Consumer Protection Update

The State of Tort Reform in Texas
Spring 2000

"Though the tort-reform debate appears to be about frivolous lawsuits, what it's really about is corporate responsibility. In the end, the most important question will be who-- if anyone-- can be held accountable when American consumers are killed, injured, or defrauded through no fault of their own."
Excerpt from: "Is lawsuit reform good for consumers?", Consumer Reports, May 1995

BACKGROUND
The rights of Texans to hold wrongdoers accountable in the civil justice system has been the subject of intense lobbying by insurance and business interests for over ten years.

Packaged as "tort reform" and advocated primarily by hired-gun lobbyists paid with funds raised from big business, civil justice issues have become a cash cow for Austin lobbyists. After obtaining significant protections for chemical companies and tobacco interests in 1993, "tort reform" peaked in 1995 with the passage of 15 bills making broad changes in the civil justice system. Simply put, tort "reform" as defined by insurance and business interests has been enacted, both in the courts and the legislature.

1995 CHANGES IN TEXAS TORT LAW - DOWNSIDES
While Texas´ lawyers supported legislation providing harsher sanctions for frivolous legal actions and new limitations on judicial campaign finance, we sought a more balanced approach in most of the 1995 tort legislation.

The negatives of the 1995 tort revisions can be summed up very easily:

• Texas citizens and businesses who are plaintiffs have fewer rights.
• Insurance companies will make more money.
• Insurance companies have less incentive to settle claims.
• In some cases, the cost of injury is shifted from liable, responsible defendants to the injured party or the taxpayers.
• Nothing was done to prevent the root cause of legal claims: preventable deaths and injuries, thus the losses and associated costs are still with us.

JUDICIAL ACTIVISM AT THE TEXAS SUPREME COURT
Coupled with the new obstacles in prosecuting civil claims brought about by the 1995 legislative changes is an activist Supreme Court carrying out a pro-defendant, pro-insurance company agenda. As reported in the September 4, 1995 edition of the independent legal publication, Texas Lawyer, defendants won 84% of the tort cases heard by the Texas Supreme Court in 1995.

CONCLUSION
Changes brought about by the 1995 tort revisions are just now beginning to impact cases in the system. The ultimate effect of these changes should be allowed to develop before additional pro-defendant changes are layered on top of the full plate already served up to insurance and business interests.

Even the proponents of "tort reform" agree that the changes enacted were substantial and far-reaching:

"All of these laws were very significant in restoring reality and striking a balance in the system -- without depriving anyone of their constitutional rights or their 'day in court'. All in all, we got much more than we could have expected." H. Dane Harris, President, Texas Association of Business & Chamber of Commerce. Texas Brought Back to 'Reality', Tyler Morning Telegraph, June 16, 1995

THE TEXAS SUPREME COURT
Texas Supreme court decisions tend to receive little attention outside legal circles, but recent court actions have significantly narrowed the rights of plaintiffs in Texas' legal system.

The success of insurance and business defendants at the Texas Supreme Court, coupled with the far-reaching legislative changes enacted at the behest of the same interests, should signal "overkill" in attempts by these groups to seek even more advantage in the civil justice system.

"Most cases involving contracts, oil and gas disputes, election conflicts, taxation and family law were excluded because there was often no clear defined plaintiff-defendant polarization, or because both parties were actively pursuing their dispute before one won the race to the courthouse. In 1995 cases that fit this profile, plaintiffs won just 16% of the time."

"Kathy Butler (name partner in Houston's Butler & Harris) in a summary of the courts 1995 actions notes that insurance companies won almost all of their cases, and the court seems ready to decide more cases by summary judgment."

"Eugene Cook, former Supreme Court justice, says he sees another pro-defense characteristic in the current court. He says since the late 1980s the increasingly conservative court has squelched plaintiffs' efforts to create new duties for banks and insurance companies that ultimately lead to bad faith claims."
The Court's Big Chill , Texas Lawyer, Sept. 4, 1995

"Part of the reason is simply that the battles in the most contentious area, personal injury law, have been fought and won by corporate defendants and insurance companies. An analysis of such cases by the Texas Lawyer newspaper found that the court ruled in favor of plaintiffs only 16% of the time in the year ended Aug. 31, compared with pro-plaintiff rulings in nearly 70% of the cases a decade ago."

"The pendulum has swung rapidly in the other direction," says former Justice Bob Gammage, who retired Sept. 1, 1995 -- and who frequently clashed with the court's majority."
High-Court Forecast is Business as Usual, Wall Street Journal, September 20, 1995

TEXAS JURIES FRIENDLY TO BUSINESS
"According to Jury Verdict Research, a Horsham, Pa., organization that tracks lawsuit statistics, [Texas] plaintiffs won only 42% of the time in 1994 while nationally plaintiffs won 55% of the time. The median compensatory award in Texas fell 36% to $31,736 while nationally the median rose to $57,250."

"When Texans take cases to court, the verdicts are usually closer to what the defendants offer than what the plaintiffs demand."
Texas juries giving less in damage claims, Dallas Morning News, Sept. 3, 1995

"Never mind. Now that lawmakers have fixed state's civil lawsuit system in response to claims that businesses have been afraid to relocate here, along comes a bunch of relocation experts suggesting it wasn't broke. Expansion Management an international site selection magazine read by 41,000 executives who manage their companies' expansion and relocation plans rated states based on a dozen factors ranging from percentage of verdicts more than $1 million to how long it takes a case to come to trial, editor Jack Wimer said. Jury Verdict Research, a Horsham, Pa., organization that tracks lawsuit statistics, provided the data."

"Texas wasn't at the top of anything. It ranked eighth for modest settlements and 18th for verdicts less than $100,000."
Texas has been always friendly to business, experts say, Dallas Morning News, July 16, 1995

CONSUMER PROTECTIONS DECLINING
"We learned that key consumer laws are being undermined in the U.S. Congress and many state legislatures. Protections that Americans have long taken for granted--... are under attack and in some cases disappearing. "There is a slash-and-burn attitude," says Bernice Friedlander, acting director of the U.S. Office of Consumer Affairs. "The philosophy of Congress seems to be let the buyer beware. Then if you break your neck or get into trouble, they'll change the liability laws so you can't help yourself."

"Knowing an opportunity when they see one, special interest groups are working to weaken or repeal pro-consumer laws in many states."

"The Consumer Product Safety Commission lost 40% of its staff between 1980 and 1985, while the FTC saw its staff reduced by 50% between 1980 and 1989. "We had a situation starting in the early 1980s where the federal government was missing in action," says Minnesota attorney general Hubert Humphrey III, whose father, the late Senator and Vice President Hubert Humphrey, fought for many consumer protections."

"The assault on consumer agencies stepped up last year with the arrival of the 104th Congress. Funding for the already skeletal CPSC is likely to be reduced by another 6% or so, and the current Congress has other targets in mind as well. For example, it proposes to cut spending for the enforcement of environmental laws by 25%, to save $1.8 billion, and of worker health and safety laws by 33%, for $50 million."
Excerpt from: You're Losing Your Consumer Rights, Money magazine investigative report, March 1996

COST OF PRODUCT LIABILITY INSURANCE LOW
"Product liability insurance costs in the United States are a small part of the retail cost of products. If product liability was totally abolished, it would drop retail prices by 26 cents for each $100 of retail sales in the country. In other words, abolition of all product liability would save $26 on a $10,000 purchase. Costs do vary somewhat by region, but in no state where data are available do they exceed 31.5 cents per $100 of retail sales."

"Six persons per 10,000 in the United States had a claim closed over the decade. Three persons per 10,000 received any payment for a product injury. Over the last decade, the average number of product liability claims closed per year was 134,209, or about 2,700 per state. The number of victims of product injury collecting payments averaged 54,055 per year, or about 1,100 per state."
Product Liability Insurance Experience 1984-1993, A Report of the Insurance Group of the Consumer Federation of America, March 1995

Our forefathers fought for freedom and it was hard won. Each time we lose a freedom or a right, we almost certainly will not be able to win it back. If we as Texans and Americans do not act to protect our freedom and our rights under the civil justice system, then who will? You can bet it won't be big business, corporations or insurance companies.

This article was provided by, and reprinted with the permission of, the Consumer Law Information Center, a project of the Texas Trial Lawyers Association - the Lawyers who represent consumers.

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