Today President George Bush will fly to Scott Air Force Base,
Illinois, then drive 15 miles northwest to address a crowd at the
Gateway Center in Collinsville, which is right next door to
Edwardsville, the epicenter of America’s tort crisis.
Madison County, Illinois, has earned all this attention by
becoming the nation’s number-one “judicial hellhole,” as the
American Tort Reform Association has coined the phrase. “It’s a
place where the judicial system has broken down,” says Sherman
“Tiger” Joyce, executive director of the American Tort Reform
Association.
Actually, Dickie Scruggs, the Pascagoula, Mississippi attorney
who started the original $275 billion Medicaid/tobacco lawsuit (and
collected several billion in the process) put it better. Speaking
before an asbestos conference sponsored by Prudential Securities in
2002, Scruggs — who at least has a streak of honesty — described
what he called “magic jurisdictions” in this way:
[W]hat I call the “magic jurisdiction,”…[is]
where the judiciary is elected with verdict money. The trial
lawyers have established relationships with the judges that are
elected; they’re State Court judges; they’re popul[ists]. They’ve
got large populations of voters who are in on the deal, they’re
getting their [piece] in many cases. And so, it’s a political force
in their jurisdiction, and it’s almost impossible to get a fair
trial if you’re a defendant in some of these places. The plaintiff
lawyer walks in there and writes the number on the blackboard, and
the first juror meets the last one coming out the door with that
amount of money.… The cases are not won in the courtroom.
They’re won on the back roads long before the case goes to trial.
Any lawyer fresh out of law school can walk in there and win the
case, so it doesn’t matter what the evidence or the law
is.
Madison County is one of those little rotten boroughs that —
with the help of the trial lawyers — has turned lawsuits into a
cottage industry. At last count close to 20 percent of the asbestos
lawsuits in the nation were being heard before a single Illinois
state judge in Madison. Out-of-state corporations as diverse as
Prudential, Ford, AIG, Philip Morris, General Motors, and dozens of
others have had to troop down to Madison County before judges and
juries obviously intent on stripping them of their worldly
goods.
In one particularly ironic case, Judge Nicholas Byron decided in
2003, without benefit of jury, that Philip Morris and its parent
company, the Altria Group, had tricked the class of Illinois
smokers out of $10.1 billion worth of damages by selling them
Marlboro Lights, which plaintiff attorneys said fooled smokers into
thinking they were less dangerous than Marlboro regulars. Judge
Byron demanded that Altria post a $12 billion bond just to appeal
the case to the state supreme court. Altria said it would have to
declare bankruptcy.
The decision set off fire alarms in the offices of 49 other
state attorney generals, who immediately rushed down to Madison to
intervene. What’s the problem? Most states have now built their
entire budgets around the Master Tobacco Settlement of 1998, which
promises the states $275 billion over the next twenty years. Since
Philip Morris pays the lion’s share of this settlement, bankrupting
the company in Madison County would set off a financial crisis in
49 other states. Judge Byron finally lowered the bond to $6 billion
but the case is still under review by the Illinois Supreme
Court.
Trial lawyers are able to concentrate their firepower in “magic
jurisdictions” like Madison because of loopholes in the federal
rules of procedure. The trick is to keep the case from being
bounced up to federal court, where class actions are much more
difficult to certify and where the judges are less susceptible to
persuasion. (Madison County plaintiff attorneys raised $125,000 in
campaign money for Judge Byron in the most recent election, in
which he ran unopposed.)
The Constitution says that cases involving plaintiffs and
defendants from “diverse” states must be tried in the federal
courts. But plaintiff attorneys circumvent this by digging up one
local plaintiff and defendant to satisfy the requirement. When
trial lawyers brought a class action against General Motors over
the wording in a warranty plan, they were sure to include Four
Flags Motors, a Madison car dealership, as one of the
defendants.
Federal procedures also require that any case involving more
than $75,000 in damages be bumped up to federal court, but class
action attorneys skirt this by making sure that each
individual defendant claims no more than $74,999. In many
instances, the plaintiffs specifically waive any damages that may
exceed $75,000, in order to keep the case in state court.
The result is that a class action involving hundreds of
thousands of alleged plaintiffs suing a host of major corporations
for billions of dollars will be heard before one backwoods judge
specifically chosen by the plaintiff attorneys.
In 2001, for example, a Madison County resident named Nicoloff
stayed one night in a Wyndham Hotel in Chicago, then sued the hotel
over a $2.87 “energy surcharge” the hotel added to the bill. A
trivial matter? Not when hundreds of thousands of other guests are
combined into a class action certified by a judge in Madison
County. Wyndham — which has no hotels in Madison County — was
forced to put its fate in the hands of a notoriously pro-plaintiff
judge. The usual outcome in such cases is that plaintiffs are
offered coupons or credit on their next purchase while the lawyers
walk away with millions in contingency fees.
The Class Action Reform Act — which couldn’t quite make it past
Tom Daschle last summer — would change all this by removing to
federal court any case where there is true diversity among the
major players and by outlawing “coupon settlements,” where
plaintiffs get non-cash awards while the lawyers walk away with
real money.
As Walter Olson has pointed out, such lawsuits constitute the
ancient violation of “champerty” — lawyers suing for their own
benefit rather than on behalf of clients. If the Bush
Administration is going to rein in this fraud, Madison County is
the place to start.
