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Why Lawsuits Are Good for America Disciplined Democracy, Big Business, and the Common Law
By Carl T. Bogus
New York University Press Copyright © 2003 Carl T. Bogus
All right reserved.
Why Tell Tales?
On Monday, July 27, 1994, Senator John C. Danforth of Missouri rose on the floor of the Senate to explain to his colleagues, and via C-Span to the nation at large, why he believed it was critical to enact legislation known as the Products Liability Fairness Act, which was designed to displace all state products liability laws with a uniform but more restrictive federal law. To the casual observer, it may have seemed that the bill was destined to become law. It had been written by five senators--two Republicans, including Danforth, and three Democrats. It had garnered forty-four cosponsors who ranged the political spectrum, from liberal Democrats such as Christopher J. Dodd of Connecticut to the hardest of right-wing Republicans, including North Carolina's Jesse Helms. And it had been approved by the Senate Commerce Committee on a vote of sixteen to six. Danforth, however, knew better. This was one of the most fiercely contested pieces of legislation of the session. In fact, it was the continuation of a bitter war that had raged through a number ofsessions of Congress. Danforth and his coauthors had expected to win before, only to taste cold defeat at end of the day. All that could be said with certainty was that each side was going to use every available tool of persuasion, politics, and parliamentary maneuvering--and whatever the outcome, it was going to be close.
Products liability may seem like a curious subject to be inspiring such a passionate struggle. It is neither a topic of wide public interest, such as health care or Social Security, nor a political wedge issue such as abortion, gun control, or affirmative action. Yet, for an arcane subject that has historically been the province of the courts, it has received a surprising amount of attention from politicians. A products liability plank was part of the Republican Party platform in 1988, 1992, 1996, and 2000. In 1994, one of the ten legislative proposals that made up Newt Gingrich's Contract With America was the so-called Common Sense Legal Reforms Act, which the Contract promised would consist of "loser pays laws--reasonable limits on punitive damages and reform of products liability laws to stem the endless tide of litigation." And although the public was largely unaware of it, George W. Bush's commitment to "tort reform"--which seeks to constrict the ability of individuals to sue corporations--was a major factor in his raising unprecedented sums for his presidential candidacy.
Danforth spoke to the Senate just hours before the vote on the bill. It was an important speech. Danforth's voice might be expected to carry particular weight in this debate. He had earned degrees from both the law and divinity schools at Yale, had sharpened his legal skills practicing law with a New York law firm and serving as attorney general of Missouri, and as an ordained Episcopal priest had preached every Tuesday at St. Alban's Church at the National Cathedral. Danforth therefore was not only a lawyer who understood the technical aspects of products liability law but was considered "a figure of moral stature" within the Senate. Years later, when U.S. Attorney General Janet Reno needed a special counsel to investigate whether the Federal Bureau of Investigation (FBI) had started the fire that killed eighty people at the Branch Dividian compound in Waco, Texas, and whether the government had suppressed information about the event, she turned to then-retired senator John C. Danforth. On the day of his appointment, the New York Times explained that Danforth would "bring immediate credibility" to the investigation among Republicans, and President Bill Clinton praised him as "an honorable man." And when George W. Bush was looking for a running mate who would add gravitas to his ticket, it appears that Danforth was one of the two finalists on his list.
On that day in the Senate, Danforth spoke slowly and earnestly. To illustrate why tort reform legislation was needed to curb a products liability system that was dangerously out of control, Danforth told his colleagues a story:
There was a famous case a few years ago of a 70-year-old man who lost the eyesight in his left eye. Now, the loss of eyesight in one eye is not a minor matter. But what is the just result of a 70-year-old man losing eyesight in one eye? What is the reasonable compensation that such an individual should receive? Should it be in the thousands of dollars? In the tens of thousands? The hundreds of thousands? Should it be in the millions of dollars? This person filed a lawsuit, a products liability case, against Upjohn Co. and his recovery was $127 million.
Danforth did not say more about this case. He did not have to. His short vignette delivered a powerful message of why the system desperately needed repair. Compassion and compensation of the injured are worthy goals, but how can pharmaceutical companies offer medicines at affordable prices if they must pay these kinds of gargantuan verdicts? How can American companies compete in the world market carrying these kinds of burdens? And how is justice served by turning a man who suffered an unfortunate outcome from a surgical procedure into a Vanderbilt? Danforth's story gave Congress a reason to act, despite the fact that the common law has traditionally been the province of the judicial rather than the legislative branch of government, and of the states rather than the federal government.
There was just one problem. Danforth told the Senate a cock-and-bull story. Though literally true in most respects, Danforth's version of the case was, as we shall see, flagrantly deceiving. Moreover, this was not the only canard served up by politicians promoting "tort reform" or "civil justice reform." It was one in a series of beguiling yarns. Indeed, so many of these fables have been told--and notwithstanding corrections brought to the attention of the storytellers, retold--that it is reasonable to conclude that deception is a deliberate tactic, if not on the part of politicians like Danforth who tell the tales then on the part of the people who put those stories in their mouths.
This book is about the common law--dynamic bodies of law that courts continually refashion while deciding private lawsuits. The gruel of the common law are cases brought by ordinary people who are focused not on making law but on their own affairs; yet the role the common law plays in American democracy is quite extraordinary. The common law is the one place in American society where a citizen without money, status, or political connections can battle the powerful on nearly equal terms. The contingent fee system--under which lawyers are paid from moneys they recover for their client--makes it possible for an ordinary individual to engage high-caliber legal talent and compel the largest corporation in America to account for its actions in a court of law.
Many believe the common law is an antiquated system that may have been well suited for postmedieval England but is out of place in contemporary America. One criticism is that the common law is too slow to respond to rapidly changing circumstances. Judge Guido Calabresi, who, before being appointed to the United States Court of Appeals for the Second Circuit, served as dean of Yale Law School, has written: "The slow, unsystematic, and organic quality of common law changes made it clearly unsuitable to many legal demands of the welfare state." A second criticism is that courts lack the resources to deal intelligently with complicated issues. We live in an age of highly specialized expertise. Even Congress, with its large professional staff, can grapple only so far with complex issues, which is why modern society is now principally regulated by administrative agencies. A third criticism is that the common law is chaotic; courts hand down conflicting decisions--sometimes deliberately, since the courts of various states decide to adopt different legal rules--which makes it difficult for corporations and others to plan their affairs. A fourth criticism is that the courts are undemocratic. Most judges are not elected, and even those who are elected are not accountable to the people in the same way as legislators are. Probably the harshest criticism of all is that judges and juries are irresponsible, that all too often they make downright wacky decisions, which, of course, was the point Senator Danforth was making in his speech to the Senate.
The central theme of this book is that the common law is not a quaint antique--that law developed by court decisions plays just as important a role at the beginning of the twenty-first century as it has at any time in American history. I focus principally on products liability, the body of law under which people injured by unreasonably dangerous products may sue the sellers of those products. Less than forty years old, products liability is the youngest and most dynamic area in the common law. It is also the most politically contentious. Corporate America has created organizations devoted exclusively to lobbying state legislatures or Congress for so-called tort reform legislation, much of which is directly aimed at legislatively curtailing judicially created products liability law. Meanwhile, products liability law has been the subject of intense debate with law schools, think tanks, and professional organizations, including, most prominently, the American Law Institute, which promulgates influential "Restatements" of common law areas.
Products liability and tort law have played an important but little-understood role in presidential politics as well. In early 1999, the race for the Republican presidential nomination was considered wide open: eight candidates, a number of whom--including former cabinet secretary Elizabeth Dole, Senator John McCain of Arizona, and former Tennessee governor Lamar Alexander--were considered formidable. None was a clear front-runner. Then, on June 30, 1999, the dynamics of the race changed overnight. George W. Bush announced he had received contributions totaling $37 million, a sum that was not only unprecedented but that so dwarfed his opponents' contributions (the Republican in second place, McCain, had raised $4.3 million) as to hobble the ability of their campaigns to be taken seriously.
This took many by surprise. Bush, although the son of a president and governor of the nation's second most populous state, had been in public life for only five years. How, at the very beginning of the race, did he catapult so far ahead?
What had happened was that, well before the race officially began, leaders of corporate America privately decided to do their best to make Bush president. Through a systematic series of discussions, beginning within various trade associations--such as the American Petroleum Institute, the American Chemical Council, the Food Marketing Institute, and the American Automobile Manufacturers Association--and moving upward into the councils of organizations such as the U.S. Chamber of Commerce, corporate leaders decided Bush was their man. Within the first ninety days of the announcement of Bush's candidacy, 1,542 chairmen and chief executive officers contributed to his campaign. Why the decision to support Bush? When he first ran for governor of Texas in 1994, Bush declared: "Probably the most significant thing that I will do when I am governor of this state is to insist that Texas change the tort laws and insist we end frivolous and junk lawsuits that threaten our producers and crowd our courts." As soon as he took office, Bush declared tort reform "an emergency issue," so that legislation could be passed without the usually required thirty-day waiting period, and pushed a tort reform package through the Texas legislature. When he ran for reelection four years later, Bush was rewarded with millions of dollars in contributions from businesses associated with Texas tort reform organizations. Indeed, officers and board members of two Texas tort reform groups, Texans for Lawsuit Reform and the Texas Civil Justice League, contributed a total of $4.5 million to Bush's two gubernatorial campaigns. Tort reform was but one part of a collection of pro-business positions--Bush also supported free trade, tax cuts, and deregulation, especially in the environmental area--but it was an important part. When he traveled from city to city for $1,000-a-plate fund-raisers early in his presidential campaign, Bush was careful to mention that he would fight for tort reform in Washington, even including the issue in comments to the mainstream media. It wasn't for the electorate at large that Bush gave tort reform so prominent a position. By publicly committing himself to make tort reform a high priority for his administration, Bush was essentially signing a tacit agreement with American industry.
Eventually, McCain was able to give Bush a run for his money. After McCain stunned Bush in the New Hampshire primary, corporate America quickly covered its bets by making contributions to McCain's campaign too. McCain also had long been a backer of tort reform. Still, big business much preferred Bush. Bush was a reliable ally; McCain was unpredictable. Throughout his political career, McCain had raised large sums from corporate America, and using his powerful position as chair of the Senate Commerce Committee, McCain had paid his debts to his benefactors. But now McCain was running for the presidency by pronouncing the arrangement unholy and making campaign finance reform his battle cry.
After New Hampshire, Bush began to give tort reform an even more prominent place in his campaign rhetoric. In part this was to simply to exploit the phrase. Bush was trying to position himself as a reformer; but seeking both to replenish his own campaign treasury and to suppress bet-covering contributions to McCain, Bush also wanted to remind big business of the stakes. Ultimately he prevailed. Part of the equation were the vast sums of money contributed to the Bush campaign--$68.7 million as of the end of 1999. McCain raised an impressive $15.7 million of his own. Still, with over four times as much money, Bush was able to out-organize and out-advertise McCain. It is difficult to beat corporate America.
To paraphrase Finley P. Dunne's Mr. Dooley, the battle over products liability has not been a game of beanbag--which brings me back to Senator Danforth's Senate speech.
Proctor v. Davis: The Real Story
Although Danforth did not identify it, the case he described to the Senate was brought by a retired public relations worker in Illinois named Meyer Proctor. In 1983, Proctor experienced blurred vision and went to see Michael J. Davis, a board-certified ophthalmologist. Dr. Davis diagnosed Proctor's condition as uveitis, a potentially serious inflammation of the middle layer of the eye, and began treating Davis with steroid eyedrops. This treatment did not significantly help, however, and as often occurs with uveitis, Proctor developed complications. Indeed, the vision in Proctor's left eye deteriorated so badly that he could be considered legally blind in that eye. After having Proctor examined by a retinal specialist, Davis decided to institute a new regime of treatment: he would inject a drug known as Depo-Medrol near Proctor's eyes.
Depo-Medrol is a steroid manufactured by Upjohn, a pharmaceutical company headquartered in Kalamazoo, Michigan, that produces Motrin, Rogaine, and the tranquilizer Xanax, as well as many other products. (Upjohn has since merged with a Swedish pharmaceutical company and changed its name to Pharmacia & Upjohn.) Depo-Medrol was by no means a new drug; the Food and Drug Administration (FDA) approved it more than twenty years earlier for use in treating a variety of inflammations throughout the human body, by injecting it directly into inflamed muscles and joints. The FDA, however, had never approved the drug for injection near the eyes--and for good reason. One of the benefits of Depo-Medrol is that it is an especially long-acting steroid. It is insoluble, and when it is injected into tissue with adequate blood supply, it is released gradually in the body over a period of six to eight weeks. But the eyes have lower blood flow than muscles and joints, and if Depo-Medrol is deposited into an eye, it will remain there--in a toxic, crystalline form--for a relatively long period of time.
Shortly after Upjohn introduced Depo-Medrol, two ophthalmologists independently contacted Upjohn and inquired about using the drug to treat inflammations of the eye. They wanted to know if Depo-Medrol could appropriately be administered by periocular injection, that is, by injecting it near the eyeball. Other steroids were used this way, but the doctors thought Depo-Medrol might offer advantages because it was long-acting.
Upjohn did not direct the doctors' attention to the fact that the very feature they found attractive--Depo-Medrol's long-acting effect--presented potential risks. And, although medical researchers normally consider animal tests a prerequisite to testing drugs on humans, Upjohn neglected to advise the doctors it had conducted no animal tests related to administering Depo-Medrol near the eyes. Instead, Upjohn sent the doctors vials of Depo-Medrol and a letter stating, "We do not have any reports concerning this use for preparation and we would very much like for you to evaluate it in this way."
Once a drug has been approved by FDA, nothing prevents physicians from using it for any purpose they consider medically appropriate, even if that use has not been approved by FDA. A pharmaceutical manufacturer encouraging physicians to use its products for unapproved purposes is another matter, however. Upjohn not only sent vials of Depo-Medrol and letters urging ophthalmologists to try administering it by periocular injection; it encouraged them with money as well. It sent at least one ophthalmologist $3,000 to support his testing of the drug. This doctor later told Upjohn he had given two talks in Chicago praising Depo-Medrol's use by periocular injection, even though, according to the doctor's own report to Upjohn, his experiment with the drug "fell flat" and did not justify his public remarks. This same doctor later published an article endorsing the use of Depo-Medrol for eye disease while, again, privately reporting to Upjohn that he did not include animal tests he conducted in the article because the results were "very unsatisfactory." Upjohn distributed twenty-five hundred copies of that article to physicians and hospitals.
Excerpted from Why Lawsuits Are Good for America by Carl T. Bogus Copyright © 2003 by Carl T. Bogus. Excerpted by permission.
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