NEED FOR TORT REFORM
By Jon Christian Ryter
February 16, 2005
Former Senate Minority Leader Tom Daschle [D-SD] who led the fight in the U.S. Senate to prevent any meaningful tort reform legislation from ever getting out of committee and onto the Senate floor for a vote is now engaged in "job talks" with McDermott, Wills & Emery LLP, the DC law firm that represents the US Chamber of Commerce's efforts to curb frivolous lawsuits through the enactment of the Class Action Fairness Act of 2005. Daschle was defeated last November by former Republican Congressman John Thune who gave up his Congressional seat in 2002 to run against then one-term South Dakota Democratic Senator Tim Johnson. It was an ironic twist of fate that by helping Johnson keep his Senate seat from the same State that year, three-term Daschle, the most powerful Democrat in the Senate, lost his own job to the same opponent last November as the GOP increased their majority by four Senate seats.
The lobbyist for McDermott, Will & Emery, Stanton D. Anderson (who is a McDermott executive vice president), admitted that the law firm had met with Daschle about a month ago.
But, Anderson said he was unaware of any "recent" conversations between the McDermott people and the former Senator, suggesting that while there was an interest in Daschle, the firm could not arrive at a meeting of the minds, suggesting that the likelihood of Daschle joining the law firm were slim to none. Yet the Beltway Betters were still betting that Daschle would eventually join the firm. Daschle's wife, Linda Hill Daschle, is one of DC's most successful lobbyists. Among her client list are American Airlines, Boeing and Schering-Plough. (It should be noted that as long as her husband served in a leadership role in the Senate, Linda Daschle took pains not to lobby Senators.)
While Anderson was lobbying the Senate on behalf of the US Chamber of Commerce in 2003, Daschle was busy forging an alliance of 39 liberal Senators to filibuster the Class Action Fairness Act—and, in doing so, they succeeded in killing it. The bill was proffered again in 2004 and met the same fate. The same bill was debated in the US Senate last week. The current debate began on Mon., Feb. 7 when the measure (a Bush campaign promise) met head-on with a firestorm of opposition led by Sen. Patrick Leahy [D-VT].
On Thursday, Feb. 10, the Senate passed the measure by a vote of 72 to 26 with two Republicans abstaining. Eighteen Democrats crossed the aisle to vote for passage of the bill.
In attempting to derail the bill that would force all class action suits into the federal court system Leahy argued that "...class actions allow the little guys to band together, [and lets] them afford competent lawyers and allows them to redress wrongdoing." It should be noted that, in the past, class action lawyers would bring their actions to county judges who generally allowed them providing there was at least one local plaintiff and a local defendant. But, Leahy was blowing smoke when he claimed that keeping class action lawsuits out of the federal courts protected the "little guy" by allowing individual claimants to band together. For the most part, class action lawsuits are frivolous and, if a court would agree to hear the cases one at a time, they would individually cost the plaintiffs far more to file them than any award the cases would bring. For example, a video-renter in Jefferson County, Texas decided that the daily late charges Blockbuster Video assessed were outrageous. He found a lawyer who saw the opportunity to create a class action lawsuit to protect virtually hundreds of thousands of Blockbuster customers all over the United States from the chain's capricious penalty policy—even though the policy is clearly posted in all stores and every customer is told they will be assessed that penalty if they return the videos late.
The lawyers who filed the class action lawsuit against Blockbuster collected $9.25 million in cash. The consumers Leahy claimed are helped by allowing frivolous class action lawsuits to be filed in local courtrooms each got a $20 gift certificate from Blockbuster—something any irate customer would have received in the form of an apology from the company had they written a letter to Blockbuster's corporate office and said they had a bad experience in one of their stores. The lawyers used the consumer to get a big, fat cash settlement—for them. The consumers, whom the lawyers claimed had been stiffed, got stiffed by their own lawyers. They got gift certificates while the lawyers got the money. Stiffed even more were the loyal Blockbusters customers who ended up paying a little bit more for the products they purchased at Blockbuster after the settlement because all costs incurred by any company are always passed directly onto the consumer who always pays the freight.
When class action lawyers filed a lawsuit against Toshiba because of a never-proven defect (by the plaintiffs) in Toshiba's laptop computer floppy disc controller, only two Toshiba computer users actually lost data on their laptops. When the case was settled, the lawyers got $147.5 million. The two original plaintiffs each got $25,000. All of the other "plaintiffs" who joined the lawsuit as the lawyers were building it into a class action, got gift certificates. Yes, Leahy was right—the purpose of allowing class action lawsuits to be heard in local courts is to protect the "little guys." In a pigs' eye when cows fly.
During the Election of 2004 the US Chamber of Commerce and several recent "targets" of class action suits as well as several "at risk targets" of possible class action suits in the future retaliated against several members of Congress who were viewed by McDermott as tort reform obstructionists. The first name on their "hit list" was Daschle.
In a script that could only have been written inside the DC beltway, McDermott, Wills & Emery called their nemesis shortly after the 109th Congress convened and invited him over for coffee and a chat at their 13th St. NW office. While Anderson insisted that Daschle had not been hired, it may be he wasn't called for that purpose. He may have been called as an independent lobbyist and not as a potential employee of the law firm. Time will tell. But, If Daschle joins the law firm (he's not an attorney) his only value would be lobbying Congress. If Daschle plans to hang out his shingle as a lobbyist, he should have joined McDermott because helping push for that piece of legislation would be a major testimony to his power as a lobbyist—since, in the past, every time the GOP attempted to pass it, Daschle succeeded in stopping it. By joining McDermott and having the legislation pass once he lobbied for it would make Daschle appear almost larger than life inside the beltway.
House members have not yet enrolled their own companion bill yet. They will likely clone the Senate bill now and fast-track it to the White House for the President's signature.
Current class action law is an irrational system in which lawyers are allowed to shop around for the most sympathetic jurisdiction in which to file their lawsuits regardless if its in the State where the primary plaintiff resides, or if its the State where the "targeted" defendant is located. One of the favorite counties where class action lawsuits are filed is Jefferson County, Mississippi. Although Mississippi does not have a class action law, it has a unique clause—Rule 20 of the Civil Action Code—that provides for the filing of "mass action" lawsuits in county courts providing the lawsuit is "local" in origin. There is only one drug store in Jefferson County—the Bankston Drug Store in the county seat of Fayette. Fayette is a small town that could never attract chain stores Rite Aid or CVS. It's a rural farming town that barely has enough people to make up the myriad of juries needed for the class action lawsuits that have made the town infamous. Some of the most famous pharmaceutical class action lawsuits played out in Fayette. The Fen-phen case was heard there. So was the first successful class action lawsuit against Rezulin. And Propulsid. As was the case against the asbestos industry. And the case against lead based paints, which was filed against Sherwin Williams (which had a store in Fayette). So was the first class action case against tobacco giant, R.J. Reynolds that the tobacco industry lost. R.J. Reynolds and five other tobacco manufacturers agreed to pay $160.6 million to the defendants in the first of two tobacco lawsuits filed in Fayette. The pharmaceutical cases were initially filed jointly against the Bankston Drug Store and whichever pharmaceutical company was being sued. Once the class action was certified, the local drug store (or other business entity which was sued to create a local link to the action) was dropped from the suit.
Up until 2004, lawyers preferred Jefferson County, Mississippi for class actions for three reasons. First, the jury awards were usually extremely extravagant. The jury in the Propulsid case awarded the plaintiffs $100 million, tapping Johnson & Johnson (which owns Janssen Labs that invented the heartburn drug) for the money since Janssen did not have the deep pockets needed. Second, the juries are wholly composed of rural, uneducated people (Jefferson County has few residents who have completed high school). The big city lawyers that prosecute these cases find it easy to manipulate the country yokels simply by drawing subtle distinctions between their standards of living and those of the heads of the large corporations they are suing—and the fact that thee fat cats will barely miss the money the jury awards the plaintiffs. The history of class action awards granted by most of the juries who hear those highly charged cases confirms that fact.
And third, the judge—Lamar Pickard—is a very controversial, l, liberal judge whom class action lawyers loved. As noted, Pickard allowed class action lawyers to tie local Jefferson County businesses to their initial lawsuit (a necessary first step in filing a "mass action" lawsuit in Jefferson County since before the case can be heard by a local judge, there must be a local plaintiff and a local defendant). Then, when the class action is certified, Pickard has allowed the lawyers to either settle with, or simply drop, the local "sham" defendant who was never really the target of the action in the first place since they generally have very shallow pockets and are not worth the efforts of the legal fleece artists. Pickard also allows plaintiff lawyers to use highly prejudiced, emotional testimony that most judges would refuse because of it's inflammatory nature and because it offers nothing to bolster the legal merits of the action except, perhaps, the size of the award when the plaintiff wins.
Further, the rural county judges that get these class action lawsuits arrogantly and unconstitutionally assume for themselves the right not only to hear interstate legal actions that include both plaintiffs and defendants outside their jurisdiction, but to render legally-binding judgments against defendants over whom their courts have no jurisdiction. As a rule, the verdicts in these class action suits are upheld by equally arrogant higher courts. (Article III of the Constitution places the jurisdiction of interstate lawsuits fully and completely in the hands of the federal court system. Of course, class action lawyers using friendly local courts with local jurisdiction to rule on interstate court actions will argue that the 11th Amendment—enacted in 1795 to legislatively overturn the 1793 Chisholm v. Georgia [2 US 419] decision by the US Supreme Court—also places in question the federal courts' sole jurisdiction to hear interstate cases.)
On Nov. 28, 2000, class action lawyers filed a personal injury lawsuit against Sherwin Williams for a single minor plaintiff, Gaines (a Jefferson County resident whom they claimed had ingested lead from Sherwin Williams paint that was applied to the walls in his home in 1979 and again in the mid-1980s). Eighteen other plaintiffs were added to Gaines v Sherwin Williams. Their lawyers had filed a similar lawsuit in Pickard's court. That action was Borden v Sherman Williams. By coupling them, the lawsuits gained class action status. Pickard was forced to dismiss the Gaines v Sherwin Williams on June 9, 2003 after Sherwin Williams proved it had ceased selling residential lead-based interior paint in 1955 and lead-based paints for exterior use in 1973. Borden v Sherwin Williams has been moved to the federal court system because Pickard lost his local plaintiff. But that did not stop Sherwin Williams from being targeted again in Jefferson County, Mississippi a few months later. In April, 2001 class action lawyers filed another suit in Pickard's court against the paint retailer and manufacturer. This time the plaintiff was the Jefferson County School system that had used Sherwin Williams paint in their classrooms during the period when the company acknowledged manufacturing it. The new lawsuit was seeking "abatement costs" to remove any residue of lead paint from its buildings. The class action lawyers are now seeking other "injured" schools in other jurisdictions to join the lawsuit. Sherwin Williams filed to remove the lawsuit from Pickard's court and into the federal judiciary system.
Earlier this year the Mississippi Supreme Court ruled that local courts within the State have no jurisdiction to hear cases filed where the plaintiffs and the defendants are not "residents" of the State. As a result of that ruling, on January 25, 2005 Pickard was forced to dismiss nearly 3,700 claims in a case before his court because the plaintiffs had no ties to Mississippi. The class action, which claims to have 7,500 plaintiffs was filed by a Texas law firm in Jefferson County, Mississippi only because that law firm liked the rulings that come out of that community.
Marcy Bryan Croft, a Jackson, Mississippi lawyer representing the long defunct asbestos industry, told the Associated Press that there are over 100 thousand asbestos cases filed in the State of Mississippi. The Mississippi Supreme Court ordered judges in Jefferson, Jones, Holmes, Humhreys, Hinds and Yazoo counties to instruct plaintiffs attorneys to provide the court with information on precisely who the plaintiffs are, and on what legal ground they are suing. That will eliminate three-fourths of the plaintiffs overnight who will simply look for more hospitable local jurisdictions where they can refile—unless Pickard and other county judges refer the case to the federal court.
According to other congressional liberals who are fighting the Class Action Fairness Act of 2005 and who favor keeping the class action suits in the local courts, the federal court system is too overburdened and, generally disinclined, to hear class action—suggesting at least to them, that the "little guy" loses his day in court. Also, they insist, when a federal court is presented a class action in which the laws from different States might conflict, most federal judges will refuse to certify the lawsuit as a valid class action, and the whole case is thrown out. (In reality, this happens when the federal judge realizes he or she is looking at a frivolous lawsuit with little or no genuine legal standing that will waste the court's time and enrich only the lawyers arguing it.
A planned amendment to the Senate version of the Class Action Fairness Act of 2005 by liberal Democrat New Mexico Senator Jeff Bingaman would force the federal court to hear the case by playing eenie-meeni and selecting one State's law and arbitrarily applying it to all of the States represented in the class action. Bingaman is working closely with Sen. Dianne Feinstein [D-CA], one of the Democratic backers of the bill to force Senate Majority Leader Bill Frist to accept Bingaman's amendment although the agreement between the GOP leadership in the House and Senate is no amendments will be allowed that dilute the legislation. Although the House, in the past, has backed a tougher version of the legislation that just passed in the Senate version, the House leadership has agreed to enroll the Senate bill (without any amendments) as a House resolution to assure speedy passage. Once enacted by the House, the bill—which Republicans have been trying to pass since 1994—will be ready for Bush's signature. Senate Judiciary Chairman Arlen Specter [R-PA] said he supports quick passage of the Class Action Fairness Act, but like Bingaman, he supported an amendment that would force the federal courts to hear all class action lawsuits. Specter votes most often with the liberal Democrats against the conservatives in the Republican Party.
The passage in the House of the Class Action Fairness Act of 2005—without any amendments that would force the federal judiciary to hear frivolous class action lawsuits—will put the brakes on runaway healthcare costs, prescription drug costs, and the prices we pay for many consumer products because the ridiculous multimillion dollar judgments awarded to plaintiffs in class action lawsuits by country-bumpkin juries are passed directly and immediately onto the general consumer by the companies that were sued. Not one time in the history of class action litigation has the judgment of a class action lawsuit ever been absorbed by the "deep pockets" corporation that was sued. In every instance that judgment has been paid by you and me. So the next time you read in the newspaper about someone winning a class action lawsuit, make a mental note of the judgment awarded, divide by the number of people who buy that product or service and you'll know what your share of the bill will be.
(What Congress objected to in Chisholm was the view of the high court
that sovereign power was retained by citizens themselves, not by the
"artificial person" of the State—whether Georgia or any other State..
The State, created as the superior entity of governance, was exempt
from being sued in their view. There was no argument that controversies
between citizens in one State against those in another State were the
jurisdiction of the federal court. (It should be noted that through
the process of incorporation, corporations are deemed to be legal "people"
and, thus, may sue or be sued by other corporations or by individuals.)
© 2005 Jon C. Ryter - All Rights Reserved
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Jon Christian Ryter is the pseudonym of a former newspaper reporter with the Parkersburg, WV Sentinel. He authored a syndicated newspaper column, Answers From The Bible, from the mid-1970s until 1985. Answers From The Bible was read weekly in many suburban markets in the United States.
Today, Jon is an advertising executive with the Washington Times. His website, www.jonchristianryter.com has helped him establish a network of mid-to senior-level Washington insiders who now provide him with a steady stream of material for use both in his books and in the investigative reports that are found on his website. E-Mail: BAFFauthor@aol.com