The threat from attack attorneys is no joke

Walter Olson

MANY OF US have wondered over the years what the difference is between satire and reality in the American legal system. I have the answer: one year, 11 months, and 10 days. Let me explain.

On Aug. 3, 2000, The Onion--America's favorite satirical newspaper--published an article entitled, "Hershey's Ordered to Pay Obese Americans $135 Billion." This piece of comic fiction reported that the chocolate company had been sued by state attorneys general in a class action over the lack of warnings on its product, its marketing of products to children, and its having--most insidiously of all--artificially spiked its products with nuts and crisped rice to keep people addicted. The jury, by this satirical account, had responded by granting an enormous award. "This is a vindication for myself and all chocolate victims," said one of the plaintiffs. In addition, the company was ordered to place a warning on all of its products reading: "The Surgeon General has determined that eating chocolate may lead to being really fat."

Well, on July 24, 2002--less than two years later--the wire services reported that Caesar Barber of the Bronx, N.Y., was filing a lawsuit against McDonald's. (He soon was joined by a number of other plaintiffs suing Wendy's, Burger King, and other fast food chains.) Barber had for years been wandering into McDonald's restaurants, apparently under the impression that they served health food, and had been receiving hamburgers and French fries instead of celery stalks. He had no idea that he could get fat from such products and, sure enough, he developed heart problems and other medical conditions associated with obesity.

Although many of us greeted this lawsuit with incredulity, it was taken quite seriously by some veterans of the tobacco litigation that had succeeded so gloriously a few years earlier. Here is a law professor from George Washington University quoted in Time: "A fast food company like McDonald's may not be responsible for the entire obesity epidemic. But let's say they're five percent responsible. Five percent of 117 billion dollars is still an enormous amount of money." Northeastern University organized a conference on how to sue food makers that was attended by scores of lawyers, one of whom--a recent Rutgers graduate--was quoted as saying: "It's a very important and pressing issue and its outcome will be with us for years to come. I'm hoping to be able to build a career out of this issue." Lawsuits against fast food restaurants also were taken seriously by The New York Times, which defended them as socially beneficial. Its general argument seemed to be: We're not saying these lawsuits should win, but what can they hurt? We used to know the answer to that question. We knew that they could hurt a lot.

In Texas, a woman who found out that her dentist husband was cheating on her ran him over in a Hilton parking lot. We used to see clearly that it would be wrong in such a case to sue Hilton hotels for negligent training of employees-thus for making it too easy for wives to run over their cheating husbands. Yet, that is what happened.

Speaking of parking lots, the proprietor of one in Framingham, Mass., was sued after a thief broke into the lot, stole a car, drove off at high speed, and crashed. Indeed, the family of the thief sued the lot owner for negligently making it too easy to steal the car.

A California man who passed out drunk on the railroad tracks sued the Union Pacific railroad because its engineer and conductor did not sound the train's horn after seeing him--they were too busy trying to engage the emergency brakes. On the other coast, a woman who lay down on the subway tracks and was hit by a train--police concluded that she had been trying to kill herself--was awarded $14,100,000 by a New York City jury. Not only did we used to know that such lawsuits are wrong--once they would not have been imaginable.

Throughout most of American history, we understood quite clearly that litigation is, for most people, one of the most expensive, unpleasant things that ever can happen to them in their lives. It is incredibly expensive, not only monetarily, but in the time and energy it absorbs. It is an assault on the reputation of at least one party, and often both parties, as charges are leveled back and forth. It is an assault on privacy, forcing those involved to answer questions under oath, involuntarily, about what they have done. It is a breach of the social peace. It is something that tends to corrupt the participants into doing things that they would not do otherwise. So, while it was recognized that litigation sometimes is necessary as a last resort, it was seen as just that--a last resort. If you accept the idea that litigation ought to be a last resort--and ought to be embarked on only in strong cases--you will want to arrange the roles of your legal system in a way to discourage weaker cases from going forward. We do not do this today. In fact, we intentionally have dismantled such roles.

In almost every country but the U.S., legal systems incorporate a "loser pays" principle. If you sue someone and lose, you cannot just walk away. You have to contribute something to making the victim of the lawsuit whole for what he or she has paid. We had that same principle in our legal system throughout much of American history, but it gradually died out. We also had procedural rules discouraging ill-conceived litigation. Moreover, we had rules of legal ethics prohibiting lawyers from stirring up litigation for their own benefit. However, something changed during the 1960s and 1970s. It started in the world of ideas--in the universities and the law schools. Litigation came to be seen not as a necessary evil, but as a positive good. This view can be identified with the career of consumer advocate Ralph Nader and with many of the professors who began to dominate elite law schools during that period.

According to this new view, litigation deters wrongful conduct: The more lawsuits that are filed, the more people will behave carefully. Litigation also came to be seen as a way to redistribute wealth from those who have it to those who need it. From this perspective, the more litigation there is, the more redistributive justice the courts can impose on society--and who can be against justice?

From being a last resort, then, litigation came to be seen as socially beneficial. Lawyers who advertise with billboards saying, "Sue someone and let's see how much money I can get for you," are seen not as sleazy, but public-spirited.

Given this new view of litigation, roles discouraging lawsuits ceased to make sense. This is why we began changing the roles to make it easier to sue. We liberalized the rules of discovery--those governing how a person can demand information from his opponent. We opened the door to the fishing expedition: "I don't know for sure whether you have done me any legal wrong, but please hand over the contents of your filing cabinets so that I can find out." We made it much easier to organize class actions, by which most Americans periodically are dragged into lawsuits as plaintiffs without even knowing it. We dropped many of the rules against attorneys stirring up litigation, just as we weakened traditional legal principles such as "assumption of risk." Here is what that means: If you go to a baseball game and get hit on the head by a foul ball, the old courts would have said that you have no grounds to sue because everyone knows that foul balls happen at baseball games. This no longer makes sense, however, if the point of lawsuits is to encourage ballclubs to be careful about where they let their players send their foul balls--and to redistribute wealth. So out it went, at least in many courts.

All these developments were bound to give us more litigation and, sure enough, they did. The share of America's gross national product devoted to litigation has tripled over the last 50 years. We spend two to three times more on it, in terms of percentage of GNP, as other industrial democracies. The figure for how much is spent annually on liability insurance in the U.S.--a relatively easy thing to measure--is now $721 per citizen, which comes to over $2,800 per year for a family of four. So, are we getting our money's worth?

Everyone has heard about the medical malpractice crisis that is driving doctors out of high-risk fields like obstetrics and neuro-surgery. A Harvard University study of New York hospitals that is cited by both sides in this controversy is revealing. On the one hand--and this is the part that has been best advertised--it found that, in the majority of cases where people are injured by negligent care in a hospital, they never sue. True enough. Yet, the same study found that, in the majority of cases where people do sue, experienced reviewers could not identify any negligence. So, you have a lot of negligence with no lawsuits and a lot of lawsuits with no negligence. Is the latter somehow supposed to balance out the former?

The Harvard study also found that a great many of the lawsuits filed where no negligence was identified nonetheless were successful in obtaining money. Even though we could go on at great length about the monetary costs of lawsuits, those costs are not, in the final analysis, of prime importance. Indeed, we are a very rich country and can afford to spend a small percentage of our GNP on litigation, if only for the entertainment value. The nonmonetary costs, however, should give us pause. For instance, at the heart of the medical malpractice crisis is the demoralization that spreads in a profession like medicine at the knowledge that being the best possible physician will not save an individual from being sued. Most doctors, I think, would be willing to pay high insurance premiums if they could have confidence that the legal system works rationally in identifying the physicians who ought not to be practicing. Few of them, I believe, have that confidence.

Warning label hysteria

Think of the knots that people tie themselves into, attempting to keep from being sued. We all have seen crazy warning labels, and each of us has a favorite. There is the one on an artificial fireplace log, "Caution: Risk of Fire"; the one on a bag of peanuts, "Warning: Contains Nuts"; and the one on a baby stroller, "Warning: Remove Child Before Folding." My favorite is the warning on the cardboard windshield sunscreen that keeps the car from getting too hot in the summer: "Do not drive with sunshield in place." This unhealthy level of caution infects many areas of our national life. Consider the unwillingness of most businesses to give honest job references. That was one factor behind the recent case of the alleged killer nurse in Pennsylvania and New Jersey, who bounced from hospital to hospital, usually leaving under suspicion. The hospitals had not even bothered calling each other, because they knew they would not get honest answers due to fears about lawsuits.

This revolution in the legal system has begun to transform American politics. The part of this that gets the most press is the litigation lobby--"big law," if you will. It is among the three or four most important financial bases of the Democratic Party, and also contributes to some Republicans. However, this financial involvement in politics merely was a prologue to a more disturbing trend. In recent years, litigation has evolved into a kind of substitute for politics.

Until quite recently, a group of Americans who saw the need for some sweeping new law would march in the streets, organize a letter-writing campaign to Congress or the state legislature, or try to replace congressmen or state legislators with candidates sympathetic to their cause. That was how politics was done. Today, though, politics is not necessary. If you want gun control or tighter control over tobacco or more environmental regulations, you simply can call 1-800-LAWSUIT. Operators will be standing by around the clock, and once you agree to give the attorneys a share of the monetary reward, you can lean back and watch them go to work.

Take tobacco, for instance. Despite years of agitation, Congress and the state legislators had not acted rapidly enough for antitobacco activists who wanted an increase in taxes on cigarettes and more regulation of advertising. So, what happened? We saw private attorneys flying around the country in their Learjets, signing up state attorneys general and brokering a settlement that obtained $246,000,000,000 for state governments and about $15,000,000,000 in fees for the lawyers. The settlement also resulted in the adoption of regulations that the elected branches of government had been unwilling to enact--as well as what amounted to a new tax on cigarettes (a tax increase unlike any other tax hike in that it did not originate in a legislature).

Soon we saw this same process of bypassing the political system being tried in other areas as well. American Lawyer magazine published an article on the origins of gun litigation, in which it interviewed the private lawyer who had dreamed it up and flown around the country selling it to mayors. The article explained that it fit his thinking--that the plaintiff's bar should act as a "de facto fourth branch of government, one that achieved regulation through litigation when legislation failed." Richard "Dickie" Scruggs, the private attorney who organized the tobacco litigation (and whose firm got an estimated $1,000,000,000 for it), was profiled in time, which reported as follows: "Ask Scruggs if trial lawyers are trying to run America, and he doesn't bother to deny it: 'Somebody's got to do it.'"

What are the differences between this newly contrived fourth branch of government and the three branches that the Founders established in the Constitution? To begin with, there is the manner of selection. Those in the fourth branch do not have to worry about pesky elections--or even about getting confirmed by the Senate, as Federal judges do. Nor do they have to be concerned about the safeguards of transparency that are built into our political system. Much of their activity takes place behind the scenes. Indeed, these cases nearly always are meant to be settled instead of tried, and the public is not admitted into the negotiation room. If the public does not like the results, there is, frankly, not much that can be done about it. This is highly ironic: The proclaimed goal of trial lawyers is to hold every profession and industry accountable for their actions, yet they have created a litigation-based policymaking process in which they themselves almost entirely are unaccountable.

There are increasing reports about how environmentalists are beginning to place their trust in global warming lawsuits against the auto industry, electric utilities, and the like. Racial reparations litigation is beginning to absorb much of the energy that used to go into political agitation for civil rights. This is is occurring in so many areas now that journalist William Greider has proposed that trial lawyers have emerged as the natural leadership of the left in America today. He may be right.

After years of refusing to govern our trial lawyers, it seems they have decided to take it upon themselves to govern us. It is not too late to do something about it. This, however, is not a problem that can be solved overnight by a quick fix such as tort reform legislation. The ideas that underlie the new legal system and way of governing were born in the academy. This is where our judges and lawyers learned them. These ideas are being spread among the general public by the system itself. For instance, these lawsuits teach us again and again the principle that some distant institution with a lot of money is responsible for each individual's problems. The first step in turning things around is to come to a real understanding of exactly what we did wrong in changing the rules of our legal system and handing the trial lawyers so much power.

Until we reverse this process, it will remain the rule that if you want to hurt someone in America, you may not be able to accomplish it with impunity using a scalpel or a car. However, do it with a lawsuit and no one will lay a glove on you.

Walter Olson, a senior fellow at the Manhattan Institute, New York, is author of several books. His latest is The Rule of Lawyers: How the New Litigation Elite Threatens America's Rule of Law. This article is adapted from a lecture given at Hillsdale (Mich.) College.

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