Tort Deform

Sometimes the ironic timing of events in our public life is so striking as to cause one to wonder if the Great Scriptwriter in the Sky isn't trying to make a point. Thus, the word that the U.S. Senate voted for tort deform last week came just a few days after the news that seven executives of W.R. Grace and Co. were indicted on criminal charges for knowingly exposing their workers and the public to asbestos ore.

Hundreds of miners, their family members and townsfolk in Libby, Mont., have died, and at least 1,200 more are sick from breathing the air polluted by the mine. Since the ore was shipped all over the country and was used as insulation in millions of homes, the total health effects are incalculable. The Seattle Post-Intelligencer deserves credit for bringing Grace to public attention with a series back in 1999.

The executives and the company were indicted on 10 counts of conspiracy, knowing endangerment, obstruction of justice and wire fraud.

W.R. Grace & Co. "categorically denies any criminal wrongdoing," said a spokesman.

The indictments and the P-I's series were based on tens of thousands of internal communications among the top health, marketing and legal managers at Grace about how to conceal the danger of asbestos in both the ore from the Libby mine and the products that were made from it. Their memos include discussion of how to keep investigators from studying the health of the miners, how to keep safety warnings off their products and how to hide the hazards of working with asbestos ore.

A lawyer with a Montana firm that has been trying to help families of the dead and dying for years said: "The prosecution cannot eliminate the death and disease in Libby. But there is comfort in the hope that criminal convictions will say to corporate America: Managers will be held criminally accountable if they lie and watch workers die."

According to an article in the St. Louis Post-Dispatch, W.R. Grace filed for Chapter 11 bankruptcy in 2001 because of a "sharply increasing number of asbestos claims." However, in 2002, the Justice Department intervened in a bankruptcy proceeding for the first time ever, alleging that before Grace asked for Chapter 11, it concealed money in new companies it bought. The Justice Department said it was a "fraudulent transfer" of money to protect itself from civil suits.

Just before the bankruptcy trial was to begin, Grace returned almost $1 billion to the bankruptcy court. The company currently has annual sales of about $2 billion, more than 6,000 employees and operations in nearly 40 companies.

On Feb. 2, President Bush again referred to "frivolous asbestos claims."

Against this timely reminder of what the tort system is designed to deter or punish, the Senate voted for the "Class Action Fairness Act" (love those cute names they keep giving rotten bills) 72 to 26. There is no "flood of frivolous lawsuits" – in fact, tort claims are declining and only 2 percent of injured people ever sue for compensation to begin with.

Public Citizen did a study showing that corporations themselves file four times as many lawsuits as do individuals, and they are penalized much more often by judges for pursuing frivolous litigation. "Corporations think America is too litigious only when they are on the receiving end of a lawsuit," said Joan Claybrook, president of Public Citizen. "But when they feel aggrieved, businesses are far more likely to take their beef to court than are consumers."

The administration came up with a weird fix for this nonexistent problem (so reminiscent of nonexistent WMDs, the "crisis" in Social Security and other non-problems): It severely limited the right of individuals to file class-action suits against corporations by moving such cases from state courts to federal courts.

If the aggregate claim is over $5 million or the defendants and the plaintiffs are in separate states, the suit goes into the federal system – and that definition pretty well encompasses all class-action suits. And federal judges are less likely to certify a group of aggrieved consumers as "a class" because such cases often involve conflicting state laws – victims of a bad product can live in any state, and the company that made the product is often in another state.

On top of that, in case you haven't talked to any federal judges lately, the whole federal system is under-funded and overburdened now. The net effect is less accountability for corporations that violate health, safety, consumer and civil rights and environmental laws. Happy Enron, WorldCom, Tyco and W.R. Grace to all.

This abominable bill was also much-sought by Republicans for nasty political reasons, which makes their rhetoric about justice all the more nauseating. It's a big win for the insurance industry and for big business, both heavy donors to Republicans. It also strips potential cases from trial lawyers, a group notoriously given to supporting the Democrats. How clever of Karl Rove.

Frankly, I think both the trial lawyers and big business can take care of themselves – it's the rest of us I worry about.

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