Hurt?
Injured? Need a Lawyer? Too Bad!
Two years ago, rich
and powerful Texans said lawsuits were ruining the state’s economy and
needed to be fairer. Today, thanks to tort reform, they are fairer -- for
business. Ordinary people are out of luck.
by Mimi Swartz
LIKE A LOT OF
OLD-FASHIONED TEXANS, Alvin Berry is the kind of man who bears the pain and
indignities of life with good grace. At 73, Alvin has never been a rich man,
but in his youth he managed to maneuver himself from the rolling plains of
Central Texas to the industrialized eastern corner of the state, where he
worked his way up to maintenance superintendent at a chemical plant in Texas
City. After he retired, he moved to a small ranch near Izoro, in Lampasas
County, on property inherited by his wife of almost fifty years, Carla Jean.
Despite the twinkle in his eyes and his love of a good story, Alvin is not a
frivolous man: He wears his snowy-white hair parted in the middle and
brushed back, Depression-era-style, is an elder of his church, votes
Republican, and, for most of his life, never dreamed of involving himself in
something as crazy as a lawsuit.
But Alvin also has, in
common with many Texans, a keenly developed sense of fairness, and something
happened two years ago that struck him as just plain wrong. He had endured
several surgeries: a hip replacement in 1999, which required additional
surgery in 2000, and in 2002, a triple bypass, after which he experienced
uncontrolled bleeding and heart failure; the doctors had to open him up
again right on his hospital bed. Alvin made no complaint; as Carla Jean
pointed out, those doctors had saved his life. But then, in 2003, Alvin got
some lab tests with disturbing results. He’d been having kidney stones,
and now his prostate-specific antigen test showed an elevated score. He
didn’t like that; the nurse at the chemical plant had been a stickler for
this test, so he knew that a high score could indicate cancer. His family
doctor was worried enough to send him to a urologist, and that is when the
trouble started. Don’t worry, Alvin recalls the doctor telling him. Kidney
stones can elevate your PSA. Go home. Relax.
But five months later,
in September, Alvin still had stones, and when he took Carla Jean in for her
physical, he asked a nurse to check his PSA. It was up again, to 86 from
12.6. He called his urologist, who, a little more brusquely, told him not to
worry. But Alvin couldn’t stop worrying. In November he got it checked
again; now his level was 166. “ Then he got all excited,” Alvin
says of his doctor, who immediately ordered a biopsy.
The news wasn’t
good: Alvin had prostate cancer, and it had already spread to his bones in
twenty places. Right away the doctor put him on daily medication and a
$4,000 injection three times a year. The money wasn’t a big
problem—Alvin had insurance—but he couldn’t help stewing about his
predicament. “If he’d caught it earlier, it wouldn’t have been in my
bones,” Alvin says. It bothered him too that the doctor hadn’t looked
him in the eye when he’d delivered the bad news and that he’d never said
he was sorry, even as he gave Alvin, at best, five years to live.
“I’ll tell you
what upset me so much,” he says today. “Other than that, I was in pretty
good health. We had a ranch out in the country, goats and cattle.” Because
Alvin didn’t want his wife to be left alone in the middle of nowhere, they
sold the house and part of the ranch and moved into a modest brick home atop
a hill in Copperas Cove, outside Killeen. He tried to control his anger, but
he felt his final years had been stolen from him: “That doctor thought he
was right and the world was wrong. He didn’t give me the opportunity to
make the decision of what to do with my life.”
Personally, Alvin had
always been against lawsuits. He thought there were too many of them, and he
didn’t think people should be able to win multimillion-dollar awards for
situations they could have prevented, like the smokers who sued tobacco
companies. Alvin had voted for Proposition 12 back in 2003, which amended
the Texas constitution to limit noneconomic damages (usually pain and
suffering) in medical malpractice cases to $250,000. “I think there are
too many frivolous lawsuits,” he says. “But you ought to have the right
to sue if you’ve been wronged.”
Alvin sure didn’t
think what had happened to him was frivolous, and he didn’t want to give
his doctor the chance to be so arrogantly dismissive of anyone else. So on a
sunny Saturday in April 2004, he found himself in a Hillsboro coffee shop
with a pretty auburn-haired lawyer named Kelly Reddell.
Kelly had good news
and bad news. The good news was, in her opinion, that Alvin had definitely
been the victim of malpractice. The bad news was that it would probably take
up to two years to litigate, and if he won the case, Alvin would take home
substantially less than the maximum of $250,000 the state of Texas had
decided an injury like his could be worth. “Is this something you are
ready to sign on for?” she asked.
Alvin was surprised
that someone who seemed as sharp as Kelly could be so misinformed. He had
paid attention to the campaign for Proposition 12, and supporters said that
damages for the likes of pain and suffering were capped at $750,000, not
$250,000. “I voted for it,” he said.
“You voted for
it?” Kelly asked, eyeing him levelly.
“Yeah,” Alvin
said. He was proud of it. A $750,000 cap struck him as more than fair.
His soon-to-be
attorney gave him a sad, patient smile. That $750,000 cap he’d seen
advertised on TV and in the papers, she explained, was available only when
there were multiple defendants whom a plaintiff could sue for $250,000 each,
such as a doctor and a couple of hospitals. Otherwise, the cap on
noneconomic damages for a retired person with no income amounted to only
$250,000. (Medical expenses are not subject to the cap.) Like a lot of
lawyers in Texas, Kelly had been turning down plenty of once-good cases
because the numbers just didn’t add up. She worked on a contingency basis,
her fee usually around 40 percent of the award, which would amount to about
$100,000. She also fronted all the expenses of the case: up to $5,000 a day
for expert witnesses, money for travel, court costs. If this case worked
like an average malpractice case, it would cost somewhere around $50,000 to
get to trial and another $25,000 for the trial itself. That would leave
Alvin about $75,000 after attorneys’ fees and expenses; other clients,
with more-complicated cases, had recovered even less. And with the damages
capped, there was little to no incentive for insurance companies to settle.
Once upon a time, the
purpose of tort law was to make injured people whole. In Texas, victims of
medical malpractice or corporate wrongdoing, no matter how poor or
powerless, had some redress through the legal system. The Texas constitution
plainly states that “all courts shall be open” and that every injured
person “shall have remedy by due course of law.” But through the efforts
of a small group of wealthy and politically influential businessmen and a
legislature slavishly devoted to the organization they founded, Texans for
Lawsuit Reform (TLR), those days are gone, and these rights may disappear
across the nation as President Bush pushes his campaign against “greedy
trial lawyers” and “frivolous lawsuits.”
Here is what can
happen to you in Texas today, thanks to tort reformers and the Legislature:
If you go to an emergency room with a heart attack and the ER doctor
misreads your EKG, you must prove, in order to prevail in a lawsuit, that he
was both “wantonly and willfully negligent.” If you took a drug that was
later recalled after studies proved it could cause fatal complications, the
manufacturer can escape liability for your serious injury or death if the
instructions inside the package were approved by the FDA when you took the
medicine. If your child is blinded at birth because of medical malpractice,
there is a good chance that her only remedy is to receive a few hundred
dollars a month for the rest of her life. If a driver hits your old Ford
Pinto from behind and burns you beyond recognition, Ford will almost
certainly be able to shift the blame from its defective product to the
driver of the other car. If you live in an apartment complex that lays off
security guards and fails to maintain its locks and you are raped as a
result, the apartment owner can still avoid liability. All of the above
presumes that you can find a lawyer to take your case; many can no longer
afford to do so because tort reform has reduced your odds of winning. And
should you by some slim chance win and the defendant appeals, your odds of
ultimately prevailing on appeal are 12 percent as of 2004—the paltry rate
at which the Texas Supreme Court, which has also been subject to the
influence of the tort reformers, has found for the plaintiff in cases
involving harm to persons or property, according to Court Watch, an
Austin-based public-interests organization.
When Alvin Berry heard
this news, he felt utterly betrayed. “I felt the whole thing had been
misrepresented,” he says now. “We’d voted on something, and we really
didn’t know what the facts were.” Alvin decided to go ahead with the
suit. But what he’d really like to do, he says, is change his vote, the
one that took away his right to a fair fight in court.
IT MIGHT SURPRISE
ALVIN TO LEARN that the people who led the battle to take his rights away
are very much like him: hardworking, churchgoing men of a certain age and
experience who believe incontrovertibly that their determination to put an
end to the spurious lawsuits supposedly clogging our courts is for the good
of all. In fact, the words they like to attach to their efforts are terms
like “civic virtue,” “level playing field,” and above all,
“fairness.” I first met with the founders of TLR early this past summer
in Leo Linbeck Jr.’s soaring home on one of the best streets in River
Oaks, sitting down with four men who have created, in a little over ten
years, not just the most powerful lobbying organization in Texas but also a
social revolution in the way we treat our fellow Texans.
Central casting
couldn’t have done better. In the sunny, expansive kitchen, which,
complete with fireplace, resembled nothing so much as the breakfast room of
a small-town country club, here was Linbeck, tall, grandfatherly, and though
pale and pained from recent surgery, still chairman, at 73, of the holding
company of his eponymous multimillion-dollar construction firm and other
enterprises. Whenever he spoke—slowly, in soft, equitable tones—the
other men, all middle-aged, listened raptly. Richard Weekley, the chairman
of his family development company and vice chairman of Weekley Homes, coiled
confidently in a corner, white-haired, tan, and assiduously fit. Richard
Trabulsi, dark-eyed, with bountiful salt-and-pepper hair, chose his words
with the precision and care befitting the corporate defense attorney he once
was at Vinson and Elkins. Finally, there was Hugh Rice Kelly, the retired
general counsel of Reliant Energy and the legal strategist and scholar of
the group, a man whose stentorian voice, sharp intellect, and dry wit have
long made him a respected presence in Houston.
As different in
personality as the four men may be, all share two crucial characteristics:
They are wealthy, and that wealth has been accumulated in businesses—from
construction to alcohol—profoundly threatened by lawsuits. The existence
of these lawsuits, in their minds, has less to do with corporate failings
than with the greed of lawyers and what Linbeck describes as “the
disengagement of the average citizen in the formulation of policy.”
“We all get busy in
our lives,” he explained gravely, his long, tapered fingers splayed open
in a gesture simultaneously apologetic and understanding. “For most of us,
it’s a day-to-day tussle, living paycheck to paycheck, and esoteric issues
like joint and several liability don’t really resonate. As a result, we
tend not to be engaged. My concern was and is that issues like this need to
be engaged by the average person.” Flaws in the civil justice system, he
said, have a “perverse” effect on our lives without our even knowing it.
People “didn’t understand why their wages were depressed. They didn’t
understand why their job opportunities were fewer. They didn’t understand
why the economy was not as robust as it would otherwise be. So I viewed this
opportunity as one in which my personal bias and interest in civic virtue
could be reflected in a tangible way.”
The other men in the
kitchen nodded sagely at this cogent analysis, one that explained why the
devastation brought about by what TLR likes to call “lawsuit abuse” had
been allowed to persist and why Texas law needed to change. But outside this
cozy scene, there are those who would strongly disagree. A 1994 Bureau of
Labor Statistics report, for example, failed to uncover any decline in the
Texas economy that could be attributed to frivolous lawsuits; Texas, in
fact, led the nation in the number of new jobs created that year, when TLR
was first becoming a force in Texas politics. That same year, Fortune
magazine reported that, in the last quarter-century, Texas had enjoyed a 311
percent increase in Fortune 500 companies headquartered here. A national
jury verdict survey found that the midpoint verdict for personal-injury
cases in Texas was below the national average in every year from 1989 to
1993, including 45 percent below average in the last year of that period. In
other words: What litigation crisis?
And why has the
campaign against trial lawyers been so successful? Here’s how Republican
political consultant Frank Luntz explained it a few years ago: “Unlike
most complex issues, the problems in our civil justice system come with a
ready-made villain: the lawyer. . . . It’s almost impossible to go too far
when it comes to demonizing lawyers.”
Trabulsi put it
another way: “A lot of people think we’re not nearly as aggressive as we
should be in trying to reform a system that’s out of control.” People
who suffer through the emotional and financial drain of lawsuits are very
passionate about what they think the solution should be.
Leaning forward
intently, he added, “We’re looking for fairness, balance, and
restoration of litigation to its appropriate role in society,” he
insisted. TLR isn’t trying to make sure the justice system favors
defendants, as its critics have claimed. The four founders have all been
involved in lawsuits; eliminating access, Trabulsi said, would be “bad
public policy, and it would be against anybody’s own self-interest.”
The distant,
high-pitched keening you might hear at this point in the story is the sound
of some of Texas’s most successful plaintiff’s lawyers gnashing their
teeth, rending their garments, and screaming in frustration. Mark Lanier,
fresh from his $253.4 million verdict in the Vioxx case, still sees himself
as an advocate for the common man, like many personal-injury lawyers. He has
this to say about Linbeck and his three cohorts when I interview him later
in his paper-strewn office in north Houston. “TLR includes what some might
call a bunch of rich snots,” he sneers, the baby face that was so charming
and affable during the jury selection phase of the trial contorted now with
icy fury. “They’re entrepreneurial everywhere but the legal system. They
don’t have a clue what it’s like to be stepped on by a rich
snot.”
And there you have it,
the two poles of a brutal debate that has been roiling Texas since the late
eighties, one that has grown more intense and self-serving with time. “It
will be difficult for you to find people in the middle,” TLR’s
communications director Ken Hoagland suggested to me, and his was the voice
of experience. Even the dean of the University of Texas law school, Bill
Powers, declined to comment on the situation on or off the record. In the
battle between trial lawyers and tort reformers, each side accuses the other
of excessive greed and infinite mendacity; each side is convinced that only
its side represents the truth. The middle ground is reserved for the
all-too-human collateral damage of a bitter war involving big money and
partisan politics, seemingly without end.
SYLVIA ANN FULLER’S
LIFE ENDED just when she was finally able to savor it. The 68-year-old Tyler
widow worked hard all her life, but the tight curls she wore reflected the
unseen constraints on her psyche. She gave herself over to teddy bear and
cookbook collections and lavished affection on her dachshund, but her
ability to love her three grown children and two grandchildren was often
eclipsed by inconsolable depressions. Then, in 2003, Sylvia sought treatment
for the first time and, with the help of antidepressants, was reborn. A
sunny day in August 2004 was one of the happiest of her life: She was
picnicking with her whole family in Tyler State Park, the first time in two
years they’d all been together.
But toward the end of
the day, Sylvia started feeling ill, and early the next morning she felt bad
enough to call her daughter, Karen Hindman, to ask for a ride to a local
hospital. She had been vomiting all night and was frightened. Karen jumped
in her car and drove the fifty miles from her home in Winnsboro to take her
mother to a quiet emergency room that, she assumed, would give her mother
the proper treatment.
Through serial
workups, including two EKGs to measure her heart function, Sylvia could not
stop vomiting, even with the help of medication. The doctor diagnosed food
poisoning from the potato salad at the picnic and was not dissuaded when
Karen noted that no one else who’d eaten it had fallen ill. He gave Sylvia
morphine, to help her rest.
The next thing Karen
knew, the nurses were saying her mother could go home. She didn’t see how.
Sylvia was barely conscious from the drugs. “We will help you get her into
the car,” they told her. “After that, you’re on your own.” Karen was
reassured when her mother chatted a little during the ride. At home, she
said she’d be fine alone; she just wanted to sleep.
But when Karen got
back to her own house and tried to call her mother, there was no answer.
After the night passed with no response, she returned to her mother’s
house, in Tyler, and found her collapsed on the floor. She had been there
for nine hours, too sick to reach the phone. As soon as Karen helped Sylvia
up, thick, grainy blood started pouring out of her nose and mouth. Sylvia
Fuller died before the paramedics could arrive.
Because there were
many things that just didn’t seem right about that visit to the emergency
room, Karen and her brother David Fuller began an investigation. They hired
a private pathologist to go over their mother’s medical records, which
showed that Sylvia’s cardiac enzymes had been irregular (a sign that often
necessitates a hospital stay). Two EKGs revealed an irregular heart rate. No
one had mentioned either finding to Karen or her mother at the hospital. In
written notes, the ER doctor had suggested that the irregular heartbeat was
a side effect of digitalis—a drug Sylvia wasn’t taking. Hospital records
also stated that Sylvia had walked out of the emergency room on her own,
when in fact she had been discharged, heavily medicated, in a wheelchair.
Then David discovered that the pathologist who had conducted the autopsy for
the hospital had a checkered history; he had left the Harris County medical
examiner’s office under a cloud after jeopardizing at least fifteen
homicide investigations because he was practicing without a Texas medical
license.
Like Alvin Berry,
Sylvia Ann Fuller’s children had never sued anyone before. But they also
felt that their mother had been robbed of her life and didn’t want what
had happened to her to happen to anyone else. “If the emergency room had
been very crowded and they had been overwhelmed, I could even forgive
them,” David told me. “But she was the only patient in there.” One
employee had been watching TV, Karen had told him. So, with his sister,
David began looking for a lawyer.
They saw the first one
last December. He explained the realities: The facts of the case looked
promising, but because their mother was retired, they would have a hard time
getting any lawyer to take the case. It was, essentially, the same story
Kelly Reddell had told Alvin Berry: Anyone who didn’t work—the elderly,
homemakers, or children—was looking at a cap on noneconomic damages of
$250,000. Trying such cases was simply not cost-effective for the lawyer or
the client. (“It’s an assault on those who are the most vulnerable,”
one plaintiff’s attorney told me. “It’s almost legal malpractice to
take those cases.”)
David contacted about
fifteen lawyers and was turned down by all of them. One letter explained
why: “Unfortunately, many of your legal rights have been taken away by
state laws proposed and lobbied for by insurance, HMO, and corporate
interests,” the lawyer wrote. “You and your family deserve better from
the Texas government.” The lawyer suggested that David contact a
citizens’ advocacy group and state officials.
So that’s what he
did. He described his mother’s experience in a letter to Governor Rick
Perry and received a form letter from someone in the constituent services
office. It described Texas’s great success in limiting frivolous lawsuits
and reducing medical malpractice rates. “Please let us know if we may
assist you in the future,” the letter ended.
The letter made him
more determined than ever to find a lawyer. So far, he’s had no luck.
“I THINK IT’S
IMPORTANT to set the stage for this discussion by talking about what the
civil justice system in Texas was like in the eighties and early
nineties,” Dick Trabulsi told me earnestly, during our first meeting. The
past was a mirror image of today: Trial lawyers, most of whom were Democrats
who were generous with their campaign contributions, had lots of loyal
friends in key legislative positions, as well as in the governor’s office
and throughout the judiciary, from the Texas Supreme Court down to local
district courts. They were skilled in the art of “forum
shopping”—filing their cases in friendly counties, particularly in South
and East Texas—and styled themselves as defenders of the weak while using
their money and power to bend the rules in their favor. “Legalized
extortion” is the way former lieutenant governor Bill Ratliff—who, as a
state senator, wrote most of the 2003 tort reform law—described the
situation to me. “If a really mean trial lawyer had a case in the right
courtroom, he would break you. Insurance companies would settle anything for
higher and higher amounts rather than go to a stacked court.”
Because venue laws
were so loose in Texas, a case with only the most tenuous connection to the
state (or the county) could still be tried in that locale, regardless of
where the alleged wrongdoing had occurred. (In a seminal case, workers at a
Costa Rica banana plantation who claimed to have been injured by a pesticide
manufactured by Dow Chemical and Shell Oil outside the state sued in Texas,
where Shell was headquartered—and won.)
Public attitudes in
those days were more sympathetic to consumers and injured people than to
corporate defendants. Texas attorneys made hundreds of millions of dollars
in cases involving everything from breast implants (in which the science was
debatable) and tobacco (in the celebrated case in which five trial lawyers,
including courtroom superstar John O’Quinn, received an arbitrated fee,
paid by tobacco companies, of $3.3 billion) to asbestos (in which people who
were not sick managed to routinely walk away with very tidy payouts of cash
from their former employers). The turning point came in 1987, when famed
Houston trial lawyer Joe Jamail allowed himself to be filmed by 60 Minutes
as he cozied up to Texas Supreme Court justice Oscar Mauzy and bragged about
his $25,000 campaign contributions soon after the court had allowed a $10.5
billion verdict Jamail had won for Pennzoil against Texaco to stand.
(“Justice for Sale?” the segment was titled.) The New York Times
said that the conduct of Texas’s courts was “reminiscent of what passes
for justice in small countries run by colonels in mirrored sunglasses.”
Corporate America
fought back, decrying a crisis in litigation. Republicans like Vice
President Dan Quayle capitalized on the partisan aspects of the issue by
attacking the mostly Democratic trial lawyers in speeches as elitists.
Advocacy groups sprang up across the nation—the tobacco industry in one
year gave $55 million to the American Tort Reform Association—while the
conservative Manhattan Institute asserted, loudly but debatably, that abuses
of our legal system were costing Americans $300 billion a year.
It was in this
atmosphere, in 1993, that Dick Weekley decided he had had enough. As he
would later write with Hugh Rice Kelly in TLR’s monograph, “Template for
Reform,” “The Trials controlled the Legislature, and Austin mandarins
dismissed attempts at meaningful reform as wishful thinking.” Weekley
began to convene meetings of Houston businessmen and community leaders to
discuss the problem, and the people who kept coming back were Leo Linbeck,
Trabulsi, and Kelly. They formed Texans for Lawsuit Reform, styling
themselves as outsiders, refusing to “go along to get along.” To defeat
“the most powerful special-interest group in the country,” they knew
that they had to match their opponents “in focus, funding, and
tenacity.”
IT WAS PROBABLY NOT
surprising that the Legislature initially viewed them with derision and
contempt—“Dick Weekley is gonna feel like he was f—ed by a bull,”
one lobbyist vowed—but they were undaunted. TLR’s chief lobbyist, a
former Republican legislator from Houston named Mike Toomey, explained to
the group that they would never effect change until they could break up the
coalition of Democratic state senators who could prevent tort reform
legislation from coming to the floor for a vote. So the group set to work,
tattling on legislators who paid lip service to tort reform back home but in
Austin remained beholden to the trial lawyers. They raised $600,000 for the
1994 elections and spent about $300,000 on three contests in which novice
Republicans were trying to unseat veteran Democrats—and won them all. The
new senators TLR helped to elect gave Republicans their first majority in
the state Senate in more than a century. Suddenly, the trial lawyers
weren’t laughing anymore.
There was a new
governor too: George W. Bush, who had defeated Ann Richards, in 1994, by
sticking to four issues, one of which was tort reform. (By the time he was
reelected, in 1998, TLR and similar groups had given more than $4 million to
his two campaigns.) Karl Rove told the Washington Post that once Bush took
on the trial lawyers, “Business groups flocked to us.” Enron CEO Ken
Lay, an early TLR member, warned the newly elected governor in a letter,
“Let me finally say that I believe there are few, if any, issues more
important to this state than reforming our tort system. It has become the
laughing stock of the country and is certainly discouraging companies from
moving offices and plants into Texas. Over time it will encourage many of us
with large operations in Texas to entertain moving some of these to other
states to attempt to reduce our exposure to what has become an extremely
capricious legal system.” (Lay did not mention Enron’s long history of
pipeline safety violations.) In February Bush responded by declaring tort
reform an emergency issue, overriding a rule that prohibited lawmakers from
taking up legislation during the first sixty days of a session.
Still, there were
enough Democrats in high places that TLR didn’t get everything it wanted.
Lieutenant Governor Bob Bullock, who presided over the Senate, forced TLR
and other tort reform groups to sit down with the trial lawyers and
negotiate a compromise, which they did, near the end of the 1995 session.
Punitive damages were contained; instead of being calculated at four times
actual damages, they were reduced to twice that amount, plus an amount equal
to noneconomic damages (for pain and suffering), up to $750,000. (“Of
course, the punitive damages are not what compensates somebody for their
loss,” says Weekley. “It’s just pure money.”) The era of soaking the
defendant with the deepest pockets came to an end; in the past, if a jury
found that the defendant was more negligent than the plaintiff, that
defendant could be held liable for the entire amount of a judgment. After
1995, a defendant was on the hook for only his share of the responsibility,
a concept defined by TLR as “proportionate liability.” The effect of
this was that if, say, an uninsured driver who rear-ended a poorly
designed car was found to be 40 percent responsible for the resulting
explosion, then the injured plaintiff would have to “eat” that 40
percent—the Legislature having chosen to protect the negligent automaker
instead of the innocent victim. The rules covering where a case could be
tried in Texas were tightened substantially; defendants could be sued only
where negligence had occurred or where they were based. While plaintiff’s
lawyers howled that victims would have a much harder time winning cases, it
was hard to argue with reforms that probably corrected some of the worst
abuses of the legal system.
Soon after the
session, plaintiff’s attorney Mark Lanier found himself at a fund-raising
lunch for a religious right organization, seated next to then—agriculture
commissioner Rick Perry.
“What’s this next
session gonna do to me?” Lanier asked.
“Hey, don’t
worry,” Perry told him. “We’ve gone as far as we need to.”
That, of course, did
not turn out to be accurate.
JUST BEFORE HE SIGNED
the contract for his house, on New Year’s Day 2002, Brian Zaltsberg looked
the KB Home salesman in the eye and gave him a stern warning. “Go ahead
and lose the commission if there are going to be problems with the house,”
he said. “Because your time will be better spent on someone else. If you
screw me, I’m gonna come back on ya.”
The salesman for KB,
one of the nation’s largest homebuilders, promised that the house would be
just fine. So Brian and his fiancée, Stephanie, signed the contract and,
thrilled, became first-time homeowners. They were just two young kids—27
and 23 years old, respectively—without much education or money to throw
around. Brian, tall, wiry, and favoring gimme caps, was determined to finish
college while he earned a living developing Web sites and repairing
computers. Porcelain-skinned Stephanie had finished high school and was
looking forward to life as a homemaker and a mom. Brian felt they had
bought, for their hard-earned $140,000, a piece of the American dream.
“Happy people,” Brian said of his envisioned future, when the three of
us met at his favorite Mexican restaurant in Fort Worth. “Dream home and
all that.” The 1,800-square-foot one-story brick house, in a sun-scorched
suburb on the northwest side of the city, was far from lavish, but to the
Zaltsbergs, it was paradise. “We were so damn excited,” Stephanie told
me.
But the trouble
started even before they moved in. Groundbreaking was delayed, and then
construction was erratic. Brian would often find the site littered with
trash and once pulled containers from fast-food restaurants from the
half-finished walls. But those were small problems compared with the one
that took place on moving day. The Zaltsbergs stored many of their
belongings in the garage while they set up the house, and as night fell, so
did a downpour. Brian stepped outside for a smoke and noticed that water was
flowing from inside the garage out into the street. He ran inside and
saw water cascading down the walls and pooling on the floor, soaking into
everything they had stored there. The Zaltsbergs had paid an extra $2,000
for a drywalled garage; now the Sheetrock was damaged and everything within
was ruined.
Every day after that
seemed to bring new problems: KB repaired the roof flashing where the leak
had occurred but refused to replace the Sheetrock; the attic door stuck, and
some of the rafters in the attic had split. Brian could pry bricks out of
their mortar on exterior walls, and shingles flipped up in the wind. He
asked KB to schedule repairs so that workmen wouldn’t interrupt meetings
with clients at his home, but they showed up unannounced. Eventually, Brian
demanded a meeting with KB. He was stressed to the max; he wanted KB to buy
the house back from him. “I don’t want to live there anymore,” he told
them. KB refused. Then Brian threatened KB with the only weapon he had: He
would exercise his First Amendment rights and put up a Web site he would
call kbhomesucks.com. The representative laughed in his face and told him to
go ahead.
Why, you may wonder,
didn’t Brian sue KB? Because his contract prohibited him from doing so. It
required him to seek binding arbitration instead of redress in the civil
courts. In fact, only a handful of lawyers in Texas are now representing
people who try to sue homebuilders, because the cases are so hard to win and
so expensive to try before arbitration panels. “I always thought it was
your constitutional right to sue people,” Brian said. “But we couldn’t
sue KB.” Like victims of medical malpractice, homeowners have seen their
access to the courthouse curtailed.
Had Brian’s
confrontation with KB taken place a couple years later, he would have run
into another obstacle: During the tort reform frenzy of 2003 that TLR helped
stir up, the Legislature, after intense lobbying and millions of dollars in
contributions from homebuilder Bob Perry, created the Texas Residential
Construction Commission (TRCC). Disgruntled homeowners were not allowed to
go directly to court; first, they had to go to the TRCC, an agency heavily
influenced by homebuilders, for a determination of whether their case had
merit, a finding that would then be admissible in court. (TLR did not
endorse or lobby for this bill.)
Brian didn’t want to
go to arbitration. He couldn’t afford an attorney. Instead, he decided to
make good on his initial threat: In January 2003 he launched kbhomesucks.com.
Almost immediately, he was swamped with e-mails from people claiming to have
been harmed by the company. They posted their complaints too, and Brian
added links for finding help. He appeared in a few local news stories, and
pretty soon he was getting between 1,200 and 2,000 hits a day on his Web
site. Then one night he checked his e-mail and found one from a lawyer,
asking for the person in charge of the site. Attached was a copy of a $20
million lawsuit filed against someone else who had tried to take on KB. “I
took that as a threat,” Brian told me. Still, Brian contacted the lawyer
and requested a meeting with KB’s director of customer service. Brian had
stopped paying on the house by then; KB had agreed to buy it back if he
would disable his Web site. For a moment, peace appeared to be at hand. But
then Brian asked for $4,000 in moving expenses and for reimbursement of his
down payment. KB said it would not exchange any cash with him until the
house sold. That was a deal breaker for Brian, so, as he put it, “the deal
broke.”
Three months later,
Brian started getting anonymous, threatening e-mails, including ones that
suggested that his wife was being unfaithful, which added to the stress at
home. (Stephanie had a miscarriage that spring.) Eventually, Brian started
protesting publicly in front of KB’s Fort Worth offices and was harassed
by the police. He had the persistent feeling he was being watched.
Finally, in September
2004, Brian sued KB in state court for harassment. The company countersued
in October, hitting him with what many lawyers call a “slap suit,” a
lawsuit filed by a big company against a much smaller firm or individual to
try to scare the other party off. Among the claims against Brian was an
accusation of cyber squatting, for misusing the KB name. Since that time,
Brian has found himself in a lawsuit many might call frivolous, especially
since it involves a company worth hundreds of millions and an accused party
worth very little.
In late August of this
year, Brian finally got to arbitration; to KB’s dismay, he was
allowed to keep kbhomesucks.com up and running. In a much bigger case
settled around the same time, KB Home was fined $2 million by the Federal
Trade Commission and, more important, was prohibited from requiring
mandatory arbitration in its homeowners’ contracts. The ruling came too
late for Brian and Stephanie, who by then had let the bank take their house.
“This is hell on earth, that’s what it is,” Stephanie said.
THE YEARS BETWEEN 1995
and 2003 were frustrating for TLR. Many legislators in both parties lacked
the stomach for another tort reform battle, feeling they had addressed the
issue well enough. But not TLR. Thwarted in Austin, TLR’s leadership
turned its attention to judicial races, investing around $1 million to
defeat Elizabeth Ray, a Houston district judge, in a 2002 Republican primary
runoff election for the Texas Supreme Court. Ray had a reputation for
fairness in her courtroom and, like many judges, accepted campaign
contributions from lawyers representing plaintiffs as well as from lawyers
representing defendants. But in an exceptionally bitter race, TLR tarred her
as a sham Republican and a friend of the plaintiff’s lawyers. Its
candidate, Dale Wainwright, won. The lesson was that you didn’t cross TLR.
(“Support from plaintiff’s lawyers is a campaign issue,” Trabulsi told
me solemnly.)
But by 2003, TLR’s
years in the wilderness were over. A Republican wave had swept through the
state in the 2002 elections, and Republicans commanded substantial
majorities in both houses of the Legislature and controlled every statewide
elected office, including all seats on the Texas Supreme Court. Once a
plaintiff’s paradise, the court in 2002 and 2003 was finding for
plaintiffs in only 19 percent of its cases. TLR had friends in high places
too, including Governor Perry and his chief of staff, Mike Toomey, a tort
reform true believer who had taken a leave from a lucrative lobbying
practice that included TLR as a client. At the beginning of the legislative
session, there were two tort reform bills, one originated by doctors (and
endorsed by TLR) that capped noneconomic damages in medical malpractice
cases at $250,000 and another containing an assortment of protections for
businesses, supported by TLR. In a clever strategic ploy, the House
leadership combined the two bills, making it difficult for a lawmaker who
supported one but not the other to vote no. Says Democratic state
representative Craig Eiland, of Galveston, himself a trial lawyer: “Never
have so many who needed so little gained so much.” The governor’s office
cleared the way by maneuvering to remove the Texas Medical Association’s
head lobbyist, who was deemed to be too friendly with the trial lawyers and
had supported Perry’s opponent in the 2002 governor’s race. Once the
lobbyist was dispatched, the TMA’s new leadership refused to engage with
the trial lawyers at all.
The 1995 tort reforms
had been forged during negotiations between lawyers on the two sides, but
with Republicans in total control of the legislative process, compromise was
a thing of the past. The sponsor of the tort reform bill, state
representative Joe Nixon, of Houston, was also the chair of the committee
where the bill would get its initial hearing. Nixon curtly informed the TTLA
that there was “a new sheriff in town,” and things went downhill from
there. “The concern was the train was going so fast no one could stop
it,” Mark Lanier told me. When Lanier protested that the trial lawyers
were being shut out, he found, coincidentally or not, a private investigator
on his tail.
When the bill reached
the House floor, hostility between Republicans and Democrats erupted in the
first twenty minutes of what turned out to be a two-week marathon. Democrats
filed hundreds of amendments to the bill; Republicans interposed
parliamentary objections; Democrats protested adverse rulings by Speaker Tom
Craddick; and on it went. Republicans voted as a bloc—the occasional
stragglers were quickly whipped back into line by Craddick—and so, most of
the time, did Democrats. Their pleas for exceptions to the cap fell on deaf
ears. What if, for instance, an injury was proved to be intentional to a
child or an elderly or disabled person—someone without significant
economic damages? The answer was no exceptions; the cap would remain at
$250,000. What about nursing home patients who were injured? Nope. What if
the doctor was proven to be drunk? Still no. What about allowing the cap to
rise with the consumer price index? After all, the $250,000 cap, which was
chosen because a similar figure had been adopted in California in 1975,
would be worth a little over $750,000 in 2003 dollars. No, no, no.
Meanwhile, the TLR principals remained a constant presence in a corner of
the House gallery, which inspired a Democratic state rep to christen their
spot “The Owners’ Box.” (TLR spokesman Hoagland told me, with barely
contained outrage, “My guys were there for civic virtue. We are not
divorced from the legislative process.”)
The House passed the
bill 99—45. The Dallas Morning News called it “Open Season on
Plaintiffs.” It gave judges authority to return cases brought by
out-of-state plaintiffs to their home courts; allowed challenges to forum
shopping to be appealed at the time of trial, instead of after a lawsuit was
over; made plaintiffs (but not defendants) responsible for court costs and
attorneys’ fees if they turned down reasonable settlement offers and then
lost at trial; and placed a limit on contingency fees, a device that is the
only way people of limited means can get to the courthouse. Plaintiff’s
lawyers front all expenses and get reimbursed (and paid a fee) only if the
client wins. TLR wanted to fix the remaining problems held over from the
eighties, but the limit on contingency fees and the medical malpractice cap
also had the benefit of constraining the ability of trial lawyers to
practice their profession.
The trial lawyers had
some hope when then—state senator Ratliff, who was known for his
evenhandedness, balked at the House version of the bill and set out to write
his own. He nixed the limit on contingency fees and made defendants as well
as plaintiffs subject to the penalties for turning down reasonable
settlement offers. He also included language that allowed the $250,000 cap
to be stretched to $500,000 and even $750,000 in rare situations. But enough
of the reforms stayed intact for TLR to champion the bill and the TTLA to
regard it as a disaster. Hartley Hampton, a former head of the TTLA, put it
this way: “It was the session where the lobbyists basically acted like
looters, and they got all of the candy that they were unable to get in an
atmosphere of deliberation and negotiation in 1995. It was a piecemeal
dismantling and sale of our civil justice system.”
TLR AND ITS TORT
REFORM allies had to fight one more battle before the victory was secure.
Back in the eighties, the Texas Supreme Court had struck down a 1977 law
that capped damages for victims who were injured but did not die from
medical negligence as “unreasonable and arbitrary.” They called the law
“a speculative experiment to determine whether liability insurance rates
will decrease.” But by 2003 that Democratic court, and the Democratic
Texas it operated in, was long gone. A constitutional amendment allowing
caps—if approved by the voters—would put to rest any doubt over the
legality of the new $250,000 cap.
The fight over
Proposition 12, as the constitutional amendment was called, presented the
people of Texas with a Hobson’s choice: access to medical care versus
access to the courts. On one side were doctors, insurance companies, and
business interests, who claimed that physicians would leave the profession
if malpractice insurance rates were not reduced; on the other were trial
lawyers and consumer groups, who said that injured victims would have no
recourse if the caps took effect. Each put harrowing statistics and shrewd
emotional ploys to work, and each side spread around plenty of money—about
$4 million came from the trial lawyers and their allies and $8 million from
an agglomeration of pro-amendment groups, including TLR.
The amendment
authorized a $250,000 cap on noneconomic damages in malpractice cases “and
other actions,” three words that sent opponents of the proposition into a
fury because they allowed the Legislature to cap damages not just on
malpractice cases but on every personal-injury lawsuit, whether it involved
drunk drivers or corporate polluters. Trabulsi suggested that no one in his
right mind would take that possibility seriously, but retired U.S. district
judge Finis Cowan, who had been a highly regarded defense lawyer at Baker
Botts, strongly disagreed in a State Bar of Texas publication on the debate.
“Clearly Prop 12 is not a medical malpractice reform,” he wrote, “but
an amendment designed by special interests who have reasons for desiring to
restrict access to courts and juries.”
Constitutional
amendments are usually voted on in early November, but the Legislature moved
the election to September to avoid the big turnout on a traditional election
day, which probably would have defeated the amendment. As of June, polls
showed that 62 percent of Texans favored letting legislators limit lawsuits,
with just 28 percent opposed. Twenty years of lawyer bashing had taken its
toll. To fight back, the lawyers hired the Dallas-based public relations and
political consulting firm of Allyn and Company to run their campaign. The
standard-bearer of the fight, however, was former Texas Supreme Court
justice Deborah Hankinson, a plucky Republican and a Bush appointee who was
willing to expend virtually all her political capital to defeat an amendment
she saw as an affront to Texans’ most basic legal rights.
In the past, Hankinson
had supported needed tort reform—and continues to do so—and accepted TLR
contributions. But this amendment, she said, wasn’t designed to cut off
bad—that is, frivolous—lawsuits; it was designed to cut off lawsuits by
people with legitimate claims, by restricting access to the courthouse.
(Meanwhile, special-interest groups had gained unprecedented control of the
Legislature.) “This tort reform went too far,” she told me. “I don’t
consider this to be reform. I view this as something that deprives people of
their constitutional rights.”
Frantically, Hankinson
enlisted a diverse coalition to fight the amendment, including members from
the American Association of Retired Persons, Mothers Against Drunk Driving,
the League of United Latin American Citizens, the Sierra Club, the Texas
Federation of Teachers, and others. One group was missing in action: trial
lawyers. “The biggest problem we face as lawyers when we try to get our
message across on this issue is that the MESSENGER is KILLING the
MESSAGE,” TTLA president John Eddie Williams wrote in a June e-mail to his
members. “To make this program work we must vow to not communicate with
the public. . . . NO LAWYERS—NO EXCEPTIONS.”
Within weeks, the
arguments about court access began to have an effect. July polls showed that
the two groups were almost dead even; the same was true in August, as
political ads from both sides became more strident and more questionable.
Particularly troubling were advertisements in print and on television that
put the cap for noneconomic damages at $750,000. On election day, Prop 12
was defeated in every major city in Texas but still won, by a margin of one
percent of the vote. The decisive votes came from South Texas and rural
areas, where voters feared that lawsuits might leave them without doctors or
hospitals. “If we’d had another week, we could have cleaned their
clock,” Hankinson told me. Instead, Alvin Berry, Karen Hindman, David
Fuller, and thousands like them have found their rights diminished when they
needed them most.
ON MY LAST VISIT with
TLR, U.S. senator Sam Brownback, of Kansas, was just leaving as I arrived.
An old friend of Linbeck’s, he is just the kind of politician TLR likes:
Republican, wealthy, with Christian right bona fides, and— in the words of
Thomas Frank, the author of What’s the Matter With Kansas? —“a
stalwart friend of the CEO class.” When he clapped Trabulsi on the
shoulder to thank the group for all its hard work in Kansas, the four men
beamed. “They brought back the small-aircraft industry,” Brownback
assured me. “It was dead. Dead.”
After he left, I asked
the quartet what, exactly, they had done in Kansas.
“Ah, nothing,” one
of the members said. “He was speaking generically about tort reform.”
It might seem that
after the sweeping 2003 reforms, there is little left for TLR to do. But the
bogeyman of excessive litigation is always out there, and TLR is, in fact,
laser-focused on the one Texas Supreme Court decision of the past few years
that did not go its way. The case involves Ashley Dueñez, who was nine
when, in 1997, a drunk driver, Roberto Ruiz, swerved across the centerline
on a highway near Port Lavaca, crashed head-on into the Dueñez family car,
and left her severely brain damaged, requiring around-the-clock care for the
rest of her life. Ashley’s father, Xavier, a corrections officer, also
suffered some brain damage and needed plastic surgery.
Ruiz had drunk one and
a half cases of beer while chopping wood earlier in the day and then,
stumbling and drooling, bought another twelve-pack at a convenience store
before getting back into his truck and destroying the lives of the Dueñez
family. The defense argued that the clerk who sold the beer was primarily
responsible, not the convenience store chain, but last September the Supreme
Court upheld a $35 million judgment for the Dueñez family against F.F.P
Operating Partners, the owners of the convenience store. The 5—4 decision
was based on anti—drunk driving laws passed years before the 1995 change
in proportionate liability. (The majority relied on a law that reflected
basic common sense: Too often a drunk driver can’t afford to make
restitution to his victims; bar and liquor store employees have the
opportunity to stop drunks from getting drunker and going on the road by
simply refusing to serve them.)
But in April of this
year, the court agreed to a rehearing, a highly unusual move, particularly
because four of the original justices who had decided the case had left the
court and been replaced by judges perceived to be even more
defendant-friendly. One possible reason given for the turnaround was the
half a dozen friend-of-the-court briefs supporting the motion for rehearing,
including one from TLR, stressing the importance of proportionate liability.
Justice Priscilla Owen, whom TLR had helped elect, had conceded in her
dissent that “a provider of alcohol should be vicariously liable for a
patron’s intoxication.” But she went on to say that she did not believe
the Legislature meant what it said when it passed a law stating that a
provider of alcohol was 100 percent liable for damages caused by an
intoxicated patron who had been allowed to buy alcohol when he was clearly
already drunk.
Mothers Against Drunk
Driving, which believes that a company that profits from the illegal sale of
alcohol should also bear the burden when injuries occur, had supported this
law. Owen didn’t see it that way, and neither did TLR, especially Trabulsi,
who opened himself to conflict-of-interest criticism as the owner of
Richard’s Liquors and Fine Wines. As John Griffin, the attorney for the
Dueñez family put it, “They are asking the court to take a Magic Marker
and put a big black mark through the Legislature’s description of its own
laws.” The assertion that legislators didn’t know what they were saying,
he says, was “sophistry.”
There are other areas
of the law that TLR would like to see “reformed.” Along with prohibiting
contingency fees for lawyers hired by government agencies, TLR wants to
restrict who can serve on juries, which, after all, are unpredictable.
According to its latest press kit, the group is intent on “upgrading the
qualifications required to serve on juries.” Explains Trabulsi: “We want
to make sure that someone who is a claimant or defendant is tried in front
of a jury of their peers. And we believe sometimes that doesn’t happen.
We’re going to take a look at the whole realm of the jury system to try to
make sure it operates as efficiently and as constructively and as fair as it
possibly can.”
After surveying their
handiwork, one can legitimately ask, fair for whom? While TLR and the
governor’s office extol the return of insurance companies to the medical
malpractice insurance business in Texas and a 6.35 percent drop in
malpractice rates (less impressive when you realize that rates for the
state’s major insurers went up more than 100 percent between 1999 and
2003), they have surprisingly little else to show for their labors. When I
asked TLR for evidence of a tort-reform-fueled business boom, they handed me
a five-year-old study.
Several recent
studies, on the other hand, make you wonder whether there was ever a
litigation crisis at all. Four law professors, including two from the
University of Texas, Bernard Black and Charles Silver, found no link between
lawsuits and rising insurance premiums. They studied resolved malpractice
claims from 1988 to 2002, relying on data from the Texas Department of
Insurance. The number of large claims—those with payouts of at least
$25,000—had remained basically flat since 1988; jury verdicts in favor of
plaintiffs in civil courts had likewise shown no change over the same
period. Furthermore, malpractice claims made up less than one percent of
total health care expenditures in Texas. In short, nothing changed much in
fourteen years except that insurance company profits doubled. And the
promised results of tort reform have not occurred: Malpractice insurance
reductions have been less than 1.5 percent since 2003, and the hoped-for
return of doctors to underserved areas has not taken place. A briefing paper
released by the Economic Policy Institute, in Washington, in May 2005
further found no evidence that tort litigation was responsible for causing
unemployment, dampening productivity, discouraging research, or driving up
liability insurance rates. The institute found, in fact, that the number of
lawsuits in the U.S. actually dropped 4 percent in the decade prior to the
tort reform year of 2003.
The tort reform
movement was born in an era when the pendulum had swung too far in the
direction of plaintiffs, and reforms that restored fairness and integrity to
the system were justified. But as so often is the case in politics, the
wronged side overreached. Now the pendulum has swung too far in the opposite
direction—so far that the Legislature has usurped the lawmaking powers of
the courts, and meaningful access to justice has been eliminated for the
likes of Alvin Berry, the children of Sylvia Ann Fuller, Brian and Stephanie
Zaltsberg, and—if business and the tort reformers have their way—Ashley
Dueñez. If lower awards limit the number of cases a good lawyer can afford
to take, the remainder of cases will fall to less competent lawyers, who, if
they take a case at all, will most likely win much lower settlements for
their clients or, more likely, not win at all. When I suggest this to
Trabulsi, he insists that attorneys can attend seminars to learn how to get
around the caps. “And lose,” Mark Lanier adds.
Maybe that’s the
point. With the courts closed and the Legislature supine, the good people of
TLR will have remade the world in their image, one in which there is no
recourse for wrongdoing, one in which the powerful simply get their way.
Brian Zaltsberg, for
one, is going down fighting. As soon as he finishes college, he plans to
attend law school.