Tuesday, 25 October 2005
November 2005 Issue...
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&mdash 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.