Celebrating a victory, preparing for next battle

More than 300 TLR members and guests came together October 11 in Houston to celebrate civil justice reform successes in the 1995 Texas legislative session and to begin gathering momentum for the 1997 session.

One of the guests was Lt. Governor Bob Bullock, who was a major force in passing the muchneeded tort reform legislation.

"We set aside party differences and did what was best for Texas," Bullock told the crowd. House Speaker Pete Laney, also a key figure in the cause of civil justice reform, thanked the TLR supporters for their dedication and hard work.

"An undertaking of that magnitude takes a team effort," Laney said, "and we sure had a good team!"

TLR President Dick Weekley, described by Lt. Gov. Bullock as "the Mr. Smith who went to Austin," acknowledged the other groups which, with TLR, made up the reform-support team. "TLR created the framework for Texans to communicate with their legislators. Our legislators listened, then stood up and voted the wishes of their constituents," Weekley said. "And for that, we are extremely grateful."

Governor George W. Bush was unable to attend the event, but made the following statement: "Without the hard work of Texans for Lawsuit Reform, I would have never had the opportunity to sign eight historic tort reform measures in my first year as governor. Texas is a better place because of your efforts."

Paul Howell, TLR's statewide finance chairman, thanked the other members of the state legislature who were in attendance for their support of the tort reform effort. Leo Linbeck, TLR's chairman, stepped out of his master-of-ceremonies role to express appreciation for the TLR staff, who kept the business of the organization on track and on schedule.

Reforms already stimulating to our Texas economy

Although much of the press attention has been focused on the rollback of insurance rates recommended by the Texas Insurance Commissioner, there's evidence the new lawsuit reform laws already are working to strengthen the state's economy.

Tom Moeller, manager of Mobil Oil Corporation's Beaumont Refinery, said he already sees evidence that his corporate management recognizes the improved business environment. "Our executive committee recently approved a $180 million project to construct a paraxylene unit as a joint venture between the chemical company and the refinery," Moeller said "These recent changes in the civil justice system in Texas had a direct impact on the decision to build this new facility in Beaumont."

Another example comes from the general counsel at Houston's St. Luke's Episcopal Hospital, Teska Moreau, who found the news of our reforms was being noted as far away as London, where the hospital's insurance carriers are headquartered.

"After reviewing the eight major reforms that recently passed in Texas," Moreau said, "paying particular attention to those regarding joint and several liability, London agreed to a significant reduction in our (professional liability) insurance premiums. These are substantial savings that can now be used to help St. Luke's further fulfill our mission and commitment to our community."

Moreau cautioned Governor George W. Bush in a letter that "one of the concerns the London underwriters had about Texas was the threat of repeal of all the good work that has been done to repeal the system. I assured them that Texans for Lawsuit Reform and the legislature planned to defend the gains that have been made while striving for further necessary reform."

Do you know of other such stories? Please forward them to the TLR office (1200 Post Oak Blvd., Suite 510, Houston, TX 77056) or fax them to (713) 963-9787. We continue to track the positive effects of lawsuit reform to illustrate the positive impacts the reforms already are having on our state. We'd also like to have your comments and suggestions on additional civil justice reforms you'd like to see addressed.

Insurance rates adjusted

[Note: TLR look no position on the insurance rate rollbacks, but the TLR board thought TLR should at least make a statement on the issue. The following is TLR President Dick Weekley's testimony at the Texas Insurance Commissioners hearing on proposed rate reductions.]

Nearly two years ago Texans for Lawsuit Reform developed an 11 -point agenda designed to return fairness, equity and common sense to the Texas civil justice system. We believed these changes were necessary to begin to restore people's faith in our civil courts. We also maintained that there would be two major collateral benefits derived from tort reform: (1) that consumers would benefit through lower prices on goods and services and (2) that the state's economy would benefit by developing an excellent environment in which to operate, build or expand a business and to nurture new businesses and stimulate innovation.

Much of the agenda which was proposed last January was passed into law by the legislature. These hearings today reflect the first tangible evidence of the consumer savings which will begin to flow to citizens from just one industry, the insurance industry, in Texas.

As the reforms begin to filter into the social and economic fabric of this state, other savings will begin to be realized. As the reform bills wound their way through the legislative process, there were trade-offs made in order to obtain a consensus which enabled the legislation to pass.

We acknowledge and support the legislative process and were very pleased overall with the legislation that passed.

Even though we do have to candidly acknowledge that there would have been greater consumer savings had the bills passed as originally proposed, we do think that the bills that passed will produce a market environment that will allow rate reductions.

The timing and scope of these reductions is the province of the commissioner.

Finally, we anticipate our 1997 agenda will generate additional reforms and therefore should generate additional consumer savings.

As the country and the world become more competitive, states which can build up the most favorable climate for both business and consumers will be in the best position to prosper. The action of the 1995 legislature has taken Texas a huge step forward, and I urge this commission to continue these positive steps.

The Association of Trial Lawyers of America recently celebrated its annual meeting in New York City with dinners and gala dances.

It's very unlikely it'll choose to hold its next meeting In Comanche, a little town tucked away in the heart of Texas. Our motels can't accommodate a large convention, and some of us are not that big on dancing. Still, the trial lawyers of America are one group that manages to make its presence felt, even in a typical rural American town, population just over 4,000.

Comanche's economic base is agrarian, mostly peanuts, dairies and cattle ranching. Mayberry this is not: Most of our young people strike out for the cities, while our low cost of living attracts retirees living on fixed incomes. The average age of people in our county is about eight years above the norm. We're hardly a community that can handle the rapidly escalating costs of runaway lawsuits.

You might think of contingency-fee lawyers and frivolous lawsuits as an urban affliction in Los Angeles, Miami and New York. But small towns have lawyers who read the papers, and they are no less shy about hitting local taxpayers. Since the mid-1950s, I've watched the costs of liability and lawsuits grow as I held many public positions, ranging from the Comanche City Council, to president of the local water board, to a dozen yeas on the school board.

The city, s cost of liability insurance alone is $21.000 a year. No big deal you say? Perhaps not, but in Comanche that would cover the coat of one new policeman or fireman.

Add to that a related cost, the $24,000 we have to pay in workers' compensation. Add to that the costs on our water district, which has to pick up another $5,000 in liability every year, and another $8,500 for workers' compensation.

Our local taxpayers have to pick up yet another $25,000 in liability costs for our school. Add to the costs of one nuisance suit after another being filed against the city, from minor injuries to stress-related illnesses. It is this steady nickel-and-diming, more than any one cost, that gouges city taxpayers and limits city services.

Yet the greatest single cost cannot be calculated in dollars. Small communities like ours thrive on voluntarism, on the willingness of people to roll up their sleeves and work for the common good We're especially dependent on volunteer leaders. We need men and women who are willing to spend long and arduous hours on a city council for $5 a session, and who have the business background to make sound decisions.

It's not easy to find many such people in a community of 4,000, especially when so many are already happily retired. The city needs people in their middle years, who have experience and the stamina to do a second job. There just aren't many such people in Comanche.

This is where liability costs run incalculably high. As the courts infringe into new areas, no one knows how far the limits of liability extend. We do know that board members, and even council members, can be sued collectively and individually.

To protect our elected officials (in a small town like ours, to volunteer is to be elected), we have to buy million-dollar liability policies. But given that a few of our local farmers are very successful, this often isn't enough to cover the costs of their capital and equipment. Some would need to buy liability protection for as much as $3 million of their assets.

Time after time, I've beseeched some of our successful citizens to serve, only be told: "I'm not going to spend a lot of my money in extra insurance just to do a free job." I can't blame them. I've been approached to run for mayor many times myself. But I've never had the desire for the job or for the financial risks it entails.

The costs of lawsuits are crippling the community spirit of our small towns. I doubt this was much on the minds of the trial lawyers and their spouses as they danced the night away in New York. From the perspective of Comanche, Texas, there seems to be awfully little to celebrate.

A study of states that have adopted limits on Civil lawsuits found that overhauling the legal system led to major gains in jobs and economic growth, giving some ammunition to proponents of federal legislation to curb damage awards.

The study, published by the National Bureau of Economic Research in Cambridge, Mass., is believed to be the first detailed statistical examination of the economic effects of liability limits. It is already proving controversial.

For years, business groups have blamed the legal system for a variety of economic ills, saying that lawsuits have inhibited product development and hurt the ability of U.S. business to meet foreign competition. The argument that "tort reform" will reverse those trends helped propel the House and Senate to approve legislation last spring. Though the House version is more sweeping than the Senate's, congressional leaders are currently trying to fashion a compromise.

Yet, consumer groups and others contend that business has exaggerated the costs of litigation and its influence on corporate decision-making. They also say industry studies of the costs of the civil justice system tend to ignore the benefits, such as safer products and workplaces.

"The claim has been made forever that tort reform will help our economy. But it has never been able to be supported with any empirical evidence," says Pamela Gilbert, a Washington lawyer and consumer advocate. Even Sen. Jay Rockefeller, a co-sponsor of the Senate bill, has conceded that while he expects his legislation would spur corporate research and development, he is short on specific examples. "I haven't had anybody say to me, as soon as this bill passes, I am building a plant in Passaic, N.J., and hiring 5,000 people," he said after the bill passed in May.

"Some of the very real problems with the current system are not easy to see," adds Sherman Joyce, president of the American Tort Reform Association. Mr. Joyce does see some signs of life in the single-engine aircraft industry in the year since Congress enacted legislation shielding it from a rash of suits over older planes. The latest study seeks to cut through the rhetoric on both sides, says George Shepherd, a professor at Emery University law school in Atlanta, and one of the authors of the study.

"When you look at the tort-reform debate and the evidence that people are using, it is just appalling," says Mr. Shepherd. One particularly egregious example, he says, is a figure cited by proponents of the federal legislation - including presidential hopeful Bob Dole - that puts the annual cost of the tort system at $300 billion.

"The numbers are sort of fetched out of thin air," Mr. Shepherd said, adding that his study is "a first stab at trying to take a reasoned, calculated look ... to start thinking about these issues in a scientific way."

The study examined government economic data from 1969 through 1990 and found strong correlation between the number of laws limiting liability that a state had adopted -such as limits on punitive damages and caps on legal fees - and levels of employment and productivity.

Some 14 of 17 industries studied benefited, sometimes dramatically. In an average state, for example, employment grew by almost 18% in miscellaneous repair services, 23% in amusement and recreation, and 25% in motion pictures. Output per worker also grew, although at, less torrid pace.

Conversely, employment fell when plaintiff-friendly laws were enacted.

The authors concede some limitations which critics said were key. The study excludes the costs to third parties, such as government welfare programs or private insurers, when corporate defendants are let off the hook. There also isn't any attempt to measure the potential injustice to injured workers left uncompensated by stricter liability rules.

"The same kind of approach would show that slavery in this country would improve corporate productivity," Ralph Nader, the consumer advocate, said of the findings. "It is unbelievable hubris for any analyst to think he has enough of the variables.... This kind of thing is totally beyond the scope of analytic capability.''

The authors say the work is statistically valid, and that critics just don't like the message. "One can debate the politics. To me, the question is whether we can improve output per capita and employment by adopting these rules," said Thomas Campbell, a Stanford law professor and former Republican 'member of Congress who was one of the study's authors. "We found that the answer is overwhelmingly clear: Yes."

Texas Supreme Court toughens rules against junk science

In June, the Texas Supreme Court issued an important decision that could positively affect the way judges evaluate the credentials of witnesses who claim to be experts on a particular scientific or technical issue. The decision is an affirmation of common-sense and a blow against junk science to support questionable litigation.

In the case of E.I. DuPont de Nemours & Co. v. Robinson, et al., owners of a pecan orchard sued a fungicide manufacturer, claiming the firm's product ruined their orchard. To substantiate this claim, they relied on the testimony of an "expert" who held degrees in horticulture, plant ecology and agronomy. The witness based his opinion on an inspection of the trees, an experiment he conducted, and a laboratory test he ran.

The defendant asked the court to throw out the "expert" testimony, which the high court said was not grounded in scientific procedures and was not based on techniques subject to peer review.

The ruling reversed an appeals court decision that said juries should be free to make their own judgments regarding the credibility of a witness.

In its ruling, the Supreme Court listed factors trial courts should use to evaluate the relevancy and reliability of scientific or technical testimony, including:

1. The extent to which the theory or technique can be tested, is susceptible to error, and whether it has been published or corroborated by other qualified experts.
2. The extent to which the witness makes a subjective interpretation of the data.
3. The extent to which the theory or technique has been generally accepted as valid by the scientific community.
4. The degree to which the theory or technique has been used in "real world" (i.e., nonjudicial) settings.
5. Whether the underlying theory or technique has been generally accepted as valid by the relevant scientific community.
6. The nonjudicial uses which have been made of the theory or technique.

• Plaintiff lawyers in Harris County stampeded to the courthouse in the last suit-filing days before tort reform. Court clerks in Houston typically receive 200 new lawsuits a day, but as tort reform laws were about to take effect, that daily load zoomed to more than 1,000!

   

• Austin also had a "rush to judgment" as lawyers tried to get more suits filed before the reform laws toughened up the restrictions. Travis County saw triple the normal number of filings on the last day, and adjacent Williamson County had four times its normal caseload.

   

• The record may go to Tarrant County, where lawyers filed almost 10 times the normal number of suits in the final hours.

   

• Max Boot of the Wall Street Journal told a Houston seminar the strategy behind mass torts, such as silicone breast implant suits which bankrupted Dow Corning Corporation, is to flood the victim company with lawsuits, so they have to surrender or drown. But he said they have to file fast, before scentific research disproves their junk science claims. Does that mean they race the facts to the courthouse, hoping they can get there first? That's it, he said.

   

• TLR President Dick Weekley spoke to the San Angelo Chamber of Commerce about tort reform and our agenda. TLR's Speakers Bureau can provide speakers for your group meeting. Let Kristi Reinertsen know where and when.. 713-963-9363.

Statewide Committee

R.C. Allen, Corpus Christi
Lonnie Arrington, Beaumont
Bob Barnes, Odessa
Dick Barnett, Tyler
Louis Beecherl, Dallas
Jack Blanton, Houston
Frank N. Boggus, Rio Grande Valley
Hugo Bustamante, El Paso
Dr. Donald M. Carlton, Austin
David Carrabba, College Station
Milton Carroll, Houston
Jack Cawood, Rio Grailde Valley
Ray Clymer, Wichita Falls
Jan Collmer, Dallas
John Coppedge, M.D., Longview
Frank Deaderick, Odessa
David H. Dewhurst, Houston
Eddie Forshage, Rio Grand Valley
Lupe Fraga, Houston
Claude Freeman, Lubbock
Elizabeth Ghrist, Houston
Bill Greehey, San Antonio
Mitch Hart, Dallas
Bill Hartley, Tyler
Roger Hemminghaus, San Antonio
Robert Hewitt, Victoria
Lyda Hill, Dallas
Roger Hirl, Dallas
Paul Howell, Houston
Ray L. Hunt, Dallas
John G. Hurd, San Antonio
Clark Johnson, Ft. Worth
Roane Lacy, Sr., Waco
Kenneth Lay, Houston
Lowell H. Lebermann, Austin
Jim Leininger, M.D., San Antonio
Cadell Liedtke, Midland
Leo Linbeck, Jr., Houston
Wales Madden, III, Amarillo
Darius R. Maggi, M.D., Denison
Max Mandel, Laredo
Jeffrey A. Marcus, Dallas
Drayton McLane, Temple
John Mark McLaughlin, San Angelo
Robert McNair, Houston
Anne H. MeNamara, Dallas
Walter Mischer, Sr., Houston
George P Mitchell, Galveston
Michael Morgan, Laredo
Beth & Reed Morion, Houston
Peter O'Donnell, Jr., Dallas
R.E. Parker, Corpus Christi
Howard T. Pebley, Jr., McMlen
Charles R. Perry; Odessa
Lee Pfluger, San Augelo
T. Boone Pickens, Dallas
Buck Prewitt, Temple
Samuel "Mendy" Rabicoff, Longview
A.W. Riter, Jr., Tyler
John V. Roach, Ft. Worth
Jonathan Rogers, El Paso
Robert D. Rogers, Dallas
Frederick E. Rowe, Jr., Dallas
Robert B. Rowling, Dallas
Kenneth E. Ruddy, Beaumont
Robert S. Scheurer, Wichita Falls
Milton Scott, Houston
David R. Seim, Lubbock
Allan Shivers, Jr., Austin
Harold C. Simmons, Dallas
William T. Solomon, Dallas
Phil Springer, College Station
F.L. Stephens, San Angelo
Gerald A. Sullivan, Galveston
Charles Teeple, Austin
Rice Tilley, Jr., Ft. Worth
Richard Trabulsi, Jr., Houston
James Tranum, Temple
Terry Tubb, M.D., Midland
J. Virgil Waggoner, Houston
Richard Ware, II, Amarillo
Johnny R. Warren, Midland
Richard W. Weekley, Houston
F.M. Young, Waco
H.B. Zachry, San Antonio