How `Jackpot Justice' Became Law's Best Bet

By Murray, Frank J. | Insight on the News, August 28, 2000 | Go to article overview

How `Jackpot Justice' Became Law's Best Bet


Murray, Frank J., Insight on the News


Lawyers now swarm across the nation in packs, chasing companies that make tobacco and firearms but also latex gloves, lead paint and medical devices, all in the name of the public interest.

Exhibit A: In the latest record-breaking product-liability case, a Miami jury ordered the five major tobacco companies to pay $145 billion in punitive damages to hundreds of thousands of sick Florida smokers in a classaction lawsuit that accused the cigarette makers of knowingly marketing a deadly product. Already, lawyers are predicting the next big lawsuit will rise from the dregs of the federal government's antitrust case against Microsoft.

The leader of the pack going after Microsoft appears to be Michael D. Hausfeld, lead counsel in the vitamin price-fixing case that produced last summer's $1.17 billion settlement. A coalition of seven dozen lawyers ("something larger than a gaggle but smaller than a plague," as Hausfeld describes it) gathered Jan. 5 at the Grand Hyatt Hotel in Washington to plot strategy for displacing the lawyers who first sued Microsoft early last year.

Neither case is typical of the 15.4 million civil lawsuits fried each year in state courts or the 256,787 lodged in federal courts during 1998 alone. Most prove only that anyone can sue anyone over anything. The vast majority go nowhere, but analysts -- including Chief Justice William H. Rehnquistsay the U.S. legal system is buckling under their overwhelming number and variety.

Among other recent examples:

* Consumers went into federal court in Philadelphia claiming that United Parcel Service, or UPS, overcharges to insure packages. UPS applies an "excess-value" charge of 35 cents per 100 pounds, while insurers charge just 13 cents per $1,000 of a package's value. Over five years, the lawsuit claims, UPS took in $845 million in premiums, while losses totaled $281 million.

* Miami Heat fan Richard Mateer, a Boca Raton lawyer who loved the National Basketball Association team enough to pay $11,000 for six front-row season tickets, sued in April when the owners added another front row, making the seats he'd held since 1988 second-rate.

* The Wal-Mart, Sears, Circuit City and Safeway chains are leading several million businesses seeking $8.1 billion in damages -- and three times that much in punitive awards -- against some 6,000 banks that operate Visa or MasterCard accounts. Stores charge that the banks conspired to force them to accept high-risk debit cards on the same status as credit cards, even though the bank charges merchants a higher fee for debit transactions.

* Workers who deliver groceries and prescriptions in New York sued Gristedes supermarkets, the A&P grocery chain and several delivery services for underpayments and unpaid overtime in an anonymous class action with the help of the National Employment Law Project. They adopted a tactic that won millions for construction laborers, carpenters, asbestos workers and plumbers who also said they fear retaliation if they use normal channels to collect unpaid overtime.

Author Peter W. Huber of the Manhattan Institute hangs a price tag of $300 billion a year in corporate costs and higher insurance premiums on the current system of lawsuits for personal injury and property damage. The Association of Trial Lawyers of America, or ATLA, rebukes that figure. (ATLA's 56,000 members mostly are lawyers who file these types of claims and oppose the "tort tax" aimed at making their endeavors less attractive.) Only about 2 percent of cases involving torts, contract violations or real property ever reach trial, according to the nonprofit National Center for State Courts. Three-fourths are dismissed, including many quietly settled out of court, according to Neil LaFountain, a research analyst at the center in Williamsburg, Va.

Researchers who look closely at high-profile verdicts find that, after years of maneuvering, the biggest winners often grow old and lose out as judgments are overturned or sharply reduced during the appeal process. …

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