(Editor’s Note: All the excerpts within this blog have been taken from a single article out of the March 16 edition of the New York Times Magazine, which can be found HERE. Yes, this is a long blog post, but the situation is incredibly important as well. Please give it a shot.)
In the March 16th edition of their weekly magazine, the New York Times published an article chronicling the pro-big-business trend of the current Supreme Court. I have just recently gotten around to actually reading it.. and I’m just as horrified as I thought I would be.
“Punitive damages – money awarded by civil juries on top of any awarded for actual harm that victims have suffered – are designed to penalize especially egregious acts of corporate misconduct resulting from malice or greed, and to deter similar wrongdoing in the future. In the 19th century, courts generally demanded a clear assignment of fault in cases where victims sued for injuries caused by malfunctioning products. It was hard for plaintiffs to recover in personal-injury cases unless the corporation was personally at fault. But in the 20th century, in liability cases involving a rapidly expanding class of potentially dangerous products like cars, drugs and medical devices, courts increasingly applied a standard of “strict liability,” which held that manufacturers should pay whether or not they were directly at fault.
“The animating idea was that manufacturers were in the best position to prevent accidents by improving their products with better design and testing. They and their insurance companies (rather than society as a whole) would shoulder the costs of accidents, thus giving them an incentive to make their products safer. Encouraged by Ralph Nader’s book, “Unsafe at Any Speed,” published in 1965, courts began to see car accidents as predictable events that better car design could have prevented. In 1968, for example, federal courts held that car manufacturers could be sued for failing to make cars safe enough for drivers to survive crashes, even if the driver was at fault for the crash.
“A series of well-publicized awards in the 1980s and ‘90s culminated in the largest punitive damage award in American history – the $5 billion levied against Exxon after the Exxon Valdez oil spill in 1989. This was hardly typical: the median punitive award actually fell to $50,000 in 2001 from $63,000 in 1992. Nevertheless, critics like Olson claimed that multimillion-dollar punitive-damage verdicts were threatening the health of the economy. They resolved to fight back on several fronts. In his first Supreme Court argument, in 1986, (Theodore) Olson (ed: pro-business lawyer) set out the broad parameters of his argument: for most of English and American history, private litigants were entitled to be compensated for whatever damages they suffered, including pain and suffering, but any public wrongs – like the failure of American business to make cars safer by adopting air bags – should be addressed by legislation or regulation, not by the courts.”
I want to preface this with a simple admission: I am not a lawyer and my analysis of this issue is not based strictly on legal precedent, an interpretation of the constitution or the founder’s intent.
Let’s start by dealing with the word ‘punitive.’ These types of damages are meant to punish defendants for willfully malicious or greedy acts AND/OR as a deterrent to discourage the defendant from engaging in specific conduct in the future. Thus, these awards function as a safeguard against corporate interests and greed run amuck. With massive punitive awards as a legitimate threat in the case of negligence or wrongdoing, corporations are forced to reform themselves in ways that should benefit the consumer. Not only this, but punitive damages disallow businesses from engaging in a simple cost-benefit analysis of risk because the possible punitive damages of a lawsuit can be wildly unpredictable. It would seem intrinsically obvious that these are good things for the collective public. Not so, apparently.
I can see a couple of possible objections quite clearly. Many pro-business libertarians would say that any sort of regulation or judicial oversight that takes away a capitalist’s ability to engage in risk-taking is harmful to business. Certainly, there are moments when this is very true. However, the ‘risk’ that we are referring to here is the kind that weighs profit against safety with the consumer hanging in the balance. Regardless of law, precedent or economic theorization, isn’t it just the right thing to actively deter corporations from engaging a cost-benefit analysis that will result in unsafe products on the market or dangerous situations in general?
Another possible objection may be on the grounds that consumers accept a certain amount of liability when purchasing a product. So, as the reasoning may go, if consumers don’t want to get injured in a car crash than instead of suing the car company they should just not buy a car. However, there are many judicial and legislative precedents that show corporations ARE responsible for the safety of their product and its effects on the population.
The final point of the excerpt above is a fairly telling one. The idea of a Supreme Court that is STRICTLY interpreting the law without becoming ‘activist’ is a straw man argument because it suggests that by taking the side of business the Supreme Court has NOT engaged in activism. In actuality, it has just engaged in the correct type of activism for the corporations. Isn’t it funny how those in power always decry the ‘activist courts’ until they actually need some activism to get their own agenda through? This will come up again later.
Obviously, the pro-corporation crowd would LOVE to see the courts begin deferring to business interests while advocating for the ascension of purely legislative regulation and oversight.. Why, you may ask? Because the vast majority of Congresspersons are elected with money and resources gathered and donated by pro-business and pro-corporation lobbyist groups. So, it is clearly in their interests to take the fight to Congress where they have the strong hand rather than leave it in the hands of unpredictable juries and judges. Or, they could just change the face of the Supreme Court by pumping exponentially more money into corporate defense and lobbying for pro-business Justices. Done and done.
“The origins of the business community’s campaign to transform the Supreme Court can be traced back precisely to Aug. 23, 1971. That was the day that Lewis F .Powell Jr., a corporate lawyer in Richmond, Va., wrote a memo to his friend Eugene B. Snydor, then the head of the education committee of the U.S. Chamber of Commerce. In the memo, Powell expressed concern that the American economic system was “under broad attack.” He identified several aggressors: the New Left, the liberal media, rebellious students on college campuses and most important, Ralph Nader. Earlier that year, Nader founded Public Citizen to advocate for consumer rights, bring antitrust actions when the Justice Department did not and sue federal agencies when they failed to adopt health and safety regulations.”
Back when Nader was a legitimate political force and not a left-wing caricature he fought for economic populism in all corners of business. His influence saw the rise of a level of corporate accountability that has become a thing of the past because of people like former Supreme Court Justice and Corporate Lawyer/Lobbyist Lewis Powell.
“To counter the growing influence of public-interest litigation groups like Public Citizen, Powell urged the Chamber of Commerce to begin a multifront lobbying campaign on behalf of business interests, including hiring top lawyers to bring cases before the Supreme Court. “The judiciary,” Powell predicted, “may be the most important instrument for social, economic and political change.” Two months after he wrote the memo, Powell was appointed by Richard Nixon to the Supreme Court.”
Whaaaaaaa..?!?! Talk about brazen hypocrisy. So in the 1970s, when the pro-business lobby was not in power and wanted to change the populist trend it embraced the judiciary system as the tool for ACTIVE change. And yet, today, when the populists are trying to use the court system in much the same way, these pro-business lawyers and lobbyists wax eloquent about the strictly interpretive role of the court system. So, in other words, the true interpretation of precedent and the constitution itself is whatever benefits YOU the most, right guys?
So, what does the big business lobbyist Chamber of Commerce look like nowadays?
“Today, the Chamber of Commerce is an imposing lobbying force. To fulfill its mission of serving “the unified interests of American business,” it collects membership dues from more than three million businesses and related organizations; last year, according to the Center for Responsive Politics, the chamber spent more than $21 million lobbying the White House, Congress and regulatory agencies on legal matters.”
We’ll gloss over the fact that there are absolutely no ‘unifed interests’ shared by all American businesses. Clearly, however, the Chamber of Commerce has built up quite an influential base.
What about their influence on the makeup of the Supreme Court Justices?
“In addition to litigating cases before the court, the Chamber of Commerce also lobbies Congress and the White House in an effort to change the composition of the court itself. (Unlike many other government officials, the justices themselves are not, of course, subject to direct corporate lobbying.) The chamber’s efforts in this area were inspired by Robert Bork’s thwarted nomination to the court in 1987. Business groups were enthusiastic about Bork — not because of his conservative social views but because of his skepticism of vigorous antitrust enforcement. “In reaction to the Bork nomination, it struck us that we didn’t even have a process in place to be a player,” Conrad said.
“So the chamber set up a formal process for endorsing candidates after their nominations. The process was designed to be bipartisan; and the chamber has encouraged Democratic as well as Republican presidents to appoint justices. Nominees are evaluated solely through the prism of their views about business. “We’re very surgical in our analysis,” Conrad said.”
Perhaps their support of Robert Bork should give us an indication as to their true wisdom. Yeah, the same guy who wanted to roll back civil rights, didn’t believe in a right to privacy and supported the supremacy of the Executive Branch. Oh, and he is one of only three Supreme Court nominees that the ACLU opposed. Thank God he is not on the court. It’s also interesting to note the non-partisan nature of this big-business alliance.
The larger problem with the stance taken by the Chamber of Commerce is exactly the ‘surgical’ type of analysis referred to by Mr. Conrad. This is EXACTLY the type of surgical analysis that has been historically performed by Christians looking for the Presidential candidate most likely to sign a ban on abortion into law. It doesn’t take the whole picture into account AND sometimes you get stuck with a pretty shitty president who can’t even change anything.
Unfortunately, in this case, the Supreme Court has shifted unquestionably toward big-business interests.
“Exactly how successful has the Chamber of Commerce been at the Supreme Court? Although the court is currently accepting less than 2 percent of the 10,000 petitions it receives each year, the Chamber of Commerce’s petitions between 2004 and 2007 were granted at a rate of 26 percent, according to Scotusblog. And persuading the Supreme Court to hear a case is more than half the battle: Richard Lazarus, a law professor at Georgetown who also represents environmental clients before the court, recently ran the numbers and found that the court reverses the lower court in 65 percent of the cases it agrees to hear; and when the petitioner is represented by the elite Supreme Court advocates routinely hired by the chamber, the success rate rises to 75 percent.
“Faced with these daunting numbers, the progressive antagonists of big business are understandably feeling beleaguered and outgunned. “The fight before the court is generally not an even one,” said David Vladeck, who once worked for the Public Citizen Litigation Group and now teaches law at Georgetown. “There’s us on one side, with a brief or two, and industry on the other side, with a well-coordinated campaign of 10 or 12 briefs, with each one written by a member of the elite Supreme Court bar that address an issue in enormous depth.” He added, ruefully, “You admire their handiwork, but it’s frustrating as hell to deal with.’”
In essence, our highest Judicial Court has been slowly and purposefully co-opted by powerful big-business interests who have money to burn and hordes of influential lawyers, intellectuals, lobbyists and former clerks at their disposal.
And this brings us to the big payoff,.. or lack thereof. Earlier this month, lawyers from both sides of the Exxon Valdez case presented their arguments to the Supreme Court regarding the punitive damages awarded as a result of the massive oil spill along the Alaskan coast in 1989. The original punitive damages were $5 billion and this was later reduced on appeal to $2.5 billion. But that wasn’t enough of a reduction for Exxon, apparently. And certainly not with their pet Justices in place and the most powerful defense team that money can buy.
Perhaps we should all refresh our memory regarding the devastating effects of this spill. Hundreds of businesses were forced to close shop. Thousand and thousands of jobs were lost and never recovered. Fisheries were out of work. Wildlife was senselessly killed and the entire ecosystem was damaged so badly that negative effects still remain today. The tourism industry was ruined. On top of all this, Exxon did NOTHING during the first 3 days of the spill, which is akin to doing nothing during the first 3 hours of a massive heart attack – That is the most critical time period. Hundreds of thousands of people were directly and indirectly affected economically, health-wise and in various other ways. And yet, 20 years later, Exxon still wants to blame the entire incident only on the ship’s alcoholic captain who steered the ship into a reef,.. rather than the company who hired, trained and was responsible to oversee his work: Exxon.
“After the verdict, Exxon began providing money for academic research to support its claim that the award for damages was excessive. It financed some of the country’s most prominent scholars on both sides of the political spectrum, including the Nobel laureate Daniel Kahneman and Cass Sunstein, a law professor at the University of Chicago. (Sunstein says he accepted only travel grants, not research support, from Exxon; and Kahneman stresses that the financing had no influence on the substance of his work.) In a 2002 book, “Punitive Damages: How Juries Decide,” Sunstein studied hundreds of mock-jury deliberations and concluded that jurors are unpredictable and often irrational in punitive-damage cases. Jury deliberations, he found, increase the unpredictability, as well as the dollar amount of the final awards. Sunstein concluded that a system of civil fines determined by experts, rather than punitive damages determined by juries, might be more sensible. When Exxon appealed the $5 billion verdict in 2006, it was reduced by an appellate court to $2.5 billion. The reduced verdict is once again being challenged as excessive.
“Walter Dellinger, the lawyer now arguing Exxon’s case before the Supreme Court, is no Republican activist. Like Sunstein, he is one of the most respected Democratic constitutional scholars, as well as a former acting solicitor general for President Clinton. Last month, in his argument before the court, Dellinger argued that because Exxon has already paid $3.4 billion in fines, cleanup costs and compensation connected with the Exxon Valdez spill, and because it didn’t act out of malice or greed in failing to monitor the alcoholic captain, additional punitive damages would serve no “public purpose.”’
We’ll attempt to suspend our disbelief about the unbiased nature of the research done by Mr. Kahneman and Mr. Sunstein.
What’s ironic, however, about Sunstein’s research is that it plays exactly into my belief about why punitive damages are a good thing. The unpredictable nature of jury-awarded damages is exactly what makes them desirable. A system of civil fines would simply make it convenient for a company to do this type of cost-benefit analysis:
[(profit – civil fine in case of lawsuits) > or < (profit + cost incurred providing safer product for consumer)]
Thus, companies could easily figure out whether safety was a desirable feature when it comes to the bottom line. In some cases the safer product would be more profitable and in other cases the unsafe product would be more profitable even when factoring in the inevitable civil fines. So, consumer benefit and corporate accountability for their products would be completely circumvented. Not even a part of the equation. Gone.
The only way civil fines would work is if they were legislated to be so high that no corporation would dare incur their wrath. Not bloody likely with the pro-business Congress in place.
What I mean to say here is that what is keeping companies like Exxon in line with safety and self-regulation over profit is the THREAT of HUGE and UNPREDICTABLE punitive damages like those awarded in the Exxon case. Punitive damages that cannot simply be worked into the budget. Why do these work? Since Exxon’s oil spill and the resulting lawsuits and financial repercussions, Exxon has been a leader in alternative energy investment, they have invested in better ships and guidance technology and they have put their employees through FAR more stringent hiring tests and oversight when working. THESE ARE THE PUBLIC GOOD that Mr. Dellinger was searching for in vain. What’s more, these public benefits would likely not have come about without a shocking punitive damage award. The punitive damages COMPELLED Exxon to change direction because the dollar amount was not an acceptable cost in ANY cost-benefit calculation or bottom line assessment.
Let me give you another example of why these damages are a good thing for consumers:
“The poster child for punitive-damage abuse, widely derided in TV and radio ads paid for by the business community, was a New Mexico grandmother who, in 1994, was awarded $2.7 million in punitive damages when she scalded herself with hot McDonald’s coffee. Consumer advocates countered that she had originally asked for $20,000 for medical expenses, which McDonald’s refused to pay, and the award appeared to have the effect of persuading McDonald’s to serve its coffee at a safer temperature.”
That’s right, folks. McDonalds did not regulate their coffee temperatures and served them DANGEROUSLY hot with absolutely no warning as to how scalding they may be. When it inevitably burned someone badly and they were sued, McDonalds REFUSED to pay the $20,000 medical bill which THEN led to the lawsuit. The jury awarded the huge punitive damage as a tool to COMPEL McDonalds to make its product safer for customers. Not only is this WELL within the legal guidelines for a punitive damage award but it also did something that a modest punitive damage award would’ve NEVER done: It actually forced a corporation to change their practices.
Does anyone HONESTLY think that if the plaintiff was awarded $200,000 that McDonalds would have lifted a finger to examine their coffee temperature policy? Hell no. It HAD to be a huge award because that is the ONLY way that the company would be persuaded to offer a safer, better product.
But wait, there’s more. I know,.. the mind reels to think there could be more.
Not only is the Chamber of Commerce working to change the composition and slant of the court’s decisions, but they are ALSO working toward this:
“Ted Olson and the Chamber of Commerce aren’t only trying to persuade the Supreme Court to cut back on large punitive-damage awards; they’re also arguing that consumers injured by dangerous or defective medical devices and drugs in some cases shouldn’t be able to file product-liability suits at all. Because there is no national product-liability law that allows federal suits for personal injuries, consumers who are injured by, say, defective heart valves or artificial hips have to sue in state courts under state tort law. By asking the Supreme Court to prevent injured consumers from suing in state court, the business community, supported by the Bush administration, is trying to ensure that these consumers often have no legal remedy for their injuries. And the Supreme Court has been increasingly sympathetic to the business community’s arguments.”
If big business gets its way, there will be no legal avenue for injured consumers to hold corporations accountable. Incredible.
If you believe this upcoming election might offer some hope for a change, you may want to think again. The only candidate espousing economic populism was John Edwards and he has long since dropped out of the race. Senator Obama has talked a good game at different times, but clearly needs big business to get elected; after all, much of his support comes from the upper-middle and upper classes of educated elites. McCain and Clinton are both shills for big-business.
There is a middle ground to all of this where business flourishes and is incentivized to produce safe products and where consumers are responsibly using safe products. I’m not sure how we can get there, but I know that where we are headed right now is unsettling to the core.
