominees to the U.S. Court of Appeals for the 4th Circuit. As sole proof for this ugly charge, Bogus tells us that Judiciary Committee Chairman Orrin Hatch "did not even schedule confirmation hearings" for the two nominees.

Imagine that. I'll bet that doesn't happen now that the Democrats are in charge of the Senate. Oh, wait. In May 2001, Bush sent the Senate 11 nominees for federal appellate courts; over a year later the Democrats still hadn't scheduled hearings for eight of them. One of them is Hispanic heavyweight Miguel Estrada, nominated for the prestigious D.C. Circuit and thought to be on Bush's short list for the first Supreme Court vacancy. Do you suppose Bogus would find the anti-Hispanic politics here to be as "loathsome"?

Anyway, Bogus claims that as a consequence of the Republicans' racial politics, libertarians were the winners because "Clinton had to compromise to move nominees through the Senate. In short, Clinton ...did little to temper the laissez-faire, libertarian, anti-regulatory disposition of the federal courts."

Speaking of federal judges and libertarians, here's Bogus taking on the federal appellate court judge Richard Posner and the legal school he helped pioneer: "Law-and-economics emerges not merely as a field of knowledge but as a system of belief. It has its own values, and like all creeds it seeks to have its values prevail over competing values. Suffice it to say that (1) the tradition of the common law, and especially American common law, is pragmatism; (2) the antithesis of pragmatism is dogmatism; and (3) whatever truths it may or may not have discovered, law-and-economics is dogma."

Apparently, a statist is a pragmatist because he calls for control over choice and believes product safety is best provided by government micro-regulation backed up by a horde of tort lawyers. A libertarian is a dogmatist because he believes devolved decision making by manufacturers and consumers leads to a more free, efficient, and safe society. After the empirical evidence from the Bogus field research on coffee temperatures, who could argue with that?