State AGs are helping trial lawyers corrupt the civil justice system

The civil justice system was originally designed to help injured people receive compensation for property damage and medical bills and to require the party who caused the damage to pay that compensation. But once the corrosive power of large sums of money enters the picture, the system cannot help but be skewed.

Take for instance the recent case of a woman who
sued a car insurance company
because she contracted a sexually transmitted disease during a backseat tete-a-tete. The Missouri court held that the injury did in fact occur in the car and upheld the award of $5.2 million. I will bet that your car insurance company does not list sexually transmitted disease as a covered risk. Nonetheless, look for your car insurance rates to go up as the insurance companies try to figure out how much to set aside for romantic liaisons! This case will certainly encourage other trial attorneys to take on similar cases.

But that is small potatoes compared to what is going on in the big-dollar cases. For instance, trial lawyers have teamed up with state attorneys general to sue large corporations for a variety of claims. Most recently, several states have seen lawsuits against pharmaceutical companies over the opioid crisis. While there are certainly people who will abuse prescription medications and unscrupulous doctors who will over-prescribe those medications, the big part of the opioid crisis concerns illegal narcotics. Nonetheless, trial lawyers working with state attorneys general have filed tort claims against companies such as Johnson & Johnson, Teva, AmerisourceBergen, Cardinal Health, McKesson, the list goes on, seeking to hold those companies totally responsible for all the problems stemming from illegal drug use. A trial judge in Oklahoma actually entered a verdict against Johnson & Johnson for nearly half a billion dollars. The money, after paying the private trial lawyers, would have gone to various drug treatment programs. Injured individuals would not have received any compensation. The state Supreme Court overturned the award, however, the ruling that there was no basis under state law for the claim.

But the big-time plaintiffs’ trial lawyers will keep trying. To use a baseball analogy, they are always “swinging for the fences” when the civil justice system was designed based on a belief that the attorneys would instead “hit for average,” meaning that they would take on cases where it looked like an individual had suffered an injury, and they would seek an award of reasonable damages for that individual. But the prospect of mega damage awards incentivizes attorneys to go for the big award — to “swing for the fences.” With contingency fee paying the attorneys sometimes 40% or more of the final award, they only need to win one case to take home hundreds of millions of dollars.

Political activists are getting in on the game. Some liberal groups have paid state attorneys general offices to
hire private outside attorneys
to help bring lawsuits related to climate change and other environmental claims. The state attorneys general are able to expand their public policy efforts without needing authorization from the state legislature, and they can use those efforts to
advance their own political careers
.

To fight this trend, some companies are using what has been called the
“Texas Two-Step Bankruptcy,”
in which the company is split into two or more entities, with one of them owning all of the tort liabilities while the other goes on to serve consumers. All the tort claims go to the new company, which then files bankruptcy. The claims are then filtered through the federal bankruptcy court. This strategy is being used by a
number of large corporations
including Johnson & Johnson, Merk, Pfizer, General Electric, and Toshiba.

From the companies’ standpoint, this is an entirely rational reaction to the latest spate of lawsuits seeking mega damage awards. It is all the more rational when you factor in the participation in these cases by state attorneys general.

Because of the massive amount of money at stake, big-time plaintiffs’ trial attorneys will continue to develop creative ways to “swing for the fences.” State attorneys general who want a piece of the damages pie, as well as perceived political points, will continue to join forces with those attorneys. What is really needed is for states to enact commonsense tort reform that will provide a rational remedy for injured individuals and will deter the use of the courts to make public policy through mega damage awards. It is time to return to the original purpose of the civil justice system.

Anthony Caso is a retired clinical professor of law at Chapman University, Fowler School of Law, and a senior legal fellow for the Claremont Institute.