Lawsuit Abuse Fortnightly #1-2
A Crushing Burden
“The tort crisis,” writes Michael Freedman in the cover story of the May 13 issue of Forbes, “is really tomorrow’s news. If the momentum of litigation costs cannot be slowed, it could easily, in the space of a few years, crush important parts of the economy.” His article tracks the devastating impact of lawsuits on medical practices: A hospital in Mississippi saw its malpractice insurance premiums double in the last year, forcing it to consider cutting back on emergency services. The article predicts that tort costs could go “from $200 billion last year to $298 billion, or 2.4 percent of GDP, by 2005.” Michael Freedman, “The Tort Mess,” Forbes, May 13, 2002.
Fat Tax Chugs Along
The idea of a “fat tax” – a tax on fatty foods to compensate society for the added costs of medical care associated with obesity – has been around since 1967. Following the $260 billion tobacco settlement, trial lawyers are eager to see if litigation might advance this agenda, and not incidentally line their pockets with billions of dollars in legal fees along the way. The Center for Science in the Public Interest, a liberal advocacy group that specializes in demonizing unpopular products, thereby setting the stage for litigation, says America’s food industry is “worried that they are going to be blamed” for rising obesity rates, “as they should be, because their marketing practices contribute to it.” Lance Gay, “Is there a ‘fat tax’ in your future?” Scripps Howard News Service, April 30, 2002.
Rats Flee Microsoft Suit
The Kansas House of Representatives has moved to compel that state’s attorney general to allow Kansas to join over 40 other states in endorsing the proposed settlement of the antitrust lawsuit against Microsoft. Rep. Tony Powell (R-Wichita), a strong critic of the state’s efforts during the past four years to force concessions out of the software giant, said “This litigation is being maintained simply to benefit Microsoft's competitors.” He offered an amendment to a budget bill that would prevent Attorney General Carla Stovall from spending any more money on the litigation. Dow Jones Newswires, May 10, 2002.
But Nobody Told Me!
Raymond Leopold, who appeared in Winston cigarette ads for two years, is now suing R.J. Reynolds Tobacco for $65 million because, he says, he now endures “long episodes of remorse and guilt.” (Washington Times, April 30, 2002.) The suit coincides with the release of W. Kip Viscusi’s new book, Smoke-Filled Rooms: A Postmortem on the Tobacco Deal (University of Chicago Press, 2002). The author, a highly respected Harvard University professor of law and economics, writes: “In the case of cigarettes, there is not only substantial knowledge in the public domain, but also the first formal warnings program that ever emerged for any consumer product other than prescription drugs. Warnings are now commonplace. While we now take warnings on dangerous products for granted, it was cigarettes that were the first among mass-marketed consumer products to bear on-product warnings, almost four decades ago.”
Lawyers against Mexicans
Howard Foster, a Chicago trial lawyer, thinks he has found a way to profit from one of America’s less respected prejudices: Anti-immigrant nativism. He has filed four anti-immigration class action lawsuits, the latest against Tyson Foods for hiring illegal aliens to work in its chicken processing plants in Arkansas. In a new twist, Foster filed his suit under RICO, the law adopted to break up gangs by requiring the forfeiture of assets owned by individuals and organizations somehow associated with illegal acts. As the Wall Street Journal editorialized, “As for the trial bar, its members advertise themselves as avatars of social justice, but in this case they’re throwing anti-Mafia laws at Mexicans who’ve crossed the border to take jobs that Americans refuse to accept.” “RICOing Immigrants,” Wall Street Journal, April 18, 2002.
Lawyers against Muslims
Ron Motley, a trial lawyer who made hundreds of millions of dollars from tobacco litigation, is leading a team of lawyers that is signing up families of victims of the September 11 tragedy for a civil lawsuit against wealthy Muslims who may have helped finance the attacks, according to Newsweek. To show how serious they are in helping to defend the nation from terrorists, the lawyers have hired Terry Lenzner, the private eye hired by President Clinton’s lawyers to uncover dirt on Paula Jones. “Suing the Saudis – And Saddam,” Newsweek, April 22, 2002.
Lawyers against Competition
Trial lawyers hate arbitration, the private-sector alternative to the government court system that is usually faster, less expensive, and more predictable than litigation. Helped by the Federal Arbitration Act and recent Supreme Court cases affirming the freedom of contract, a healthy trend toward arbitration has developed, causing much alarm and consternation in the plaintiff’s bar. Trial lawyers are now pushing for federal legislation that would limit arbitration by ending enforcement of large categories of arbitration agreements. According to the Cato Institute’s Stephen Ware, passage of such legislation “would squelch private-sector alternatives to lawyer-dominated court systems, violate freedom of contract, and raise costs to American business.” Stephen J. Ware, “Arbitration under Assault: Trial Lawyers Lead the Charge,” Cato Policy Analysis, April 18, 2002.
Who Wants to be a Millionaire?
There may be a Web site for every conceivable product and cause. Trial lawyers seeking to make their fortunes by abusing the nation’s loose class action lawsuit standards now have their own site, ClassActionAmerica.com. Its tag line reads “justice is now a click away” and the headline on the home page rises (or falls) to the level of the best in direct mail hype: “Could you be due a settlement? Billions of dollars go unclaimed every year!”
Afraid to Lead? D&O Insurance Premiums Soar
Fortune magazine reported in April that rates for D&O insurance are climbing fast, largely as the result of law suits. “D&O premiums are expected to rise between 35% and as much as 300% this year,” the magazine reports. Suits claiming class-action securities fraud jumped 125% between 2000 and 2001, to 480. Cedant paid $3.2 billion to settle a shareholder suit in 2000. “That amount will be dwarfed by the Enron case.” Jeremy Kahn, “Desperately Seeking Suit Protection,” Fortune, April 1, 2002.
Don’t Know Much about ... Justice
The separation of government powers into three branches by the U.S. Constitution is one of the legal community’s two great contributions to social justice (the other being the right to a trial before a jury of one’s peers). To perform its constitutional role, the judicial branch requires public support and comprehension of its authority. According to new survey data, that support is perilously thin. Less than one third of the public knows how many justices sit on the U.S. Supreme Court (the correct answer is nine) and nearly two-thirds could not name a single one of them. The survey of 800 people, conducted by the polling company™ and released in April, helps explain why so many people still believe the Supreme Court “stole the election” for George W. Bush. UPI’s Capital Comment for April 19, 2002.
Law Abusers Team Up with Drug Abusers
“It’s hard to tell who are the bigger drug abusers,” writes Ian Zack for Forbes, “addicts or their lawyers.” He tells the story of how trial lawyers have filed at least 60 lawsuits against Purdue Pharma, a Stamford, Connecticut-based drug manufacturer whose prescription painkiller, Oxycontin, became the drug-of-choice for addicts looking for a cheap high. The problem is, as one Kentucky judge ruled, “the plaintiffs have failed to produce any evidence showing that the defendant’s marketing, promotional or distribution practices have ever caused even one tablet of Oxycontin to be inappropriately prescribed or diverted.” Much to its credit, Purdue Pharma has taken a hard line against the lawsuits. Ian Zack, “Oxy Morons,” Forbes, April 29, 2002.
Published bi-weekly by The Heartland Institute,
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Publisher: Joseph L. Bast
Editors: Diane Carol Bast, Paul Fisher, Dan Hales