The Tortellini

U.S. Chamber Won't Disclose Donors Without a Fight

Cross-Posted from MoJo Blog:

For years, big (and often unpopular) corporations like drug and tobacco companies, have used innocuous-sounding trade associations to lobby on their behalf, without having to disclose who picks up the tab. But a new law Congress passed earlier this year is designed to put an end to the practice. Under the threat of criminal penalties, the lobbying reform act requires trade groups to disclose members who contribute more than $5,000 in a quarter and who are involved in planning or directing lobbying activities. Not surprisingly, big businesses are not happy about this, particularly the criminal penalty part.

The U.S. Chamber of Commerce and the National Association of Manufacturers fired the first shot across the bow yesterday, sending a letter to the Secretary of the Senate and the clerk of the House asking for "guidance" on how to interpret the new reporting requirements. They're essentially asking to exempt a lot of people who might otherwise be outed by the new law on the grounds that the law is an unconstitutional intrusion into their inner workings.

The chamber isn't fond of disclosure. For instance, the Institute for Legal Reform, the chamber's $40 million-a-year tort reform lobbying arm, failed to disclose to the IRS four years and millions of dollars worth of taxable spending on political races. A few years ago, it secretly bought its own newspaper in Madison County, Illinois, where it was spending millions to defeat liberal state court judges. The paper generated a regular stream of chamber propaganda that got treated like bona fide news until its owners got outed by the Washington Post. Despite the chamber's complaints about the evils of the American legal system, yesterday's letter is a pretty good indication that it will spend some time there before it ever gives up exactly how much radioactive industries contribute to its lobbying efforts.

Mississippi Just Can't Get a Break

I'm starting to think that West Virginia and Mississippi will essentially have to abolish their entire civil jury system before the U.S. Chamber of Commerce ever elevates them in their ridiculous rankings of state legal climates. The latest is out today, and while I'd rather just ignore these meaningless reports, the rankings did make me wonder what it would take to get Mississippi up from its perpetual spot on the bottom of the list. I mean, the state has passed all sorts of tort reform in recent years. It's got a tobacco lobbyists as a governor, for crying out loud. It's state supreme court was bought and paid for by the Chamber. How much more corporate-friendly can it get?

Chamber newspaper makes some news, with a subpoena

The U.S. Chamber of Commerce's newest legal newspaper, the Southeast Texas Record, got off to a rather auspicious start: with a subpoena. The Chamber secretly started the chain of newspapers a few years back in Madison County, Illinois, to help bolster its assault on the civil justice system. The ownership was eventually revealed, but the papers have continued to thrive, with the latest entry in Beaumont arriving this month.

The new paper has already made news after its editor and a reporter had a run-in with local plaintiffs' attorney Brent Coon, who just happens to think the Chamber is the root of all evil and who happened to be in the local courthouse picking a jury for an asbestos trial when the Record employees were allegedly giving potential jurors copies of the paper. Given that the paper was full of stories bashing trial lawyers and alleging fraud in mass tort cases, Coon went to the judge and accused the pair of jury tampering. Depositions are scheduled for Thursday...

Minor Trial Underway in Mississippi

This week, the second criminal trial of Mississippi attorney Paul Minor gets under way. For the most of you who don't follow Mississippi politics, Minor is a successful plaintiff's attorney who was known as "the judge maker" in Mississippi democratic circles because of his key role in raising money for progressive judicial candidates. (You can read more about him in my book.) He was also a big donor to a political action committee founded by state trial lawyers to counter the influence of big business in other local elections. (Another one of its founding donors was the former trial lawyer, state legislator and author John Grisham.)

The U.S. Attorney in Mississippi accused Minor of bribing several state court judges to secure favorable rulings in his cases. The ensuing FBI investigation and 2003 indictment of Minor and several judges came at the same time the U.S. Chamber of Commerce was funneling hundreds of thousands of dollars into judicial elections in the state. The indictment all but ensured that trial lawyers stopped giving money to the Democratic party and to its candidates in the state, giving the GOP and the business groups a huge spending advantage. (There is no other source of money for progressive candidates in Mississippi besides trial lawyers.)

The part of the story that doesn't usually make the news is that the famous lawyer Richard "Dickie" Scruggs (portrayed in the movie "The Insider"), also did some of the same things that Minor is accused of but he wasn't prosecuted, something conspiracy theorists attribute to the fact that he's Trent Lott's brother-in-law.

Minor was acquitted of some of the charges in 2005 but the jury deadlocked on the rest. In the first go-around, the U.S. Attorney had a pretty weak case. (Why the U.S. Attorney got involved at all is something of a mystery, given that the crimes involved are state misdemeanor campaign finance violations.) In one instance, the office charged Minor with bribing a judge who wasn't even on the bench when Minor paid off one of his campaign loans and another who had actually recused himself from all of Minor's cases. Given Minor's skills as an attorney, too, he didn't need to bribe judges to get favorable rulings. And his firm had already won $70 million in tobacco litigation fees, so it's not like he needed any financial help.

Anyway, the U.S. Attorney will get a chance to correct his mistakes this time, but so, too, will Minor's defense team. It will be interesting to see what happens. If Minor is convicted, Mississippi will essentially be criminalizing campaign contributions, which will leave it in a rather odd situation down the road...

Bush and the docs

I suppose I should weigh in on the State of the Union address last night, but I confess that I didn't watch it. I didn't need to hear Bush speak to know that he would beat the old malpractice horse and call for fewer "junk lawsuits" against doctors. I have to wonder sometimes whether doctors still fall for this. It's the domestic policy version of blaming Osama bin Laden for the war in Iraq.

In the run-up to the 2004 presidential election, Bush and his policy operation helped organize doctors and whip them in to a frenzy about malpractice lawsuits, promising them that support for Republicans would bring them relief from high insurance premiums and "lawsuit abuse." Some states went ahead and passed legislation making it harder for injured patients to sue their doctors. But no one ever really thought Congress would do anything about this, much less the White House, whose lobbying efforts on the med mal bills were half-hearted at best. After all, medical malpractice law is overwhelmingly a state issue, not a federal one. Even some Republicans can see that.

Doctors, though, with all their white-coat protests and threats to abandon their elderly patients to move to Guam or whatever state had a "better liability climate," provided Bush and his corporate backers with a useful tool for passing another anti-consumer bill they really did want, the Class Action Fairness Act (CAFA). Of course, CAFA had nothing to do with medical malpractice, but the doctors' protests enabled Bush to equate legal reform with helping Marcus Welby, M.D.

Remember how Bush showed up in Madison County, Illinois for a photo op with some nice doctors in 2005, just a few weeks before CAFA went to the Senate floor? The U.S. Chamber of Commerce had already made the county the poster child for class action reform, but Bush made it sound like passing it would fix the health care system. Talk about bait and switch! Doctors, though, I've come to realize, have a bit of a tin ear when it comes to politics. I do hope someday they realize that they've been had...

Isn't this a conflict?

While I was reading up on the U.S. Chamber of Commerce's latest lobbying plans, I noticed that their "Outlook 2007: State of American Business" event this Friday, featuring Commerce Secretary Carlos Gutierrez and chamber prez Tom Donohue, is co-sponsored by Congressional Quarterly.

Given the gobs of money that the chamber spends lobbying Congress ($60 million in 2004 and 2005 just on legal reform alone!), should the ever-so-balanced media outlet really be getting so chummy with these guys?? After all, it's hard to imagine CQ co-hosting an event with the trial lawyers...

The Business Lobby's 2007 Agenda

One nice thing about big corporate business groups is that they spend a lot of money telling the world exactly how they plan to spend the next year screwing over the little guy. Today the U.S. Chamber of Commerce held a press conference to spell out their priorities for the year. Naturally, even though the media have already declared business the winner in this old fight, the agenda includes a bunch of new legal "reform" initiatives.

Legislation reining in securities litigation tops the chamber's list, along with measures to limit discovery and mass medical screenings, and passing the federal asbestos trust fund. The chamber also plans to continue meddling in off-year state judicial elections and lobbying for legislative "improvements" in the "problem states" of California, Louisiana, Texas and Wisconsin. State attorney generals are still a big target, especially those who have the nerve to make contingency fee contracts with outside counsel. Read the full report here.

One thing not on the list: Defending chamber prez Tom Donohue from lawsuits over his performance on several corporate boards. Rumor has it that he's in the crosshairs of some pissed off securities lawyers this year. Read more here about their potential ammunition...

 

What Big Business gets for its campaign money.

Much of the media coverage of the nasty state judicial elections in recent years has focused on the millions of dollars in campaign contributions that have come from parties appearing before the courts. But reporters and watchdog groups, I think, are often asking the wrong questions about what the donors get for their money. While it's certainly unseemly when, as the New York Times' Adam Liptak reported (sub req), judges vote with their contributors in big cases, state supreme courts are also legal policy making bodies. Their decisions affect cases that never get heard in their chambers, as well as the fate of legislation, most notably, bills enacting tort reform. The fate of such laws can affect not just one defendant but entire industries.

So it's no surprise that the states with the most expensive judicial elections in recent years are those where the courts previously have struck down, or would likely strike down, tort reform laws, for violating constitutional protections guaranteeing equal treatment, access to the courts, and the right to a civil jury trial. (These include Illinois, Mississippi, West Virginia, Georgia and Ohio.)

Now that the U.S. Chamber of Commerce has succeeded in most of its attempts to stack state supreme courts with pro-tort reform judges, we're seeing the cynical results. Take the case of Ohio.

In 1996, the Ohio state legislature passed a law capping noneconomic damages in most tort cases at $500,000 per plaintiff. Three years later, the Ohio supreme court struck down the law as unconstitutional. The decision prompted national business groups to pour money into Ohio's judicial elections, using vicious attack ads to swing the court from more moderate to extremely conservative.

In 2004, knowing full well that it would be unconstitutional, the legislature nonetheless passed a bill that was virtually identical to the 1996 law, except it was more restrictive than the old one, with a $350,000 cap on noneconomic damages in most tort cases. But legislators seemed pretty confident that the new business-friendly Supreme Court would let it fly, even though doing so would overturn years of established precedent in the state. (The state supreme court had also struck down a cap on med-mal damages in 1991.)

Trial lawyers have challenged the new law in a lawsuit over injuries from Johnson & Johnson's Ortho Evra birth control patch. The plaintiff, Melisa Arbino, landed in the hospital in 2005 suffering with life-threatening blood clots in her brain and lungs. One of the clots remains lodged in her brain, with potentially life-threatening complications, just the kind of thing that noneconomic damages are supposed to compensate for. Arbino alleges that the patch, which had much higher levels of estrogen than regular birth control pills, caused her injuries. A federal court recently kicked the case back to the state, where the new pro-tort reform judges will get a shot at it.

This is a huge case, and practically every major industry group has filed briefs in the case. Poor Arbino is up against all of corporate America: big Pharma, the National Association of Manufacturers, the U.S. Chamber of Commerce, the American Chemistry Council, the American Tort Reform Association, the National Association of Independent Business, numerous insurance industry and hospital and medical groups, and a handful of other well-funded tort reform groups have all weighed in.

Coming to Arbino's aid, besides the Ohio Academy of Trial Lawyers, is the Ohio chapter of the National Organization of Women, the NAACP, and that big-money group, Mothers Against Drunk Driving.

What are the odds that the new court will stick by the old precedent and find the tort reform law unconstitutional? Not much, I'm afraid. According to Liptak, Ohio plaintiff's lawyers won only 17 percent of their cases after the conservative takeover, compared with 64 percent before 2003. If the new damage cap is allowed to stand, most of those cases probably won't even make it to the court to lose there. The chamber's money will certainly look like a wise investment indeed.

Tiny Tim and the "tort tax"

Well, I guess I didn't have to worry so much that the mid-term elections would dry up the well of material for this blog. The U.S. Chamber of Commerce sure hasn't missed a beat. Click here to listen to its latest radio clip on how "sue-happy plaintiff lawyers" are ruining Christmas...

Following the blue-ribbon money

New York Times columnist Floyd Norris has a great post on his blog about the money behind the blue-ribbon Committee on Capital Markets Regulation that's pushing to relax corporate governance regulations. Turns out that the panel's biggest funder is none other than Hank Greenberg, the former and longtime CEO of the world's largest liability insurer, AIG. 

Greenberg, as you may know, has also been one of the nation's richest and meanest tort reformers, dumping tons of money into groups working for lawsuit restrictions, including the U.S. Chamber of Commerce and the Manhattan Institute. In 2003, before he had to resign in the face of business fraud allegations, Greenberg said publicly that his company and other investors should stop buying municipal bonds in states that refuse to pass tort reform--an enormously powerful threat given the size of AIG and its affiliates (some run by Greenberg's sons).

A year later, he caught fire for referring to plaintiffs lawyers as terrorists. Given his funding for the "blue-ribbon" panel, its calls for more limits on shareholder lawsuits and corporate investigations by state attorney generals should surprise exactly no one.