The Honorable William Pryor, Attorney General of Alabama *
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 now holding conferences on
"The New Business of Government-Sponsored Litigation"
and, convening panels to discuss "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 fundamental underlying principle of
the American rule of law.
Eleven years ago, Justice Antonin Scalia was the lone member of
the Supreme Court to vote to declare the independent counsel law
unconstitutional. His opinion which seems to have grown on
some people since 1988 is worthwhile reading. At the outset
of his dissent, 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 bodies
_ commercial regulation, taxation, appropriation, and the power
to change law to 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 using lawsuits to "enact" and impose new regulations,
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 any and all constitutional,
legal, or even practical objections and concerns become moot. What
has been impossible legally and politically suddenly becomes possible,
even attractive or, worse yet, 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
that market.
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 demonstrably 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 proven that
existing cigarette taxes 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; furthermore,
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 heated battles in states where governors
and legislators each 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-dollar 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,
Mississippi plaintiffs' attorney Dick Scruggs told a Federalist
Society conference 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
the following 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 are filed.
Second, we need either to ban contingent fee contracts for attorneys
representing governments or to tightly regulate 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.
* This text is adapted from a speech given by Attorney General
Pryor on Tuesday, June 22, 1999 at the U.S. Chamber of Commerce,
Washington, D.C. at the Conference on the New Business of Government-Sponsored
Litigation: State Attorneys General & Big City Lawsuits, co-sponsored
by the Federalist Society, the Manhattan Institute, and the U.S.
Chamber Institute for Legal Reform.
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