Reclaim Democracy!

Archives for October 2004

Beware of “Junk Lawsuits” Hype

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Citizens’ right to hold corporations accountable is the real target

By Jeff Milchen
Published October 27, 2004

“We think lawsuit abuse is a serious problem in this country,” proclaimed Dick Cheney while debating John Edwards in early October. The “runaway lawsuits” theme is repeated at almost every Bush/Cheney campaign stop.

Knowing the record of his own company, I can’t help wondering whether Cheney is like an alcoholic seeking help, for during his five-year reign as CEO, Halliburton and its subsidiaries filed more than 150 separate court actions (documented by Halliburton Watch). Those lawsuits pursued injunctions, evictions, and attempted to collect alleged debts from other corporations and individuals, sometimes for as little as $1,500.

But Halliburton is just part of a larger pattern. A recent study by Public Citizen indicates that the 7 million U.S. corporations file four times as many lawsuits as the 281 million individual Americans, so corporations are 160 times as likely to sue as an average person.

The study covered the only four U.S. jurisdictions that require records with enough detail to distinguish corporate-initiated lawsuits from those filed on behalf of individuals: Mississippi, Arkansas, Philadelphia and Cook County (Chicago and vicinity).

And what about the “frivolous lawsuits” we hear about constantly? The same Public Citizen study noted, “businesses and their attorneys were 69 percent more likely than individual tort plaintiffs and their attorneys to be sanctioned by federal judges for filing frivolous claims or defenses.”

Scrolling down big business’ hit list, next up is “runaway awards.” Here again, if large awards are a serious problem, corporations seem to be the primary cause. Last November, National Law Journal reported that eight of the year’s 10 largest awards to date involved corporations suing each other.

And while Cheney blamed frivolous lawsuits for their “devastating impact” on health-care costs during the VP debate, perhaps he should focus on suits filed by pharmaceutical corporations, rather than injured citizens.

In 2001, a federal court ruled that Bristol-Myers Squibb (BMS) filed frivolous patent-infringement lawsuits to block the introduction of generic competition for its lucrative anti-anxiety drug, BuSpar. Despite “losing” the claim, BMS delayed competition for four months, during which it gouged Americans for about four times the price it could charge in a competitive market.

BMS’s actions were so egregious that the Federal Trade Commission ordered the company to halt “any fraudulent or objectively baseless claim or otherwise engage in sham litigation.”

Again, this is an example of systemic abuse. As Merrill Goozner documents in his exhaustively-researched book, “The $800 Million Pill,” baseless claims to extend patent monopolies are routine practice for BMS and other drug manufacturers.

Of course, the corporate lobbyists behind calls for “tort reform” aren’t so concerned by these cases. Class-action lawsuits — which help average citizens harmed by corporate negligence or malevolence to gain compensation and punish the offender — are their target. So while Congress considers capping class-action punitive damages (awards in such cases have not increased over the past decade) at $250,000, the bill wouldn’t touch frivolous suits like those filed by BMS.

I’ve worked for years organizing and advocating for independent business owners, and learned there are indeed a few unscrupulous lawyers filing sleazy lawsuits. Since large corporations generally will fight any questionable lawsuit, small businesses that can’t afford the time or risk of fighting are the usual targets.

We should strive to eliminate such suits and rid the legal profession of those who file them, but a $250,000 cap on punitive damages would do little to discourage the offenders. Their aim is to coerce smaller out-of-court settlements, not go to trial.

That cap on damages, however, would endanger every American, because the amount is inadequate to deter or change criminal practices at large companies. Consider that BMS voluntarily paid more than $500 million to victims of its fraudulent patent claim, and you quickly see that a $250,000 punishment is insufficient to deter large corporate criminals.

When asked during the debate if he thought Senator Edwards, a former trial lawyer, was part of the lawsuit problem, Cheney responded, “I’m not familiar with his cases.” (As if Bush campaign staffers didn’t scrutinize every lawsuit the man ever filed). But as The Washington Post noted, Edwards’ previous political opponents seeking dirt “came away frustrated because Edwards’ clients were almost universally sympathetic figures.” Like most trial lawyers, he helped genuine victims get justified compensation and deter wrongdoers from harming others.

The attack on trial lawyers is really an attack on citizens’ ability to sue corporations, and it goes far beyond this election cycle; it’s part of a long-term assault on the rights of citizens and small business owners to hold corporations accountable via the courts. Having successfully undermined or dismantled regulations on big business in many realms, the next corporate agenda item is to regulate us — to strip citizens of our right to punish corporate crime and criminals.

We can and should find ways to curb groundless lawsuits, including disbarring lawyers deemed by judges and peers to have repeatedly filed unjustified lawsuits (and nobody despises unscrupulous attorneys more than honest ones). Genuine improvements, however, must work narrowly to discourage the small fraction of suits that truly are frivolous, not shield giant corporations from one of our few functioning tools to hold them accountable.

Jeff Milchen directs ReclaimDemocracy.org

 

Replace Bi-partisan Shows With Real Debates

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By Jeff Milchen
Published by the Pacific News Service, Sept 29, 2004

George W. Bush’s father, a five-time participant in events staged by the Commission on Presidential Debates (CPD), described them this way: “…it’s too much show business and too much prompting, too much artificiality, and not really debates. They’re rehearsed appearances.”

The problems began in 1988, when the League of Women Voters halted its long-time sponsorship of the debates over bi-partisan attempts to turn them into glorified infomercials. The League officially stated, “We have no intention of becoming an accessory to the hoodwinking of the American people.”

After the League’s withdrawal, the Republican and Democratic parties immediately seized the opportunity to control the debates with their own bi-partisan group, the CPD. Chaired by former heads of the respective parties, the CPD simply executes agreements made by the major party candidates and shields them from accountability for actions such as choosing sound-bite exchanges over real debate and excluding viable candidates from outside the dominant parties. The 32-page Kerry/Bush agreement forbids direct exchanges between candidates, limits follow-up questions and controls details right down to podium and camera angles.

Though few citizens’ know the full story, millions apparently recognize the events have ceased to be genuinely informative. From 1976 to 1984, 60-80 million viewers watched each debate hosted by the non-partisan League. But since then, Americans have tuned out the CPD’s staged events in droves. CPD events have averaged just 40 million viewers in the past two elections. Sixty percent of households tuned in to watch the Carter-Reagan debate in 1980 (in which candidates had a respectable 4 minutes per answer) compared to 30 percent of households dialing into the last Bush-Gore battle of 2 minute (maximum) sound bites in 2000. Though the numbers rebounded in the first 2004 debate, even with 60 million more potential U.S. viewers since 1984, viewership still is down.

What’s made the events so unappealing? The restrictive rules and shorter response times have enabled many scripted and evasive answers. Even the “town hall” debate is largely a facade, with CPD moderators screening questions from the pre-selected audience and forbidding any follow-up. The Kerry and Bush campaigns specified that the microphone must be cut if any participants deviate from the question approved by the moderator.

The lack of direct exchanges and moderators who stick tightly to standard stump speech topics may be the greatest injury to voters. Among key issues that never were mentioned in any 2000 presidential debate were: corporate power or corporate crime, the “drug war,” population growth, immigration and “free trade.” The only mention of labor referred to banning their soft money contributions. Will any moderator challenge the candidates about corporate power over elections or scandals like Halliburton and Enron this year? It will take exceptional courage as long as CPD events are staged for their owners’ benefit, not voters’.

And while more money than ever is being spent on youth voter registration, the CPD events send the message that their concerns don’t matter. While seniors and social security each were referenced more than 60 times during three debates in 2000, neither teenagers nor college students were mentioned at all — and every debate occurred on a college campus!

The narrow range of topics is linked to shutting out viable independent and “third party” candidates (except when both are convinced the outsider will help them, as with Ross Perot in 1992). For 2004, the major parties decreed that 15 percent of the public must indicate plans to vote for a candidate for him to be invited to the debate club. That’s an impossibly high bar, given that most news outlets never have mentioned that three candidates other than Bush, Kerry and Ralph Nader all have earned ballot positions in enough states to win an Electoral College majority (David Cobb, Green Party; Michael Badnarik, Libertarian Party; and Michael Peroutka, Constitution Party). Voters of every ideology lose when our choices are dictated by the two dominant parties.

This year, the organization I direct, Reclaim Democracy!, was proud to help launch a new and truly non-partisan Citizens’ Debate Commission (CDC) to challenge the CPD’s control and provide real debates, rather than sound-bite volleys. These debates would feature direct exchanges between candidates, set fair candidate participation criteria and address a wide range of pressing issues.

The CDC is supported by more than 60 civic groups as diverse as the American electorate, including leaders of the Free Congress Foundation, Judicial Watch, Youth Vote Coalition, Common Cause, the TransAfrica Forum and, tellingly, the former producer of the CPD debates. Yet most major media (with notable exceptions like the L.A. Times) have ignored the challenge entirely, much like the major parties deny voters’ rights to know their full options.

Simply exposing the CPD’s illegitimacy and directly challenging its control has forced it to adopt some of our plan, like varying moderators, lengthening rebuttal time, and allowing some follow-up questions and surrebuttals. It also led to the Memorandum of Understanding between candidates being released for the first time, which in turn produced more critical media coverage than ever before.

But that’s not enough when it comes to the single most influential forum for Americans trying to decide whether to vote and who to vote for. We all deserve debates that serve democracy, not two political parties. The Citizens’ Debate Commission is ready to serve that role and could well succeed by the next presidential election — if, that is, Americans step up and demand the change.

At the time of writing, Jeff Milchen directed Reclaim Democracy!, a non-profit organization working to revitalize American democracy. 

See our overview of the presidential debates and the need for reform.

Overview of Do-Not-Call Registry Litigation

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by ReclaimDemocracy.org Staff & Volunteers
Last updated October 4, 2004

Editors’ Note: If you seek detailed legal analysis of the DNCR case, see: Mainstream Marketing Services, et al. v. Federal Trade Commission: Resources and Legal Analysis

Introduction

Beneath the surface of the Do-Not-Call list dispute lie critical constitutional and democratic questions, such as: should corporations have free speech rights? Should courts consider economic impacts in evaluating whether a law is constitutional?

ReclaimDemocracy.org has compiled resources presenting all sides of this dispute and the larger issues of “commercial speech” and corporate claims to the protections of the U.S. Constitution. We do so because we believe it presents a key opportunity to re-examine the judicial creation of constitutional rights for corporations (corporate personhood) and explore how corporations use ill-gotten power to trump bona fide rights of citizens.

Background of the Do-Not-Call Registry (DNCR)

U.S. residents have tried to avoid unwanted phone solicitations with unlisted numbers, caller ID, voice mail, and other devices. Until recently, the burden rested on individuals to stop unwanted solicitations by spending time and money on these technologies and by requesting that they be added to company-specific”do not call” lists (a request telemarketers legally are obliged to honor). Despite these significant expenditures of time and money, many citizens complain they are losing control and are unable to defend their personal space.

In response, the Federal Trade Commission (FTC) created the national Do-Not-Call registry in 2003. The DNCR allows citizens to place their phone numbers on a national list controlled by the federal government. Under the law, it is illegal for commercial telemarketers to call people on the registry (however businesses may solicit recent customers who are on the list).

Citizens may register online at www.donotcall.gov or by phone. Three months after registration, commercial telemarketers are forbidden from calling you. Telemarketing companies are required to cover the costs of the program by purchasing the do-not-call lists from the government at a cost of $25 per area code and a $7,375 maximum annual charge. If a telemarketer makes an unauthorized call, the recipient can file a complaint, which the FTC will compile and use to fine or prosecute repeat offenders.

Telemarketing Corporations Sue to Block the Program

Telemarketing corporations filed two lawsuits attempting to stop implementation of the program. In the first, five telemarketing firms jointly argued that the Federal Trade Commission did not possess the legal authority to create and enforce the registry. On September 24, 2003, U.S. District Judge Lee R. West ruled for the telemarketers and prohibited the FTC from implementing the list and its associated restrictions. In response, the next day Congress approved legislation ratifying the authority of the FTC to enforce the no-call list, which George W. Bush promptly signed into law.

This Congressional save did not last long, however. Another group of telemarketing corporations (Mainstream Media Services, TMG Marketing, and American Teleservices Association) had filed a second lawsuit. On September 25 Denver-based U.S. District Court Judge Edward Nottingham decided that the registry unconstitutionally violates the telemarketing corporations’ “free speech rights.” Nottingham reasoned that no legal basis existed for the FTC to allow citizens to screen for-profit solicitors while not also offering citizens an opportunity to block calls from non-profit groups. So Nottingham prohibited the FTC from implementing the registry on October 1, 2003, the date it was supposed to take effect.

The FTC appealed the decision to the Tenth Circuit Court of Appeals. On October 7, a three-judge panel gave the FTC permission to enforce the registry while it decides whether to uphold or strike down Judge Nottingham’s decision. In doing so, the Tenth Circuit found that the FTC had a substantial chance of success on the merits of its appeal regarding the constitutionality of the DNCR.

The FTC reopened access to the registry on October 10, and it went into full effect on October 17. In addition, the Federal Communications Commission (FCC), which has overlapping jurisdiction with the FTC to protect citizens from telemarketing abuses, passed regulations under which it, too, can enforce the DNCR. The two agencies will coordinate enforcement. While the ultimate constitutionality of the registry hangs in the balance, the FTC already has issued civil fines to enforce the registry (see this pdf file for details).

Getting at the Core Issues

The DNCR dispute provides provocation to examine some extreme arguments made by the telemarketing industry:

1. Corporations enjoy commercial speech rights that are on par with, and may even take precedence over, the rights of people to enjoy peace and privacy in their homes.

2. The government must weigh the financial impacts of speech regulation on an industry as part of evaluating a law’s constitutionality. This is particularly disturbing given that telemarketing corporations voluntarily chose to create an industry based on breaching citizens’ privacy.

The inherent conflict between court-created “corporate rights” and the rights of human beings is growing. Consider this dualism: Corporations have obtained “intellectual property rights” to profit exclusively (with government enforcing their private monopoly) from the creations of employees–even for decades after an employees death. Access to, and use of, this information by others is limited because the government forcibly protects this lucrative proprietary information. Conversely, you have almost no power to protect your own personal information, such as your telephone number, e-mail addresses, home address, and personal financial information; and what little power you possess (excepting the DNCR) has required substantial time and effort to exercise. Courts have created corporate property rights allowing businesses to buy and sell this information without your consent.

The question for citizens is whether to accept corporate usurpation of human rights or to help revoke illegitimately-granted corporate privileges.

Updates: On October 4, 2004, without comment, the U.S. Supreme Court rejected an appeal by commercial telemarketers, which upheld the no-call list as constitutional.

Additional Resources

See our legal analysis of the Do-Not-Call Registry cases, with links to major briefs, court decisions and news coverage.

Learn more about Corporate Personhood

Black-Majority Congressional Districts May Undermine Black Americans’ Political Power

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By Henry Louis Gates Jr.
First published by The NY Times, Sept 23, 2004

The Voting Rights Act – signed into law on Aug. 6, 1965 – was a high point of the civil rights era. In 1965, there were 5 black members of Congress; today there are 39. No single piece of legislation since the 14th Amendment has had such a measurable and dramatic effect on the political fortunes of black Americans.

What’s not so clear is whether the effect is now mainly a positive one.

In 1965, in the infamous “Bloody Sunday” police riot on Pettus Bridge in Selma, a young civil rights leader named John Lewis risked his life for the cause of black enfranchisement. Yet two years ago, the same John Lewis, now a congressman from Georgia, found himself accused by John Ashcroft’s Justice Department of violating the Voting Rights Act.

That’s because he and his fellow Georgia Democrats backed a plan to reduce the concentration of minority voters in various districts. And Section 5 of the act prohibits “retrogression”: a change in district boundaries that would diminish a district’s percentage of black voters.

It sounds like some political “Freaky Friday”: was Mr. Ashcroft really trying to protect black Georgians from Mr. Lewis? Not exactly.

Mr. Lewis says Georgia is now a place where black candidates can be elected by black-white coalitions. “More and more, black and white voters, especially in the South, see that they’re in the same boat,” he says. “A lot of issues, like protecting the environment, creating jobs, protecting neighborhoods, cleaning up a toxic site, or trying to do something about Iraq, have very little to do with race.”

Meanwhile, Mr. Ashcroft’s record shows little concern for black voters but abundant concern for Republican candidates. As governor of Missouri, he vetoed two bills designed to redress racial inequalities in voter registration.

As U.S. attorney general, he has effectively seconded the Justice Department’s Voting Section to the G.O.P. Remember Tom DeLay’s plan to redistrict Texas to gain seats for Republicans? As Jeffrey Toobin has reported in The New Yorker, career lawyers at the Voting Section had drafted a long internal memo arguing that the DeLay plan would illegally dilute minority voting power. But late last year, Mr. Ashcroft’s political staff approved the plan anyway. Come November, you’ll see the results.

The creation of black-majority districts was necessary when the Democratic Party had a monopoly in the South, and whites would almost never vote for blacks. But since 1990, districting deals between Republicans and black Democrats have led to political mischief. Shepherding black voters into black districts left other districts lily-white – and skewed to the right. You saw the consequences in 1994, when the House came under Republican control.

In Georgia and elsewhere, there has been a clash between what the constitutional scholar Richard Pildes calls “descriptive” and “substantive” representation. Descriptive representation is centered on the symbolism of skin: a black face for a black constituency. But it came at the cost of substantive representation – the likelihood that lawmakers, taken as a whole, would represent the group’s substantive interests. Blacks were winning battles but losing the war as conservative Republicans beat white moderate Democrats.

Still, Georgia v. Ashcroft – finally settled in favor of the Georgia Democrats by the Supreme Court – is really a symptom of a bigger problem: not racial districting but partisan districting. “The United States is the only country that places the power to draw election districts in the hands of self-interested political actors,” Mr. Pildes says. “The joke is that the voters don’t really choose the candidates; the candidates choose their voters.”

Iowa, which has genuinely competitive districts drawn by a nonpartisan panel, is an exception. Jim Leach, a Republican congressman from Iowa, says about 390 seats in the U.S. House are safe for one party or the other: he calls it “the collegiality of incumbency.” The safe Republican districts “tend to nominate to the right of center, while safe Democratic districts tend to nominate left of center.” The result is a polarized Congress.

In 2007, Section 5 of the Voting Rights Act is set to expire and Congress will have to decide how to respond. After years of race- and party-based redistricting, two things seem likely. There’ll be many black faces in the House – and the Republicans will be running the place.

© 2004 NY Times