Wealthy Mercenaries Plunder the American People
by Jerome F. Winzig
A new elite is in the midst of a massive grab for power in America. It forces all of us to support its power grab by suing government agencies funded by taxpayers and companies owned by pension funds, IRA account holders, mutual funds, and individual investors. This power grab has already begun to concentrate economic and political power in the hands of a select group of class action and civil litigation lawyers.
Amazingly, many state attorneys general and U.S. Justice Department officials support this elite group of mercenaries, even though it poses a major threat to America's free market economy, democracy, and the rule of law. This effort is especially sinister because it cloaks its true purposes under the auspices of judicial proceedings. Disturbingly, it also enjoys massive propaganda support from the entertainment industry in the form of movies like "Erin Brockovich," "A Civil Action," and "The Insider."
A self-funding steamroller is very difficult to stop. According to the non-profit Contributions Watch, attorneys contributed $100 million to federal and state political campaigns from 1990 to 1995. More recent figures are not available, but the coffers of some law firms are now overflowing with the proceeds from the $370 billion tobacco settlement and other huge class action and civil litigation cases.
This naked reach for power is becoming increasingly bold. Earlier this month, personal-injury attorney Willie E. Gary flew into Atlanta in his private plane, "Wings of Justice," to join a class action lawsuit against Coca-Cola, proclaiming "I don't come cheap. I think big, real big." Jennifer Granholm, the attorney general of Michigan, says "We want to do a Smith & Wesson-like thing with Double Click," referring to her efforts to sue the Internet advertising company for alleged privacy abuses. Sheldon Whitehouse, the attorney general of Rhode Island, is targeting latex gloves. In a letter to his fellow state attorneys general, Whitehouse crassly suggests "going after the latex rubber industry" so that money can be raised to put "a couple of billion dollars into a foundation to raise awareness and do research."
"No company is too big. No industry is exempt." insists Mike Moore, the attorney general of Michigan, who originated the idea of having state prosecutors hire class action lawyers to sue the tobacco industry on a contingency fee basis. Eliot Spitzer, the attorney general of New York, glibly dismisses concerns that this threatens the rule of law, saying such concerns merely express "a fear of progress. We cannot reject the notion of the law's evolution.
Recently, this new elite has begun to reach beyond political contributions in an effort to place some of its own in high political office. In Minnesota, attorney Michael Ciresi, whose law firm raked in $440 million as its share of the Minnesota tobacco settlement, has already donated $600,000 to his own campaign to defeat U.S. Senator Rod Grams. Meanwhile, a former lobbyist for the Association of Trial Lawyers of America (ATLA) told Senator Grams in a recorded telephone message that the ATLA would drop a "massive media buy" of political attack ads against him if he would drop his sponsorship of an asbestos litigation bill currently before Congress.
The bill opposed by the ATLA seeks to reduce court delays and limit huge fees for lawyers in more than 200,000 asbestos cases against 2,400 companies. Companies being sued include Campbell Soup, Colgate-Palmolive, Gerber Products, Gallo Winery, Dow Jones, General Electric, AT&T, and DuPont. According to Jay Hughes, senior litigation counsel for W.R. Grace, which has already paid out $398 million in claims, "Virtually every company involved in traditional basic industries is a potential defendant in asbestos litigation."
Many Americans have already been on the receiving end of frivolous and excessive class action lawsuits. Several years ago, we received a notice in the mail informing us that a group of law firms had reached a settlement with Packard Bell, the maker of our home computer. The suit disputed how Packard Bell calculated the exact diagonal measurement of its 17-inch computer monitors. The settlement awarded us with six extra months of free telephone support from Packard Bell. It seemed a strange settlement, since our monitor worked fine and Packard Bell's help desk was hard to reach anyhow. But the fine print revealed that the lawyers in the case had pocketed a multi-million dollar fee on our behalf.
As a self-employed person, my pension consists entirely of IRA and Keogh accounts. Like most investors, I try to buy stock when prices are low. Frequently, after buying stock at such times, I have discovered that class action lawsuits have been filed against these companies because their stock prices had dropped. Not incidentally, the same law firms' names appeared in case after case. The intent of these lawsuits is not to punish any company officials who may have committed some alleged crimes but rather to extort money out of the current stockholders.
A few state attorneys general have begun to express concern about the joint litigation efforts of their fellow attorneys general. Alabama's attorney general Bill Pryor says his fellow AG's "tactics are the ultimate expression of the end justifies the means." Texas attorney general John Cornyn warns, "Even in the absence of proof, economic pressures are so great that an industry cannot afford to go to trial....They must, out of necessity, try to settle on the best terms they can." And Federal Appeals Court Judge Richard Posner describes such settlements as "blackmail settlements."
However, it will take more than expressions of concern to slow down the class action and civil litigation juggernaut. The enormous financial proceeds to date have provided law firms with seed money for endless future cases, and the financial rewards are not limited to class-action lawsuits. In 1999, the top ten jury awards to individuals and families alone totaled $9 billion; the largest was $4.8 billion.
Ford Motor Company's general counsel has reported that Ford seldom used to fight more than a half-dozen class action suits at a time; by 1997, however, it faced almost 70 simultaneous lawsuits. Today, in the wake of Judge Thomas Penfield Jackson's ruling, Microsoft faces over 130 lawsuits in federal and state courts from parties eager to reap large benefits. In Florida, plaintiffs are seeking yet another class-action tobacco settlement, this time for a reputed $100 billion. And in the wake of the recent stock market fall, another round of "stock drop" lawsuits is quite probable.
This is an extraordinarily difficult battle. In addition to massive amounts of money, the class-action coalition enjoys slick media support from Hollywood. The current top hit, "Erin Brockovich," starring Julia Roberts, describes a class-action lawsuit against Pacific Gas & Electric (PG&E) for leaching chromium-6, a rust inhibitor, into the water supply of Hinkley, California. In 1996, PG&E settled for $333 million. The law firm's cut was $133 million, including more than $2 million for the real Ms. Brockovich.
However, the popular film neglects to point out that since the settlement an Environmental Protection Agency 1998 evaluation of chromium-6 has concluded that "No data were located in the available literature that suggested that CR(VI) is carcinogenic by the oral route of exposure." In other words, there is NO scientific evidence that water-borne chromium-6 can cause cancer in any concentrations, much less in concentrations that, according to the California Regional Quality Control Board, never exceeded 0.58 parts per million in Hinkley. In addition, the International Agency for Research on Cancer reports that, "For cancers other than that of the lung and sinonasal cavity, no consistent pattern of cancer risk has been shown among workers exposed to chromium compounds."
In addition, the Journal of Occupational and Environmental Medicine recently published the results of a study by William Blot, head of the International Epidemiology Institute, and others. It evaluated almost 52,000 workers who worked at PG&E plants over a quarter of a century, including the one in Hinkley, California and another near Kettleman, California. The researchers found cancer rates were no higher than the general California population and death rates were significantly lower than expected.
Yet Ms. Brockovich's law firm, bankrolled with its $133 million haul, is now rounding up plaintiffs near Kettleman for another class-action lawsuit against PG&E, 45 percent of which is owned by pension funds and mutual funds. At the same time, "Erin Brockovich" continues to be an extremely popular box office hit, earning Julie Roberts a cool $20 million.
It is almost impossible to overestimate the threat this represents to the United States. Over ten years ago, one judge foresaw the threat represented by class action lawsuits when he wrote, "During the Hundred Years' War, Europe was nearly brought to its knees by roving bands of mercenaries who pillaged and robbed and left a barren landscape in their wake. The modern equivalent of these mercenaries is the plaintiff's attorney in...class actions." He was not exaggerating.