Class Action Dilemmas: Pursuing Public Goals for Private Gain

In May 1995, former Texas Department of Insurance ( TDI) General Counsel D. J. Powers, then working as a solo practitioner in Austin, received a call from Dallas attorney John Cracken seeking Powers' help in exploring a new area of litigation. Cracken, a personal injury attorney described by the San Antonio Express-News as having "a reputation for aggressive if not audacious litigation," ⁴ reportedly had seen his caseload and earnings threatened by recently enacted Texas tort reform. ⁵ He had watched the progress of a class action suit handled by an attorney he admired and wound up liking both the action and the outcomes involved in this sort of litigation. In pursuit of a new line of work, Cracken thought that there might be good "small claims" class action cases within either the utilities or insurance arenas and hired Powers at $150 per hour as one of his consultants to see if there were any potential for a consumer class action against the insurance industry. ⁶ Other consultants were concurrently investigating possible utility-related class action litigation.

Powers was eminently qualified for this role. Before his stint as general counsel from November 1993 through January 1995, he was a staff attorney with the Office of Public Insurance Counsel ( OPIC), the state agency that represents the interests of consumers in matters involving insurers and regulatory agencies. Generally regarded as an advocate for consumers and insureds during his tenure at OPIC and TDI, Powers had felt his time at the agency was coming to a close with the election of Republican George W. Bush as Governor of Texas. After the election, Powers worked furiously on passing controversial rules that would prohibit redlining, the practice of refusing to write insurance policies -- or overcharging for their premiums -- in underprivileged areas. With the appointment of Elton Bomer as commissioner for the TDI, regarded by many observers as more conservative than the incumbent commissioner, Powers felt that the new administration would quickly terminate him.

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