- The Washington Times - Sunday, July 30, 2000

Second of five parts

Filing lawsuits has become a year-round sport in which entrepreneurial trial lawyers endlessly race back and forth from America's courthouses. The spoils go to the swiftest and most imaginative.
Exhibit A: a stunning $4.9 billion jury verdict handed down last July against General Motors. A California family's lawyer successfully argued that the automaker was to blame for burns and other injuries suffered in a two-car accident caused by a drunken driver.
In the latest record-breaking product-liability case, a Miami jury last week ordered the five major tobacco companies to pay $145 billion in punitive damages to hundreds of thousands of sick Florida smokers in a class-action lawsuit that accused the cigarette makers of knowingly marketing a deadly product.
But plaintiff lawyers like Richard Turbin of Honolulu defend the manipulation of law that legal reformers deride as "jackpot justice."
"By and large juries are conservative and won't give away a lot of money for nothing," Mr. Turbin says.
Lawyers predict the next big-dollar milestone will rise from the dregs of the federal government's antitrust case against Microsoft.
Although a rival group of lawyers could win court designation, the leader of the pack going after that prize appears to be Michael D. Hausfeld, also a lead counsel in the vitamin price-fixing case that produced last summer's $1.17 billion settlement.
A coalition of seven dozen lawyers ("something larger than a gaggle and smaller than a plague," as Mr. Hausfeld describes it) gathered Jan. 5 at the Grand Hyatt here to plot strategy for displacing the lawyers who first sued Microsoft early last year.
None of these cases is exactly typical of the 15.4 million civil lawsuits filed each year in state courts, or the 256,787 lodged in federal courts during 1998 alone.
Most prove only that anyone can sue anyone else over practically anything. The vast majority of lawsuits go nowhere, but analysts up to and including Chief Justice William H. Rehnquist say the system increasingly buckles under the overwhelming number and variety.
Among other recent examples:
Consumers went into Philadelphia federal court claiming that United Parcel Service overcharges to insure packages. UPS applies an "excess value" charge of 35 cents per 100 pounds, while insurers charge just 13 cents per $1,000 of a package's value. Over five years, the lawsuit claims, UPS took in $845 million in premiums while losses totaled $281 million.
Miami Heat fan Richard Mateer, a Boca Raton lawyer who loved the NBA team enough to pay $11,000 for six front-row season tickets, sued in April when the owners added another front row, making the seats he'd held since 1988 second-rate.
Trial is set for fall on a class action in which the Wal-Mart, Sears, Circuit City and Safeway chains are leading several million businesses seeking $8.1 billion in damages and three times that much in punitive awards against about 6,000 banks that operate Visa or MasterCard accounts. Stores charge that the banks conspired to force them to accept high-risk debit cards on the same status as credit cards, even though the bank charges merchants a higher fee for debit transactions.
Workers who deliver groceries and prescriptions in New York sued Gristedes supermarkets, the A&P; grocery chain and several delivery services for underpayments and unpaid overtime in an anonymous class action with the help of the National Employment Law Project. They adopted a tactic that won millions for construction laborers, carpenters, asbestos workers and plumbers who also said they fear retaliation if they use normal channels to collect unpaid overtime.

Disputing the costs

Author Peter W. Huber of the Manhattan Institute hangs a price tag of $300 billion a year in corporate costs and higher insurance premiums on the current system of lawsuits for personal injury and property damage.
Mr. Huber is a lawyer with a doctorate degree in mechanical engineering. He clerked for Supreme Court Justice Sandra Day O'Connor and for Justice Ruth Bader Ginsburg when she was a judge on the U.S. Circuit Court of Appeals for the District.
The Web site of the Association of Trial Lawyers of America attacks Mr. Huber and his estimate of the cost of such lawsuits. ATLA's 56,000 members primarily are lawyers who file these types of claims and oppose the "tort tax" aimed at making their endeavors less attractive.
ATLA quotes Judge Robert J. Miner of the 2nd U.S. Circuit Court of Appeals, an appointee of President Reagan, as saying the $300 billion estimate is "a product of casual speculation."
"I think it's a cruel hoax that American industry and the insurance industry are playing on the public," says Jack Olender, a noted trial lawyer who is president of the D.C. Bar Association.
Such critiques of those who oppose the tort lawsuit system are featured in a recent article in Florida State University Law Review written by a Tallahassee lawyer and two ATLA employees.
Only about 2 percent of cases involving torts, contract violations or real property ever reach trial, according to the nonprofit National Center for State Courts. Three-fourths are dismissed, including many quietly settled out of court, says Neil LaFountain, a research analyst at the center in Williamsburg.
Researchers who look closely at verdicts that made giant headlines find that, after years of maneuvering, the biggest winners often grow old and lose out as judgments are overturned or sharply reduced during the long appeal process.
For example, a Wisconsin appeals court in February reversed a much-publicized 1997 verdict awarding $25 million to a man who sued Miller Brewing Co. for job discrimination.

Not on the house

Studies usually take no account of the extent to which the system creates more financial burdens on companies and insurers to defend themselves or of real damages a plaintiff may suffer without compensation.
That could change if a May 8 decision in California takes hold elsewhere, says Frederick J. Krebs, president of the American Corporate Counsel Association, whose members are staff lawyers for companies.
The state Supreme Court allowed an insurance company, Aon Risk Services, to collect attorney's fees for staff counsel Laurie Falik at the $185-an-hour "market rate." Most companies collect nothing for in-house counsel on the theory that their lawyers are on salary anyway.
With some irony, the decision assessed $61,050 in legal fees against lawyer David Drexler, who lost a battle over a $10,319.62 bill from his malpractice-insurance carrier.
"We are thrilled," says the District-based Mr. Krebs, who advocates adopting the principle elsewhere. "Given the prestige of the court and its well-reasoned opinion, we expect this decision will be widely followed in the future."

The ultimate milestone

In the highly publicized General Motors case, members of Patricia Anderson's family sustained burns and other serious injuries when a drunken driver ran into their 1979 Chevrolet Malibu in Los Angeles. The fiery crash happened Christmas Eve 1993, but it took 5 and 1/2 years for Santa Claus to arrive with a verdict that shook the automotive industry last July:
The Andersons' lawyer persuaded a jury that deep-pocketed GM was at fault for the consequences of the drunken driver's actions. The automaker had argued that Malibus had an extraordinarily low death rate from fire one per 1.3 billion miles.
The massive size of the award also surprised even the Andersons' lawyer, Brian Parish of Santa Monica, Calif. He stayed impressed even after Judge Ernest Williams cut $4.9 billion in punitive damages to $1.1 billion plus $108 million in compensatory damages.
Mrs. Anderson's 12-year-old daughter, Alisha Parker, became a poster child for trial lawyers after losing the fingers of one hand and undergoing more than 65 operations for disfiguring burns.
It was the ultimate milestone in the words of the National Law Journal, "beyond any yardstick, new or old" on a long trip from the "slip and fall" days when lawyer split fees with ambulance-chasing runners who referred accident victims to them.

Follow the leader

On one side, lobbyists try to put the brakes on lawyers who creatively ask courts to stretch the boundaries of law and Constitution and public patience.
On the other side are lawyers emulating New Orleans legal guru Wendell Gauthier, who in 1997 won a $3.4 billion verdict against CSX Transportation and four co-defendants. The case stemmed from a 1987 train explosion in Louisiana that forced thousands from their homes but caused no deaths or serious injuries. Mr. Gauthier also won hundreds of millions of dollars in other cases from airlines, two hotel companies and Shell Oil Co.
With the help of other champions of the trial bar who see rainbows over disaster and pursue the pots of gold, Mr. Gauthier designed a system in which dozens of lawyers join for a major lawsuit behind a "leader" like him. He reduced the collective to a science, even building mock courtrooms in his office where "jurors" decide in advance how a case will play.
Mr. Gauthier's allies include "King of Torts" Melvin Belli of San Francisco; the District's John P. Coale, a self-described legal pirate who took on the Bhopal cyanide disaster; Stanley M. Chesley of Cincinnati, who chaired the legal team going after silicone breast implants; and New Orleans lawyer Russ Herman, who complains about his tobacco litigation fee of $1 billion.
"A billion dollars sounds like a big fee, but a billion dollars paid over 30 or 40 years really is less than $200 million," Mr. Herman griped after winning a piece of the $246 billion nationwide tobacco settlement.
Mr. Herman apologetically cut short an interview in March 1999 so he could fly to Bourbonnais, Ill., to meet new clients among more than 100 injured in a deadly Amtrak train wreck.

Bucking the image

Critics charge that trial lawyers exploit any technicality. That's just what Anthony P. Griffin did at a recent Supreme Court hearing when he complained that his opponent stretched an appeals court ruling to cover different circumstances.
" 'We want to press it as far as we can press it.' That's the admission of their lawyer," Mr. Griffin told the high court.
"Is that so strange that a lawyer would want to press a particular decision the way his clients wanted to go, as far as it could be pressed?" Chief Justice Rehnquist responded.
ATLA President Richard H. Middleton Jr. disputes the image of trial lawyers as exploitive. The lawyer from Savannah, Ga., says Chevrolet's faulty design justified the California award in the General Motors case, which is on appeal.
"There are lawyers who are willing to give back significant punitive damages or a portion of a settlement in exchange for commitments from defendants to make safer products," Mr. Middleton says. "These well-meaning, substantial and worthwhile acts are positively shaping the legal landscape."
One Mississippi lawyer speaking at the American Bar Association's midwinter meeting in Dallas said he won a 50 percent contingency fee in a case against a police department, then spent some to buy bulletproof vests for officers who worked there.

Judges more generous

The Bureau of Justice Statistics reported in September that, contrary to conventional wisdom, punitive damages are awarded 45 percent more often in bench trials before judges than by juries.
Based on data collected by the National Center for State Courts from the nation's 75 largest counties, the report said "punies" were awarded in 224 of 11,010 jury trials (2 percent) and 136 of 4,628 bench trials (2.9 percent).
The study did not analyze the amounts of awards, but Mr. Middleton says the median is under $50,000, with half more and half less.
Plaintiffs won about half of all cases that went to trial, the statistics show. Juries awarded more than $1 million in one out of four medical malpractice cases. Half of all the malpractice awards were above $201,000, half below. Payoffs were much smaller in automobile accidents, at a median of $29,000.
Although million-dollar payoffs occur most often in medical-malpractice cases, product-liability cases consistently are the most costly. The median award against a manufacturer is $260,000.
Mr. Turbin heads the American Bar Association's Tort and Insurance Practice section, which includes lawyers for both plaintiffs and the defense. He contends the rate of federal lawsuits per capita is unchanged since 1790.
Mr. Turbin notes a steady rate of 30 percent to 40 percent of cases won by plaintiffs, with the size of awards swollen only by inflation. He argues that its long-winded contracts that clog the courts.
"Plaintiff lawyers aren't responsible for the tremendous lengths lawyers are taking for businesses to defend themselves," he says.

Cases of much ado

Lawyers hungry for a way to find a fee routinely prove the adage that anybody can sue about anything, and often about nothing:
In Belton, S.C., Olene Burton took the infamous case of the hot McDonald's coffee to a new level by suing Krispy Kreme, claiming a hot doughnut burned her wrist.
Taco Bell was sued for serving a beef burrito to a Hindu for whom eating beef is sacrilegious instead of the chicken burrito he ordered.
A D.C. lawyer who sued his own mother settled for $15,000, then threatened to sue a reporter for writing about it.
A divorce lawyer from Fullerton, Calif., sued GTE for $100,000 after her practice was listed in the Yellow Pages under "reptiles."
The American Civil Liberties Union sued the Suns baseball team in Hagerstown, Md., for giving church-goers a $2 discount on Easter.
The California District Court of Appeal reinstated a man's lawsuit against Hertz for charging him $3.19 a gallon to fill the tank of a rental car.

Defying common sense

Trial lawyers defend their custom of working for contingency fees, in which they get paid a percentage of what they win and collect. They say it allows them to protect vulnerable victims who could not battle alone and that lawyers often must advance costs and fees for poor clients.
But payoffs can be unexpectedly huge.
Louise Crawley's lawyers won a class-action suit against DaimlerChrysler after she sustained minor burns from gases released when an air bag deployed in an accident, although she conceded the air bag saved her life and protected her pregnancy.
In addition to awarding her $730 in actual damages and $3.75 million in punitive damages in February 1999, the jury ordered an estimated $63.89 million to cover others in the class.
"The verdict just defies common sense," says Jay Cooney, spokesman for Chrysler's legal team. "The plaintiff walks away with burns that go away a week later, and the company gets hit with $60 million. It's bizarre."
A jury in Galveston, Texas, ordered Honda of America to pay $48.75 million to the parents and estate of Karen Norman, a pediatric nurse who drowned when she accidentally backed down a 17-degree boat ramp and couldn't unbuckle her seat belt. Honda had argued that the woman limited her own dexterity because she was legally drunk (her blood-alcohol level was 0.17 percent).
Critics say such tactics force businesses and unsued innocents into defensive, "zero tolerance" lifestyles that harm everyone.
Many lawyers search for a friendly court and "jackpot justice," such as that served up in Barbour County, Ala., where Ford dealer Randall Greene calls the blizzard of lawsuits "the Alabama lottery." He alone was sued 24 times last year.
"Our small-business members cannot thrive and create more jobs for the people of this state because of the fear of frivolous lawsuits," warns Clark Richardson, president of the Business Council of Alabama.
Even the former lieutenant governor, Jere Beasley, won a $50 million verdict against a finance company in a car deal and settled for $1.5 million. He blames the situation on inadequate consumer protection and poor insurance and banking regulations; other lawyers see hostile juries using a chance to get even with big business under outmoded laws.

Bypassing the lawmakers

In recent years federal, state and city governments set bounty-hunting private lawyers loose on disfavored but legal industries such as tobacco and firearms, to force by settlement or jury verdict an outcome the public lawmaking process did not provide.
"Extortion moves ahead, the rule of law be damned," Robert A. Levy of the Cato Institute think tank says of a process that pays billions in fees to private lawyers by exploiting activist courts to displace the executive and legislative branches.
"Coordination of litigation in multiple jurisdictions, the use of contingency-fee lawyers by government and the executive branch's use of the judiciary to bypass the legislature are nothing better than theft masquerading as law," Mr. Levy says.
Offering contingency-fee lawyers a huge financial stake in a public policy outcome warps the process, he says, as if district attorneys were paid per indictment or troopers by the speeding ticket.
Lawyers swarm across the nation in those packs pioneered by Mr. Gauthier, going after companies that make cigarettes, handguns, latex gloves, lead paint, cars and trucks, and medicines and medical devices.
If initial successes stand, the same forces are expected to mount modern-day Prohibition efforts against the beer, wine and liquor industries and perhaps pursue the health hazards of fatty foods.
Just out of public view is a surge of what Internet types call "B2B lawsuits," businesses suing other businesses to gain a competitive advantage or to keep someone else from having one. The companies file lawsuits against suppliers, customers and competitors, charging infringements of patent or copyright, theft of trade secrets, piracy of staffs, and violation of antitrust or contract provisions.
Jason Costomiris, chief technology officer at ClearLogic, a computer company in Haddonfield, N.J., longs for a return to the traditional values of free enterprise.
"Wouldn't it be more appropriate," he asks, "to squash the competition by simply doing whatever it is that you do better than the other guy?"

Please visit Part I: Modern-day jousters continue to battle for respect

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