On July 5, John Edwards slipped into a high-rise at One Boston Place to greet some of his and John Kerry's top contributors among plaintiffs' attorneys. At the offices of Robinson & Cole, Edwards shook hands with Alex MacDonald, a partner there who had helped raise $600,000 for the campaign. Much of the crowd was in Boston for the annual convention of the Association of Trial Lawyers of America (ATLA). Edwards told his choir that plaintiffs' lawyers were on the front lines of a war, defending everyday Americans from corporate fraud, dangerous drugs, deadly doctors, and toxic waste in school kids' drinking water. Representative Ed Markey of Massachusetts, standing in the invitation-only crowd, cheered. It was, MacDonald said later, a fantastic speech, "reminding all of us why we do what we do -- that we are the good guys."
Most of America has not heard that speech, or anything like it. According to several political analysts, Democratic and Republican, Edwards has, with some direction from Kerry's strategists, toned down his message about trial lawyers. In fact, during the second presidential debate against George W. Bush, Kerry waffled and wobbled in responding to accusations that his running mate was a personal-injury lawyer. Finally he blurted out that, like Bush, he and Edwards support "tort reform." He responded like this because, thanks to a billion-dollar, decades-long public-relations campaign funded by industries and the U.S. Chamber of Commerce, trial lawyers are now synonymous in common parlance with baby snatchers and muggers. And instead of fighting back, terrified Democrats have buckled.
In the past two decades, business and allies in Congress have had phenomenal success in painting plaintiffs' attorneys as un-American monstrosities who have burdened the nation with too many lawsuits. Supported by sometimes bogus think tanks and studies, industry has created a massive advertising campaign, hammering on the folly of "frivolous" lawsuits. In late September, the Washington Legal Foundation's ad in The New York Times went so far as to blast the Justice Department and John Ashcroft for taking sides with tort lawyers to sue the tobacco companies. The result is a mass perception that these suits have raised the cost of health care, insurance, cars, houses, fast food, gasoline, and liquor; have cut into business profits and therefore increased unemployment; and have distracted doctors from their jobs saving lives.
Most everyone has jumped on the bandwagon. The Wall Street Journal's op-ed pages, FOX's O'Reilly Factor, Forbes, Fortune, BusinessWeek, and all the network newscasts, not to mention Court TV, keep their audiences enthralled with tales of tort madness. Last December, Newsweek joined the converts with a cover story on how litigation is "paralyzing our professions," displaying a huge picture of a priest, doctor, and law-enforcement officer looking like stunned deer in the headlights. The cover headline was "Lawsuit Hell."
The problem is, tort reformers deliberately ignore one fact, and it is the fact that Edwards could, and should, emphasize about his profession: The average American needs the chance to bring civil suits because government -- systematically over the last decade -- has stopped protecting us. When corporate front groups complain about "regulation by lawsuit," they are right: Without lawsuits, the government's weakened rules do a poor job of guarding against bad drugs, bad doctors, corporations that shortchange their shareholders and pension funds, rollover cars, exploding tires, unstable buildings, poisonous waste, and undrinkable water. So it's true: Trial lawyers have become the regulators of last resort. They are the only sheriffs left in town.
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Tort reform and deregulation began in earnest in 1994, when New Gingrich became speaker of the House and led the Republican Revolution to get government out of everyone's life, especially big business'. In the pharmaceutical arena, Congress worked out several "reforms" for the Food and Drug Administration, including a "modernization" act to speed up drug approvals and a law allowing drug companies to pay relatively inexpensive "user fees" to get their drugs quickly through the FDA.
In the financial industry, Congress passed the Private Securities Litigation Reform Act in 1995, which undercut opportunities for shareholders to challenge their boards and executives. There were moves in Congress and the current White House to paralyze the Environmental Protection Agency and its enforcement of forest protections and the Clean Air Act, and to undercut the Occupational Health and Safety Administration. And, despite 270 deaths linked to Firestone tire blowouts in 2000, the Bush administration attempted to weaken a law that would force tiremakers to install pressure monitors so consumers would know when their tires were underinflated.
Behind these actions were dozens of pro-industry lobbyists and organizations, heavily involved in drafting changes to legislation or executive orders. The Washington Post reported in September that, since the Bush administration assumed power, watchdog groups have found identical wording of coal lobbyists' position papers and new governmental documents related to looser rules on mercury pollution from power plants. Even now, industry leaders are on a campaign to undo rules regarding accounting practices, boardroom transparency, and shareholder rights.
"Regulation has gone south," says Brian Wolfman of Public Citizen's Litigation Group. "How can you ratchet down regulation and ratchet up shield laws protecting companies that make dangerous products? Even on its own terms, you can't make that argument."
Wolfman is particularly galled by recent attempts by the FDA's chief counsel, Dan Troy, to stifle product-liability suits against drugmakers in state courts. Troy scored victories against the FDA for the Washington Legal Foundation before he was named FDA counsel by the White House in 2001. Troy's new strategy would shield drugmakers from liability for failing to warn consumers about potentially hazardous side effects. In supporting Pfizer in one case in 2002, Troy filed amicus briefs arguing that only the FDA could determine which warnings to consumers were necessary and that the FDA's labeling process "preempts" lawsuits at the state level by alleged victims.
What has this regulatory rollback caused? On the medical front, nearly a dozen deadly drugs, approved during the post–1994 gold rush by the FDA, have since had to be withdrawn. These medicines, which have been linked to many deaths and injuries, include the billion-dollar baby Vioxx and the diet phenomenon Redux. Both drugs were marketed despite internal concerns at the FDA. On the environmental side, a recent series in The Seattle Times tracked the effects of a dozen calculated revisions of environmental rules by the Bush White House and Congress: heavy diesel emissions by marine tankers on the West Coast, decimation of wildlife such as otter herds, and polluted commercial fishing waters. As for those pesky regulations on Wall Street, plaintiffs' lawyer Bill Lerach says, "[Congress] made the most far-reaching negative changes to federal securities laws, period." Lerach, who led suits against Enron, Martha Stewart's company, and WorldCom, asks, "Did we see more economic growth because CEOs were no longer disturbed by these lawsuits? Did we see job creation? No, we saw the largest surge in fraud in U.S. history."
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Nature abhors a vacuum, and lawsuits have filled in the regulatory gap. Thousands of product-liability suits, hundreds of them death cases, have been filed over a dozen deadly medicines whose sales the FDA failed to curb. There are suits pending on issues as basic as dirty air, water, land polluted by commercial farms, and lead paint, all because the federal government gave corporations a pass or moved in belatedly (and then only under public pressure from private lawsuits). To Wall Street's horror, there have been a half-dozen suits against major U.S. corporations in the past three years alone, filed by employees and shareholders who have lost their life's savings and pensions to boardroom shenanigans that the Securities and Exchange Commission didn't quash. "Lerach," wrote Jeffrey Toobin in The New Yorker in 2002, "[is] a poor substitute for the S.E.C. lawyer. ... But Lerach has thrived at least in part because the S.E.C. has grown weaker." Adds professor Amitai Etzioni of George Washington University in an October op-ed in the Los Angeles Times, "The truth is, there aren't too many civil lawsuits; there are too few. ... A 1990 Harvard University study found that only one out of eight patients who had a valid medical malpractice claim actually filed a suit."
It's also simply untrue that these suits are single-handedly responsible, as industry would like us to believe, for driving up the cost of business and health care. While insurance companies have been increasing malpractice insurance rates more than 30 percent for many doctors in the past decade, lawsuits account for less than 10 percent of medical-care costs. According to a recent article in The Washington Monthly, studies show that bad investments in the stock market by largely unregulated insurance companies are responsible for higher insurance premiums.
As for those widely publicized punitive awards, which industry claims make it impossible for businesses to post a profit, they are, in fact, rarely paid. Fred Baron, former president of ATLA, says of these infamous multimillion-dollar punitive damages, "I doubt that 10 have ever been paid out." They almost always get settled by the winning plaintiffs, who need a quick settlement to pay their bills and can't wait out the numerous appeals by the corporate defendant. Baron notes that studies show that the overall cost of punitive damages is down since the mid-1990s, despite reports of wild verdicts in "judicial hellhole states." In 2001, punitive damages were only awarded in about 6 percent of jury civil trials, according to the Bureau of Justice Statistics, and the average payout was $50,000. Furthermore, a Supreme Court case involving the State Farm insurance company in 2003 now limits punitive damages to a "rational" relationship to actual injuries suffered, with nationwide impact.
In fact, far from hurting average Americans, lawsuits perform a vital protective role. To begin with, they force into public view information that companies desperately want to keep secret. Regulatory agencies accede to "trade secrecy" agreements to obtain key information on products and company actions. And they have little incentive to undo these agreements when problems arise, because the hidden facts often show where the agency itself was complicit with the company in allowing mistakes to slip through. "The Environmental Protection Agency and the Food and Drug Administration don't dig for anything," says Thomas McGarity, a professor at the University of Texas School of Law and the president of the Center for Progressive Regulation. At the FDA, there is no equivalent to the National Transportation Safety Board, which comes in after a plane crash and independently determines what went wrong. When someone is hurt or dies after a drug reaction, the FDA usually just defends its own actions. Lawsuits are often the first opportunity for consumers, Congress, and the media to hear the facts. When one top FDA official declined to allow one of his doctors to testify for plaintiffs in the "fen-phen" disaster in 1999, he explained his decision at an internal FDA meeting, saying, "Surely a smart plaintiffs' attorney will figure out" how to get company insider information into court.
Defendant corporations also have their own mechanisms for keeping secrets. By labeling anything a "trade secret" or claiming "attorney-client privilege," they are legally permitted to claim that revealing the information would aid their competitors. That leaves judges to open up the files. But most judges bow to a corporation's request for secrecy as one way to move a case forward, even when it involves the public's health. (Judges' reputations are often based on how fast they finish mass tort cases.) "No one is interested in representing the public here," says Alan Morrison, formerly top litigator with Public Citizen's Litigation Group. Plaintiffs frequently have no choice but to accede to the judge's demands to keep damning corporate evidence sealed in return for an early settlement.
"I learned the consequences of too much secrecy during the 1994 tobacco hearings," Lerach explains. "[Politicians] paraded these corporate execs before Congress" and listed the ways in which the smoking cases "distracted them" from their jobs. "The executives said, 'I couldn't sleep at night, I couldn't have sex with my wife, and we didn't do anything wrong.'" Yet, says Lerach, "We were sitting with documents in our hands showing corporate fraudulent behavior, and we couldn't" make them public. "I never forgot that lesson."
However, secrecy was upended during the fen-phen lawsuits. Lawyers found state judges who were willing to unseal documents from drugmaker Wyeth-Ayerst. Lawyers shared these, finally showing their clients, the press, juries -- and the FDA -- that Wyeth-Ayerst knew much more about the dangers of its popular diet drugs much earlier than it had indicated. These revelations encouraged plaintiffs in other drug cases to push harder for unsealing documents. Similarly, in the Enron scandal, Lerach found a paper trail of executive misbehavior much earlier than government regulators. And with the help of congressional investigators, Lerach got more information, which he then revealed to the public, about Enron's blunders, thereby encouraging other employees to come forward with revelations. This in turn inspired New York Attorney General Eliot Spitzer to aggressively pursue corporate misfeasance, which finally moved the federal government to investigate recent major financial meltdowns.
There are other uses of liability lawsuits and punitive damages: They provide "retribution," which American justice certainly recognizes as a valid goal for crime victims. And, as in court cases involving common shoplifters and petty thieves, punitive damages are supposed to provide both a punishment and a deterrent effect. They are simply the most immediate way to make a company or industry behave appropriately toward consumers and investors.
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On July 6, Republicans were preparing their attack on John Edwards, who had just been named the Democratic vice-presidential candidate, and on Edwards' allies among tort lawyers. At the same time, The New Yorker broke a story about Vice President Dick Cheney's doctor, head of internal medicine at prestigious George Washington University Hospital and medical school. Dr. Gary Malakoff had been under treatment for five years of prescription-drug abuse. Yet the D.C. Board of Medicine, which licenses Malakoff, had never been informed of this by the D.C. Medical Society, which tracks doctors with substance-abuse and professional problems. Malakoff, named on Washingtonian magazine's November 2002 "Top Docs" list, has been one of the physicians who has assured the media and the public for several years that Cheney's health is good.
This issue could have been fodder for the Democrats in this year's election campaign. But Democrats did not jump on the Cheney physician embarrassment. And, more generally, they have not pushed back at all with creative suggestions on liability lawsuits. They need to -- both for political reasons and, especially, to protect Americans from the Republican one-two punch of deregulation and tort reform.
Luckily, they have some strategies they can use, if only they are willing. Democrats could defend lawsuits in terms of what they've led to for Americans: safer cars; safer hospitals; cleaner air; cleaner drinking water; more opportunity for blacks, women, and workers over the age of 50. Even racial desegregation grew out of a private lawsuit.
Democrats could also take a proactive role in promoting changes to some tort problems. They could push for a "sunshine policy" in hospitals regarding repeated malpractice settlements involving an individual doctor, which would save hospitals money and patients their suffering or their lives. Regarding product liability, Democrats need to insist that the courts and Congress mandate an end to secrecy agreements and privacy labels when there's a disaster such as SUV rollovers or deadly drugs on the market. If judges would seriously sanction and fine recalcitrant corporate defendants who withhold documents from plaintiffs, payouts would not have to be so high and corporate defendants would not hide behind secrecy agreements and use stall tactics to outlast dying victims.
The Democrats could also fight back against the current elitist "solution" put forward by tort reformers: doing away with juries in these cases. Tort reformers, whose staunchest allies are GOP leaders, don't trust juries, especially in the "judicial hellholes" of West Virginia, Mississippi, Texas, and Illinois. Lawyers with the American Tort Reform Association complain that juries aren't always well-informed in complex medical, engineering, and corporate-finance issues. They say that judges educated in these issues (sometimes at industry-sponsored conferences) are better arbiters. Democrats could propose, as Edwards has, a more objective "screening" process by independent legal panels in the early stages of any lawsuit -- before the cases get to a jury and allowing for panels' decisions to be revisited if new information is revealed.
In addition, Democrats could promote more widespread justice for those who have been hurt. McGarity says that in product-liability cases, there are too many examples of one plaintiff, perhaps not even the sickest, hitting the jackpot while other victims waste away in a federal tort case. Under "court reform," corporate funds would be set up to pay for victims according to a scale (as there are now in mass torts). Similarly, Democrats could press the notion that the courts must do more to improve so-called coupon class-action cases. This is an area of law where lawyers make millions and plaintiffs against, say, Blockbuster, get a bunch of free rentals.
Finally, Democrats could make a populist issue of the right to sue. As former ATLA President Leo Boyle noted, "It's been well-documented that tort reform penalizes children, women, the poor, and the elderly, while preserving most of the rights of the highest wage earners." For instance, lawyers are unlikely to sue a nursing-home chain for letting an 80-year-old woman die if the only award will be based on economic damages in her loss of life and potential income.
Instead of touting these arguments, Democrats have run for cover. As with Senators Chris Dodd and Joe Lieberman of Connecticut, Chuck Schumer of New York, and Mary Landrieu of Louisiana, Democratic politicians sometimes "throw business a bone," as one ATLA lobbyist explained, by backing a tort-reform bill and praying it won't really pass. They hope those votes will act as insulation against the charges that one supports the dreaded tort lawyers.
It's easy to see why Democrats slide here. The Chamber of Commerce's Institute for Legal Reform alone has spent about $50 million on this issue in the past few years. "Corporate America's megaphone is more powerful than yours or mine," says Lerach. "You can't pick up a major magazine without seeing a full-page ad blasting litigation. These ads in U.S. News [& World Report], Time, and Newsweek, are directed at ordinary people. … Why do a lot of intelligent 30-year-olds think there are too many lawsuits? It's imprinted on them," he says.
Edwards is almost alone among Democrats in fighting back, proposing reforms to the tort system's abuses even during the vice-presidential debate. Under his plan, any lawyer who filed three "frivolous" suits in a certain time period would lose the right to file another suit. In return, Edwards wants a three-strikes rule that says any doctor who loses three negligence suits in a similar time period would lose practice privileges -- and it would be made public. Tort reformers and members of the American Medical Association like the first part of that suggestion. But they just can't get on board with the second. When it comes up, Baron notes, both sides suddenly shut up.
If Edwards gets into the White House, they may have to start talking about it. If not, the tort reformers on the right will continue to own this issue. And Americans will have lost both governmental regulation to protect consumers and the only alternative, lawsuits. Stopping this will require the Democrats to fight back -- legislatively, judicially, and in the court of public opinion. Perhaps they should hire a good lawyer. John Edwards comes to mind.
Alicia Mundy is the author of Dispensing With the Truth, about the fen-phen disaster, and a fellow at the New America Foundation.
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