An Examiner Editorial Special Report:Trial lawyers’ lobbyists seeking special favors from Congress

Washington special interests don’t always need traditional pork barrel to get rich through congressional action. Brief or obscure provisions in bills that often run to hundreds of pages can do the trick just as well as a law directing a government check or contract to a favored recipient.

That reality is what made so telling an observation from House Speaker Nancy Pelosi, D-CA, regarding tense negotiations between her chamber and the U.S. Senate on the $787 billion economic stimulus package signed Tuesday by President Barack Obama.

Pelosi said: “Around here language means a lot. Words weigh a ton…. We wanted to take all the time that was necessary to make sure it was right."

Pelosi’s remark also points to the reason why the U.S. Chamber of Commerce’s Institute for Legal Reform (ILR) last summer started warning against what it called “trial lawyer earmarks” - provisions (sometimes even entire laws) designed to encourage lawsuits on issues in which certain attorneys specialize.

Trial lawyers are among the most prolific contributors to Members of Congress, with the American Association for Justice (formerly known as the Association of Trial Lawyers of America) alone giving Democratic congressional incumbents and challengers more than $2.5 million. A mere four percent of the group’s contributions went to Republicans.

In return for the campaign dough, senators and representatives insert the earmarks or other legislative language that creates new litigation opportunities for the enterprising trail lawyers. And round and round it goes, all at the taxpayers’ expense.

To help taxpayers keep track of this process, ILR created a website – which premiered last July in conjunction with an illustration first published by The Washington Examiner – to dramatize and track the legislative priorities of the increasingly aggressive class-action trial lawyers (http://www.triallawyerearmarks.com/).

As the Examiner reported at the time, “stealth” provisions in various bills in the last Congress encouraged filing of more class-action lawsuits relating to asbestos exposure (even after a huge scandal had erupted involving tens of thousands of false asbestosis claims), against cruise ship companies, and even to collect “disability” benefits for people who merely appear to be disabled but who actually have no real impairment!

ILR now is busily updating its web site for the new Congress that came into office last month. With even larger majorities for lawmakers friendly to the plaintiffs’ lawyers that often are their heaviest campaign contributors, lobbyists for the trial lawyers bar are actively pursuing new earmarks.

And they are succeeding. The economic stimulus package, for example, contained a provision expanding class-action lawsuits on medical records. Another new bill recently introduced in Congress would eliminate arbitration between consumers and creditors and replace it with court suits. And that’s just the start.

Working with IRL, The Washington Examiner is actively tracking the many ways trial-lawyer lobbyists and their congressional buddies are trying to influence legislation to put more money in the pockets of class-action attorneys who in turn make lots of campaign contributions.

Three that are already prominent in the 111th Congress are proposed legislation on whistle blowers in the workplace, paycheck fairness and whether greenhouse gas emissions constitute a workplace danger. Read on for more details.
 

Part 2

Blown whistles, or a siren song for business?

Everybody likes people who blow the whistle on government waste and fraud. Whistleblowers are heroes. So, why would anyone object to a bill giving whistleblowers more reason to be vigilant?

Such good-intentioned, pro-whistleblower sentiments seem to explain the impetus behind proposed changes to the federal government’s False Claims Act. What they hide is the huge profit motive for enterprising lawyers, and the huge danger to mom-and-pop businesses and to charities as well.

The Examiner reported last summer that the changes would expand the definition of four words – “government money or property” – to cover any money “to be spent on the government’s behalf or to advance a government program.”

In practice, that means that a third-party claiming to be acting on behalf of taxpayers could sue any recipient of money that began as a government grant – no matter how many times the money changed hands in the meantime.

(Under the terms of the Act, the government can collect damages of three times the original amount in dispute, plus up to $11,000, for each individual “false claim,” and the outside party that brought the suit could collect 30 percent of the government’s take.)

So if a hardware shop “overcharges” for the widgets it sells a charity funded by a local agency that received a federal grant, well…suddenly, the hardware shop could be dragged into court and charged with fraud.

As it turns out, though, the proposed changes to the False Claims Act go much farther than just those four words. John T. Boese, author of a two-volume text regarded by law schools and courts since 1993 as the leading authority on the subject of the False Claims Act, wrote an analysis last February that outlines a host of other problems with the new proposals.

First, Boese noted that the statute of limitations on such lawsuits effectively would be extended, in certain circumstances, to decades – far longer than for almost any other violation. The mob-busting RICO (Racketeer Influenced and Corrupt Organizations) statute, for instance, has a four-year statute of limitation.

The extended limitations for the Fair Claims Act would mean that every charity, university, or small business that handles any government money would face an administrative nightmare of record-keeping for years on end, just to guard against any retroactive lawsuit some third party might dream up.

Other proposed changes effectively would eliminate a number of grounds for dismissing such lawsuits on the front end and force defendants to share otherwise privileged business information not just with government investigators but with third parties – even though the vast majority of such third-party lawsuits ultimately are dismissed for lack of merit.

Perhaps worst of all, one proposal would encourage government employees themselves to file third-party False Claims suits and profit from them, rather than just reporting their findings to their agency for review.

Boese writes that the result would be defendants “sued by a government employee using government information for personal gain. That is toxic…. The amendment practically encourages auditors, investigators, and regulators to file such suits…. [But] government employees should not be permitted to receive a financial windfall for merely doing their jobs.” --- Quin Hillyer
 

Part 3

Endangered by “Endangerment”

Businesses worried about lawsuits are keeping wary eyes not just on Congress, but on the executive branch, too. New policies adopted by executive order or regulatory fiat, just as well as new legislation, can change the entire field of play in courtrooms.

Consider what at first glance seems to be a mere technical judgment about greenhouse gas emissions that awaits a decision by new Environmental Protection Agency (EPA) administrator Lisa Jackson.

“The most critical decision Lisa Jackson will have to make … is whether to affirm or reject a finding that greenhouse gas (GHG) emissions from new motor vehicles endanger public health or welfare,” said Marlo Lewis, senior fellow of the Competitive Enterprise Institute. “The compliance and administrative burdens of GHG regulation under the CAA could vastly exceed in cost, scope, and intrusiveness any of the climate bills the U.S. Senate has so far rejected or declined to pass.”

And that is just the regulatory burden of an “endangerment” finding by EPA. What corporate executives and small business owners fear more is what trial lawyers could do with it.

Even without an endangerment finding, the village of Kivalina, Alaska has filed a lawsuit against Exxon/Mobil and other energy companies alleging that they are responsible for “global warming” which in turn, they say, is causing melting Arctic sea ice to melt and wash the entire village into the sea. Villagers are asking for hundreds of millions of dollars in compensation.

Joanna Lichtman of the Global Climate Law Blog explained last September: “Kivalina is only the latest lawsuit to raise the complex question of what role regulatory findings and conclusions should have in [lawsuits in which] companies are being alleged to have caused or contributed to property damage and personal injury from their greenhouse gas emissions. Regulatory determinations that carry a government seal of approval and appear to be reached by significant research and study can be very persuasive and influential for jurors asked to resolve complex questions of science.”

In short, if the EPA rules that car exhaust “endangers” public health, aggressive lawyers might start using that determination to blame automakers and gasoline companies for all sorts of lung or respiratory problems, meaning the spate of lawsuits could make the infamous asbestos-related litigation seem like child’s play.

The real “endangerment,” then, could be to the jobs of workers those companies employ. --- Quin Hillyer
 

Part 4

When Paycheck Fairness isn’t fair

When all of the outlets of establishment opinion were celebrating the very first piece of legislation that Barack Obama signed as President of the United States -  the Lilly Ledbetter Fair Pay Act -  more than a few small business owners were sighing in relief that a harshly anti-employer piece of companion legislation had been stripped from the bill.

But that companion legislation, the Paycheck Fairness Act, isn’t dead yet, not by a long shot. The bill would open so many ordinary business decisions to second-guessing by clever attorneys that entrepreneurs would be rightly reluctant to hire new workers.

The House-passed version of Ledbetter included the Paycheck Fairness Act, but the Senate took it out, fearing that its presence would jeopardize passage of Ledbetter. But Senate and House backers of Paycheck Fairness promise to bring it back.

Critics say Paycheck Fairness is dangerous on two levels. First, the bill would enable trial lawyers to shake down businesses for awards many times as expensive as the wages in dispute.

Because the bill removes all limits on both compensatory and punitive damage awards, the proposal provides big incentives for more lawsuits.

Second, it would make businesses liable for lawsuits claiming unequal pay for the same job and experience level, plus for litigation claiming employers failed to “adopt [any] alternative practice” that would help equalize pay between men and women.

That’s even in cases where differences in pay would otherwise be defensible because of the nature of the jobs or the specific employees’ levels of experience.

So, if a trial lawyer could convince a jury that an employer could have found a way to equalize pay if only he looked hard enough, his company could be hit with an unlimited damage award that bankrupts the firm and end the jobs of everybody working there.

Even The Washington Post editorial board, which supported the Ledbetter Act, opposed the Equal Pay Act for just this reason: “It also potentially invites too much intrusion and interference [by the courts] with core business decisions.”

It is one thing to demand that businesses pay men and women equal amounts for doing the same jobs. But it’s another thing entirely, an absurd notion, to make profiteering lawyers the tribune for determining how a business should be organized in the first place. --- Quin Hillyer