In this issue...

Right to Arbitration Under Attack

œPre vs.œPost-Judgment Interest

TLR Proposes Fair Share Act

TLR Endorses Justice Margaret Mirabal

TLR™S Other Endorsements

The Stakes Have Been Raised

Irresponsible Litigation is a Threat To Every Texas Family

OUR RIGHT TO ARBITRATION IS UNDER NATIONWIDE ATTACK.

For almost 100 years, arbitration has played a valuable role in civil justice. This streamlined procedure removes much of the time, uncertainty, and expense when used as an alternative to a lawsuit filed in court.

Arbitration is a contractual right that should be preserved. In repeated opinions, the U.S. Supreme Court has upheld its validity since Congress wrote it into law in 1925.

This right is under nationwide attack by a small group of plaintiffs™ lawyers and their allies. The assault started in California, moved into Texas and other states, and is in full swing in Congress.

Texas lawmakers are studying arbitration provisions in standard contracts relating to the purchase of many goods and services, from cell phones to homes. Arbitration is a pocketbook issue for everyone. It saves consumers money. But for trial lawyers, it reduces the chance of receiving

excessive fees. That is why they are set on taking away your right to arbitrate.

To the extent that Texas law applies, the Texas Legislature has already passed safeguards to protect consumers from unfair arbitration provisions. Those safeguards include:

• Unfair arbitration agreements are unconscionable.

   

• Arbitration agreements involving individuals acquiring property, services, money or credit in an amount of $50,000 or less must be signed by each party and each party™s attorney.

   

• Arbitration agreements relating to personal injury claims must be signed by each party and each party™s attorney, regardless of the amount of the claim.

The major costs involved in litigation are the cost involved in the discovery process, and cost of attorney fees. In arbitration, the discovery process can be streamlined and limited to relevant materials. Arbitration can reduce attorney fees since it is often completed in months as opposed to years. This means arbitration often costs a fraction of what it would cost to resolve similar issues in court.

In arbitrations administered by the American Arbitration Association (AAA), consumers pay only $125 as an initiation fee in cases under $10,000, and $375 in cases under $75,000. These fees are refundable if the case is settled prior to the arbitrator taking action.

If the Legislature wishes to strengthen guidelines for all arbitrations, they could consider issues relating to cost and venue.

• While there is no evidence that initiation fees for arbitrations are generally prohibitive, the Legislature could cap such fees at or less than the amount charged for filing lawsuits. Initiation fees charged over that amount would be paid by the business entity in the dispute.

   

• And again, while there is no evidence that arbitration venues are generally inconvenient to consumers, the Legislature could require arbitration covered by Texas law to take place in the county where the consumer lives, where the property is located, or where the transaction occurred.

The right to contract for arbitration must be preserved. As long as arbitration agreements are fair and entered into knowingly, Texans deserve this cost-effective option to litigation in the courts.

BACK TO THE FUTURE: œPRE VS. œPOST-JUDGMENT INTEREST.

We are all too aware of the fact that many lawsuits take years to resolve. To help mitigate that problem, Texas law allows compensation to plaintiffs who win lawsuits for the time-value of the money that they are owed between the date of their injury and the date of the judgment. This is known as pre-judgment interest.

If a plaintiff is injured and suffers $100,000 in lost wages between the time of her injury and the time of her trial, the law allows her interest on that $100,000. That is as it should be.

In some cases, however, interest is being awarded on damages that have not yet even been incurred. This is called pre-judgment interest on future damages. Future damages are damages that the plaintiff is expected to incur after the judgment. Consequently, a plaintiff has not been out of pocket any of the money she is awarded as future damages during the lawsuit. Thus, there is no reason to award compensation for the time value of money for the future damages.

Other provisions under Texas law require that defendants pay interest on the money that they owe plaintiffs between the time of the judgment and the time that they actually pay the judgment. This is called post-judgment interest and is another area where good intentions have resulted in some unfair consequences.

The problem with the current Texas law is that post-judgment interest is set at a fixed rate instead of actual market interest rates. That can cause plaintiffs to be overcompensated or undercompensated depending on whether current market rates are above or below the fixed rate mandated by statute.

TLR has developed legislation addressing these problems. We would correct the pre-judgment interest problem by limiting the recovery of interest to damages that have already occurred. And we would address the postjudgment interest problem by basing that interest on the actual market interest rates.

These two reforms will restore the fairness and common sense that was originally intended in our laws regarding interest awards on judgments.

TLR PROPOSES FAIR SHARE ACT TO CORRECT THE CURRENT UNJUST ALLOCATION OF RESPONSIBILITY.

In a fair system of civil justice, the courts would assign financial responsibility to defendants in the same proportion that they contributed to the injury to the plaintiff. Unfortunately, current Texas law can prevent juries from assigning responsibility to certain parties “ even when those parties are the most responsible.

This means that many times the defendants, who are perhaps only partially responsible for an injury, are assigned most or all of the financial responsibility. Examples of the types of parties excluded from responsibility are debtors in bankruptcy, unknown or fugitive criminals, or persons whom the court does not have jurisdiction over, such as foreign nationals.

In many cases, jurors actually hear evidence about the responsibility of the excluded parties, and learn later in the jury room that they cannot hold those parties responsible. This can confuse and frustrate jurors and undermine their ability to reach a just verdict based on the evidence.

Texas should fairly apportion responsibility to all responsible parties. Our reform passed in 1995 says that in most cases, a defendant can be held liable only for its proportionate share of the damages, equal to its share of fault. Unfortunately, that reform excluded certain kinds of parties. There is no sound reason for those exclusions.

TLR™s proposed legislation would allow juries to consider the fault of all parties who are responsible for a plaintiff™s injuries, even those that cannot technically be joined in the lawsuit.

It amends Chapter 33A of the Civil Practice and Remedies Code to allow defendants to request that the court allow the jury to consider all potentially responsible parties when it assigns fault and financial responsibility.

TLR ENDORSES JUSTICE MARGARET MIRABAL FOR THE TEXAS SUPREME COURT.

Before TLR and the broad tort reform coalition started engaging in the critically important races for the Texas Supreme Court, assuring that competent, conservative and honest men and women were elected to that court, we all suffered the price of a liberal activist court. The court™s decisions in the 1980s tilted heavily in favor of outcomes that benefited the same personal injury lawyers that were bankrolling their campaigns. Those decisions by the old Supreme Court were result based, not law based.

We must remain vigilant to ensure that we don™t return to the days when 60 Minutes declared œJustice is for Sale in Texas. We must continue to actively promote candidates who are committed to a fair and balanced system of justice. That is why TLR PAC, the political arm of TLR, has endorsed five outstanding jurists who are running this year for election or re-election to our Supreme Court. One of those five is Judge Margaret Mirabal for Supreme Court Place 4.

Dick Trabulsi, President and Chairman of Legislative Affairs for TLR commented, œTLR and our allies in the legislature have given careful consideration to the new civil justice laws that we are proposing. We need experienced judges like Margaret Mirabal who will follow those new laws as they are written and who will not legislate from the bench.

Judge Mirabal is an experienced jurist who is currently serving her 14th year as a Justice on the 1st Court of Appeals in Houston. She has been a leader in mediation law, which can often resolve disputes in a fraction of the time and expense of a trial. The Dallas Morning News wrote, œJustice Margaret Mirabal offers broad judicial experience and high ratings from legal organizations. Justice Mirabal is particularly knowledgeable in the area of dispute resolution.

Justice Mirabal graduated from the University of Texas at Austin in 1972 and from the UT Law School in 1975. She is consistently ranked among the top justices in Texas and has authored more than 1,500 appellate court opinions.

œThis November, it is critically important that every TLR supporter turn out to vote on every race, particularly the Supreme Court positions. We are pleased to have a candidate like Judge Margaret Mirabal to become a justice on our highest civil court in Texas, said Richard W. Weekley, TLR Chairman and CEO.

This article is a political advertisement paid for by Texans for Lawsuit Reform PAC, 1110 North Post Oak Road, Suite 315, Houston, Texas 77055.

A REVIEW OF TLR™S OTHER ENDORSEMENTS FOR ELECTION TO THE TEXAS SUPREME COURT.

In addition to Justice Mirabal who is highlighted on the preceding page, TLR endorses these outstanding candidates for the Texas Supreme Court. Each of these Judges has proven their commitment to interpreting our laws fairly for both plaintiffs and defendants. We honor their commitment to following our laws as written and not attempting to legislate from the bench.

Judge Dale Wainwright is running for Place 2, which is being vacated by retiring Justice Deborah Hankinson. Judge Wainwright was appointed to the district court by Gov. George W. Bush in June 1999 and won election to that court in November 2000. He has ruled on more than 3,000 contested motions and resolved over 3,000 lawsuits, and has never been reversed by appellate courts.

Justice Wallace Jefferson is seeking election to an unexpired term. Gov. Rick Perry made history last March when he appointed Mr. Jefferson, the first African American to serve on Texas™ highest court. Justice Jefferson believes that it is a judge™s role to interpret the law, not make it. While in private practice, he argued “ and won “ two cases decided by the U.S. Supreme Court.

Justice Michael Schneider was appointed to the Supreme Court in September 2002. He replaced retiring Justice James Baker. He is now seeking election to a full term. For the five years prior to joining the Supreme Court, Justice Schneider served as chief justice of the First Court of Appeals in Houston, which hears civil and criminal appeals from all state trial courts in a 14-county region in and around Harris County.

Chief Justice Tom Phillips was appointed Chief Justice of the Supreme Court on January 4, 1988, and was subsequently elected in 1988, 1990, and 1996. Prior to serving on the Texas Supreme Court, Justice Phillips was appointed by Governor William P. Clements as judge of the 280th District Court in Harris County. Justice Phillips has been a leader in the effort to reform the process by which Judges are selected.

This article is a political advertisement paid for by Texans for Lawsuit Reform PAC, 1110 North Post Oak Road, Suite 315, Houston, Texas 77055.

THE STAKES IN THE BATTLE FOR TORT REFORM HAVE BEEN RAISED.

Recent news reports detail how lawsuits over œtoxic mold are causing many Texans™ homeowner™s insurance rates to double. Others are being denied coverage at any cost or are having trouble selling their homes. This is happening in spite of the fact that there is no scientific evidence linking mold to the numerous illnesses that trial lawyers claim it causes.

This news comes on the heels of reports of a crisis in the health insurance and healthcare industries. Meritless malpractice lawsuits and skyrocketing awards are increasing the already high costs of health insurance. Rising malpractice insurance costs are forcing many doctors to quit their practice. A flood of lawsuits threaten to close even well-run nursing homes.

AN INEVITABLE TARGET.

Believe it or not, the next type of mega-lawsuit being shopped around by plaintiffs™ lawyers is a class-action suit against fast food companies for making people fat!

There is no end to the types of lawsuits that can be dreamed up by those few lawyers who are willing to put profit over legal ethics. These lawyers have set up a perpetual lawsuit industry to constantly manufacture new types of lawsuits. Until we achieve comprehensive reform, those lawyers will always find new industries to victimize.

You™ve already joined the effort to reform our civil justice system, but could you do a little more? Would you ask another person to join TLR? Please e-mail us at tlr@tortreform.com or call us at 713-963-9363 and provide us the name and contact information of anyone who may want to join.

We™ll provide them information about TLR along with a supporter response form. There are no dues or membership fees. The only requirement is a willingness to help fix lawsuit abuse in Texas.

IRRESPONSIBLE LITIGATION IS A THREAT TO EVERY TEXAS FAMILY.

Lawsuit abuse is a disease spreading into every sector of our economy “ destroying people™s lives, costing them their jobs, driving up their purchasing costs, and devouring their savings. It™s driven by greed, the absence of legal ethics, and an œanything goes mentality among a small but powerful group of plaintiffs™ lawyers.

The disease is growing, in part, as a result of the millions of dollars in political contributions that the same few lawyers are funneling into the campaigns of candidates who oppose tort reform and support expansive causes of action.

This campaign season, Texans should take a very close look at who is funding candidates. Voters should be wary of any candidate that is receiving a significant portion of their total contributions from personal injury trial lawyers.

More than 10,000 Texas Democrats, Independents and Republicans, from 1,101 trades and professions, who live in 599 different Texas towns and cities, have joined our effort to bring fairness and balance to the our civil justice laws “ and we all agree that lawsuits are needed against corporate wrongdoing and other injustices.

But we also believe that lawsuits should be driven by justice, not greed. We believe that much litigation has become purely predatory in nature.

If you are willing to join the fight to fix the lawsuit abuses that threaten our healthcare, pocketbooks and the future of the Texas economy, we need you now. Please visit us at http://www.tortreform.com or call us at 713-963-9363 today.