Presentation by Bill Pryor, Attorney General of Alabama
Tuesday, June 22, 1999, U.S. Chamber of Commerce, Washington, D.C.
The Federalist Society, The Manhattan Institute, and The U.S. Chamber
Institute for Legal Reform Conference on The New Business of Government-Sponsored
Litigation: State Attorneys General & Big City Lawsuits
Two years ago, I warned, in editorials published in The Wall Street
Journal and The New York Times, that the lawsuits filed by my fellow
state attorneys general against the tobacco industry threatened the
entire business community. Since then, the legal landscape has deteriorated
to the point that we are here today to discuss generally the "new
business of government-sponsored litigation" and, on this panel,
specifically, "state attorneys general and the power to change
law." I am still a dissenter. My objection to this new wave of
lawsuit abuse is that it violates the key principle that underlies
the American notion of the rule of law. In my remarks, I will explain
this objection and outline four abusive features of this litigation.
I also will offer four ideas for curtailing this problem.
Eleven years ago, Justice Antonia Scalia was the lone member of
the Supreme Court to vote to declare the independent counsel law
unconstitutional. The beginning of his dissenting opinion, which
is today more popular than it was in 1988, is worthwhile reading.
Justice Scalia wrote,
"It is the proud boast of our democracy that we have "a
government of laws and not of men." Many Americans are familiar
with that phrase; not many know its derivation. It comes from Part
the First, Article XXX, of the Massachusetts Constitution of 1780,
which reads in full as follows:
`In the government of this Commonwealth, the legislative department
shall never exercise the executive and judicial powers, or either
of them: The executive shall never exercise the legislative and
judicial powers, or either of them: The judicial shall never exercise
the legislative and executive powers, or either of them: to the
end it may be a government of laws and not of men.'
"The Framers of the Federal Constitution similarly viewed
the principle of separation of powers as the absolutely central
guarantee of a just Government." Morrison v. Olson, 487 U.S.
654, 697 (1988) (Scalia, J., dissenting).
The recent government suits against the tobacco and firearms industries
trample upon this central feature of the rule of law. The aim of
this litigation is to shift the awesome powers of legislative bodiescommercial
regulation, taxation, appropriation, and the power to change lawto
the judicial branch of government. With that shift comes an assault
on civil rights, democratic representation, and free enterprise.
The government suits against the tobacco and firearms industries
involve commercial regulation that, in a legislative arena, would
be impossible to achieve both legally and politically. The national
tobacco settlement, for example, imposes unprecedented advertising
and other marketing restrictions on the manufacture and sale of
tobacco products. The settlement creates a complicated regulatory
scheme that bans the use of cartoons in tobacco marketing, the sale
of clothes with brand-name logos, sponsorships of most forms of
commercial entertainment, and even some forms of lobbying. Politically,
antitobacco activists could not have enacted legislation on this
scale in either Congress or a substantial number of state legislatures.
Indeed, they tried and failed. Legally, these restrictions could
not have been achieved through legislation without violating the
free speech guarantee of the first amendment.
By utilizing litigation to achieve new regulation, the proponents
of government expansion have a powerful new tool. If the new regulations
are "voluntarily" accepted by the industry through a settlement
agreement, then the constitutional and other legal objections become
moot. What has been impossible legally and politically suddenly
becomes possible, even attractive or worse, inevitable. The historic
respect of the common law for freedom of contract and private property
is also undermined when the manufacturer of legal but dangerous
products can be haled into court to pay huge sums that were unforeseeable
when the manufacturer first calculated the risks of investing in
The main objective of the tobacco lawsuits, despite the rhetoric
of the proponents, was to raise revenue. Indeed, the tobacco settlement
represents the largest government-imposed increase in the price
of a legal product in the history of the United States.
Using lawsuits to raise revenue is far easier than raising taxes
the old-fashioned way. This method bypasses the need for representatives
or the voters to approve the tax. Those "messy" restrictions,
such as requiring the revenue measure to originate in the House
of Representatives, can also be avoided.
The myth told by the proponents of the lawsuits is that the new
revenue involves the payment of damages. From a legal perspective,
compensatory damages would involve primarily retroactive relief
(payment for past harm) plus limited prospective relief (payment
for future harm caused by past wrongdoing). The tobacco settlement
involves neither: There are no damages for past losses. Indeed,
Professor Kip Viscusi of Harvard Law School has proved that cigarette
tax collections more than offset the cost to government for treating
tobacco-related illnesses. The tobacco deal instead requires the
industry to pay a new revenue stream based on current government
costs, with no credit for existing tax collections, and that revenue
stream continues forever without regard to the good or bad conduct
of the industry.
The third legislative power invaded by these lawsuits is appropriation.
This intrusion has sparked some battles in states where governors
and legislators want to control the spending of the new tobacco
revenue. The most egregious example, of course, involves the billions
of dollars to be paid to attorneys without a legislative appropriation.
The payoff for the attorneys makes these lawsuits a remarkably inefficient
way to raise revenue. In addition, the tobacco settlement creates
a multibillion dollars foundation for health research and disease
prevention without legislative approval or oversight.
At bottom, these lawsuits involve the familiar activist tactic
of using the judiciary to change the law. Two and a half years ago,
Dick Scruggs said at a Federalist Society conference here in the
District of Columbia that in the light of the misconduct of the
tobacco industry, "it really doesn't matter what legal theory
you use." His point was simple: the tobacco suits were vehicles
for changing the law. The attorneys general used novel legal theories
and crafted their complaints to avoid the traditional remedy of
subrogation, which allows defendants powerful arguments of assumption
of risk, contributory negligence, and statutes of limitation. These
lawsuits were filed en masse to politicize the judicial process
while a public relations campaign said it was all about kids. These
lawsuits represent the antithesis of the rule of law: namely, the
end justifies the means.
For those who want to curb this new form of lawsuit abuse, I offer
four ideas. First, some consideration needs to be given to a legislative
ban of government suits against manufacturers for indirect harm,
except for the traditional remedy of subrogation. If governments
sue industries for harm primarily suffered by citizens, such as
smokers, then the industries should be able to assert well-established
defenses of assumption of risk, contributory negligence, and statutes
of limitation. Governments should not have rights to sue that are
superior to the rights of the citizens on whose behalf the lawsuits
Second, there needs to be either a ban of contingent fee contracts
for government attorneys or tight regulation in this area. For a
long time, contingent fee contracts were considered unethical, but
that view gave way to the need for poor persons with valid claims
to have access to the legal system. Governments do not have this
problem. Governments are wealthy, because they have the power to
tax and condemn. Governments also control access to the legal system.
The use of contingent fee contracts allows governments to avoid
the appropriation process and create the illusion that these lawsuits
are being pursued at no cost to the taxpayers. These contracts also
create the potential for outrageous windfalls or even outright corruption
for political supporters of the officials who negotiated the contracts.
Third, government suits against industries should be subject to
fair venue rules. There was a fair amount of forum shopping in the
tobacco suits, and I suspect it is occurring in the gun suits. The
usual presumption in favor of the plaintiff's choice is unfair to
an out-of-state corporation, especially when the government plaintiff
actually controls the entire court system.
Fourth, these suits require special rules for appeals. In a bet
your industry lawsuit, it could be impossible for the defendants
to post an appeal bond. When governments pursue novel legal theories
against entire industries for enormous sums of money, there needs
to be a fair chance for the appellate courts to ensure that the
process is fair and the law is sound.
In American political thought, we have a rich history of trying
to limit the power of government. Our forefathers understood the
dangers of unchecked power. The profound debate that produced our
Constitution and Bill of Rights revolved around this problem. The
Federalists believed a federal government of enumerated powers with
three distinct and competing branches would best preserve our liberty
while Thomas Jefferson and his fellow Antifederalists insisted that
a Bill of Rights was needed to restrain a powerful central government.
Fortunately, we inherited gifts from both groups.
We should follow that tradition by prohibiting governments from
using civil lawsuits for abuses against our citizens. For two years,
I resisted intense pressure to join the tobacco litigation, because
I am firmly committed to the rule of law and limited government.
Lawsuit abuse by governments is the most serious challenge to the
rule of law today. The free market and the cause of human liberty
cannot survive much more of this litigation madness.