ALEC and 'Tort Reform'

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ALEC and 'Tort Reform'

The real theory behind the effort is “individual responsibility for you, but not for corporations

Brendan Fischer

On October 23, 2009, Harrison “Harry” Kothari celebrated his second birthday by blowing out candles on a cake decorated with a giant airplane. At age two, Harry could ride a tricycle, stack blocks, and say words like mama, airplane, and thank you. A month earlier, surgeons at a Houston hospital had removed a benign cyst from Harrison’s head without problems. In follow-up visits, nurses drained cerebrospinal fluid to test for infection, and following normal protocol, wiped the area around the drain with what they assumed were sterile alcohol wipes. On December 1, Harry was dead, his tiny brain swollen by a Bacillus cereus infection apparently caused by contaminated alcohol wipes.

The wipes were produced by the Hartland, Wisconsin corporation Triad Group and its manufacturing subsidiary, H&P. Employees had long complained of hygiene and safety problems; one former quality control inspector told the Milwaukee Journal Sentinel that “we were told to keep things running at all costs,” and after one employee cut her finger when packing alcohol wipe packets, the wipes were nonetheless shipped with blood inside and outside the box. And for years, the Food and Drug Administration (FDA) – the regulatory agency tasked with protecting public health -- had noted sanitation and manufacturing problems at the plant, but did not take serious action until it was too late.

Harry’s family has sued Triad for killing their baby boy with its negligence. Triad states its products met FDA regulations. Under a bill promoted by the American Legislative Exchange Council (ALEC), the Regulatory Compliance Congruity with Liability Act, Triad’s “regulatory compliance” might be enough to absolve Triad from any and all responsibility to Harry’s family.

ALEC’s Pro-Corporate “Tort Reform” Effort

The Regulatory Compliance Congruity with Liability Act is part of a set of “tort reform” bills from ALEC that limit corporate responsibility at the expense of average Americans. ALEC, the corporate-funded national organization that lets Big Business hand state legislators “model bills” to introduce in their state, has been pushing "tort reform" since about 1986 with the support of Big Tobacco, the insurance industry, and other major corporations.

The Center for Media and Democracy has obtained copies of more than 800 model bills approved by corporations at ALEC meetings (some of which are "tort reform" bills), analyzed and marked-up those bills, and made them available at the Center's newest resource, ALEC Exposed.

While "tort reform" is allegedly premised on the notion of “individual responsibility,” the real theory behind the effort is “individual responsibility for you, but not for corporations.” The ALEC “tort reform” bills help ALEC corporations escape responsibility for wrongdoing, help ALEC insurance companies limit payouts (and increase profits), and prevent Americans wrongfully injured or killed from receiving just compensation.

Tort Liability and Justice

A long-standing principle of American law gives a person injured (or whose family member is killed) by the fault of another the right to vindicate their losses through a lawsuit. An injury for which a person can sue is known as a “tort.” Tort lawsuits are one of the few instances where an average American can stand on equal footing with a global corporation, make their case in front of a citizen jury, and demand justice. While a lawsuit cannot undo a person’s injury or loss, monetary compensation – “damages” -- provides the next-best substitute.

Tort cases are relatively rare -- they make up only 6 percent of the entire civil court caseload, and are declining – but they are effective. Tort liability is why defective cribs are no longer strangling infants, why flammable children’s pajamas are no longer on the market, and why carcinogenic asbestos no longer insulates our homes and poisons our lungs.

While "tort reform" is allegedly premised on the notion of “individual responsibility,” the real theory behind the effort is “individual responsibility for you, but not for corporations.”

Other ALEC Attacks on Civil Justice

ALEC “model bills,” approved by major corporations before being introduced in state legislatures, restrict the already-narrow accountability that tort liability provides. For Harry’s family, a number of ALEC “tort reform” model bills, besides the bill barring liability for compliance with FDA regulations, would keep them from holding Triad accountable.

The ALEC “Non-Economic Damage Awards Act” limits to $250,000 (or twice Harry’s hospital bills) the amount Triad would owe Harry’s mom, dad, and sister for the “pain and suffering” that accompanies their loss. In this bill, ALEC corporations are putting a flat rate on the value of a human life, and dictating to Harry’s family what their suffering is “worth.”

If a jury determines that compensating Harry’s family for their “pain and suffering” does not adequately punish Triad for its misconduct, it might award “punitive damages” to deter Triad and other manufacturers from repeating it. But under the ALEC “Punitive Damages Standards Act,” Harry’s family would have to prove Triad acted with “malice” (rather than “negligence”), a standard even higher than is required to convict a person for homicide in a criminal case. Even if it were shown that Triad corporate executives ignored safety concerns and cut costs in ways that made its products unsafe, no punitive damages would be available. If punitive damages were permitted, they would be capped at $250,000 (or twice economic damages). When a corporation knows its financial liability for killing or maiming consumers will be kept low, it can write-off potential lawsuits caused by its defective products as a “cost of business.”

ALEC Circumvents Juries, Legislatively

These “tort reforms” apply to all lawsuits, regardless of the extent of misconduct or severity of the injury. None of these “reforms” will stop the “frivolous lawsuits” allegedly flooding the courts -- caps on damages ONLY apply AFTER a jury has listened to all the evidence, determined that the case has merit, and found the corporation at fault; frivolous lawsuits never make it that far.

The ALEC damage caps strip a jury of one’s peers from determining an appropriate level of compensation for any particular case, based on the individual circumstances proven in court. This circumvents the constitutional right to a trial – and decision-- by jury, guaranteed by the Seventh Amendment.

In contrast with politicians hounded by lobbyists and dependent on campaign contributions, moneyed interests have a more difficult time manipulating the judicial decision-making process. While corporations have tried influencing who is elected or appointed as judges, corporate money cannot control who serves as a juror. Instead, through ALEC, corporations use the legislative process to limit judicial discretion and constrain juries in their role of dispensing civil justice.

Wisconsin Successes

ALEC has claimed success in pushing tort reform bills across the country, most recently in Wisconsin. Wisconsin Governor (and ALEC alumni) Scott Walker’s very first action upon taking office in January 2011 was to push “tort reform” measures from the ALEC corporate wish list.

Walker’s law, Wisconsin Act 2, appears to draw liberally from the ALEC “Product Liability Act,” the “Punitive Damages Standards Act,” the “Litigation Accountability Act,” the “Reliability in Expert Testimony Standards Act,” and elements of the “Comparative Fault Act” and “Joint and Several Liability Act.” (See a version of Wis Act 2 identifying the ALEC bills here). After Governor Walker granted the wishes of ALEC corporations and limited the rights of injured Wisconsin residents, ALEC publicly applauded Walker's actions.

Contradictions and Concerns

ALEC claims to be guided by principles of “free markets” and “limited government,” and its opposition to a robust tort liability system contradicts those alleged goals. Under the tort liability system, free market economic pressures check corporate misbehavior. The possibility of a lawsuit (and the associated financial liability) provides an economic incentive for manufacturers, hospitals, builders, and other corporations to be more safe and responsible, and it does so without government regulation and enforcement. By pushing its “tort reform” bills, ALEC is not advocating for “free markets” and “limited government,” but enlarging government to protect corporate interests from free market pressures.

ALEC has been working behind-the-scenes for years to keep families like Harry’s from achieving justice. Any one of us could experience a loss like that suffered by Harry’s family; that ALEC has been so successful in limiting access to civil justice should concern all of us.


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