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These are not the best of times for the Association of Trial Lawyers of America. The Supreme Court issued a sweeping ruling last week that will make it difficult for plaintiffs to secure huge punitive damages awards. On April 11, the Senate Judiciary Committee approved a proposal that could make it harder for plaintiffs to prevail in class actions, and key senators of both parties may try later this month to set up a massive trust fund to put an end to asbestos litigation. The House of Representatives, meanwhile, passed a bill to cap noneconomic damages in medical malpractice cases and approved a measure that would shield gun makers and dealers from suits resulting from the criminal use of firearms. The 50,000-member ATLA, which touts itself as chief protector of the traditional tort system, is on the defensive. It’s facing off against a Republican president and Congress and a re-energized business community as well as contending with the defection of a key ally — the American Bar Association — on two of its most important issues. The trial lawyers’ foes have taken note. “The momentum is moving against them, both in the courts and in Washington,” says Lisa Rickard, president of the U.S. Chamber of Commerce Institute for Legal Reform. “But more important, the momentum is building up in public opinion.” Ken Schloman, Washington counsel for the Alliance of American Insurers, says that the loss of the ABA’s support and the turnover of the Senate to Republican control have been serious blows to ATLA. “They are still a formidable lobbying force, but they are having to fight now on many fronts, both in Congress and in the states,” Schloman says. An ATLA spokesman says that the group, which spent nearly $2.6 million on lobbying in 2002, is as strong as ever and will prevail on the Hill. “I don’t think there’s any kind of downswing,” says ATLA’s Carlton Carl. “There are assaults daily on the rights of American families by the drug, chemical, and tobacco industries that have been going on for 30 years. I don’t think the American people will tolerate attempts to take away their rights.” Jonathan Yarowsky, a partner at Patton Boggs who represents ATLA on Capitol Hill, did not return calls for comment. LOSING THE SPOTLIGHT ATLA’s current woes are due in part to the power of its opponents’ lobbying and public relations efforts. Industry and insurance groups have pushed their stories into the center of the public debate with accounts of class actions that benefit no one but plaintiffs’ lawyers, of asbestos cases against companies that never made or sold the substance, and of physicians closing their practices because of the high cost of malpractice insurance. In the face of such a media barrage, ATLA’s views have barely registered. The day before the Senate Judiciary panel met last week to consider the class action bill, which would permit defendants to move many cases out of state courts, the U.S. Chamber of Commerce ran full-page newspaper ads criticizing many state courts as harmful to business and the economy. And on two key issues — class actions and asbestos — ATLA recently lost the support of the ABA. In February, the ABA’s House of Delegates overwhelmingly endorsed positions on the class action and asbestos issues contrary to ATLA’s views and “contrary to our usual positions in favor of maintaining state tort law,” says ABA President A.P. Carlton Jr. “ATLA represents their 50,000 members, but we represent all aspects of the bar.” “Our position reflects a deep-seated consensus within the profession as a whole that there now are problems in the legal system that need to be corrected,” Carlton says. The delegates voted after hearing a public debate between Carlton and ATLA President Mary Alexander. Alexander’s statement after the ABA meeting betrayed the heated division among former allies. “In choosing to ignore the rights of innocent asbestos victims, the ABA has made a bad decision that undermines our entire legal system and the right to trial by jury,” Alexander said. IN THE COURTS On the judicial front, ATLA took a big hit from the Supreme Court in its April 7 ruling in State Farm Mutual Automobile Insurance Co. v. Campbell. Some who have analyzed the case think ATLA misread the justices and might have cut its losses had it taken a different tack. In the case, the Court was scrutinizing a Utah jury’s award of $145 million in punitive damages, to accompany a compensatory verdict of $1 million. A policyholder had sued State Farm for bad faith after the insurance company refused to settle an automobile accident case, went to trial instead, and then refused to pay a jury verdict in excess of the policy amount, warning the policyholder that he might have to sell his house instead. The $145 million in punitives against the insurer was upheld by Utah’s highest court. In State Farm, the high court looked at the constitutionality of punitive damages in light of its 1996 decision in BMW v. Gore, in which it held that such damages can violate due process under some circumstances. Rather than try to limit Gore, ATLA, in a strongly worded amicus curiae brief, flatly asked the Court to overrule its seven-year-old precedent. Gore, ATLA’s brief argued, was an attempt to use the old and discredited “substantive due process” doctrine to review the finding of a state court jury. The Court not only declined to overrule Gore, but also extended it. “ATLA was playing toward the positions of Justices [Antonin] Scalia and [Clarence] Thomas,” says Robin Conrad, the National Chamber Litigation Center’s senior vice president, co-author of an amicus brief on the other side. “They overplayed their hand and didn’t see the clear position of the rest of the justices. “ATLA represents a broad group of trial lawyers, but it runs the risk of being tainted by the overreaching of an overzealous minority who give trial lawyers a bad name,” says Conrad. Justices Thomas and Scalia, who had dissented in Gore, did so in State Farm as well. But they carried only Justice Ruth Bader Ginsburg with them in dissent. Robert Peck, president of the Center for Constitutional Litigation, a public interest law firm and ATLA spinoff that wrote the ATLA amicus brief, defends his strategy. “It is a disappointing decision in that it did not reach a result that we find is compelled by the Constitution,” says Peck. “But the constant PR campaign by industry on punitive damages has clearly had an impact on the justices.” Yet Peck says that the decision will have little practical impact. “The only awards that garner any headlines are these large outlier awards,” Peck says. “But in fact, very few trial lawyers ever ask for punitive damages. And a 2000 Department of Justice survey found that the average award of punitives was only $32,000.” In the fight over asbestos legislation, ATLA has suffered from an internal dispute. Although no asbestos bill is now pending, Senate Judiciary Chairman Orrin Hatch, R-Utah, plans to draft legislation later this month — possibly with the support of ranking minority member Patrick Leahy, D-Vt. — to set up a trust fund to pay claims by injured people without trials. An industry coalition has proposed setting the trust fund at $90 billion. ATLA balks at that figure, saying it’s too low since independent studies say claimants could number more than 2 million. Some plaintiffs’ lawyers have joined business and insurance interests in a coalition — the Asbestos Alliance — that is pushing an alternative proposal that would require that asbestos claimants meet specific medical criteria before they can be compensated. “Only a handful of attorneys support the asbestos legislation, and they represent those victims who are dying. Unfortunately, they are not taking into account the needs of those who are sick and not yet dying,” replies ATLA spokesman Carl. Lawrence Fineran, vice president for regulatory and competition policy of the National Association of Manufacturers, an ATLA opponent, sees the situation differently. “The litigation got so out of hand that some trial lawyers just thought it had gone too far. Some companies without culpability for asbestos have been sued, and some people who are not injured have filed suit,” Fineran says Carl responds that “it’s ludicrous and false to suggest that people who are not sick are being compensated. No court in the country is compensating people who can’t prove both exposure and physical injury.” ATLA’S GLIMMER OF HOPE ATLA appears to have the upper hand on medical malpractice legislation, in which it is joined by the ABA in opposing caps on damage awards. Although the House voted last month for a $250,000 ceiling, Senate Republicans’ efforts to enlist Dianne Feinstein, D-Calif., a crucial swing vote on the Judiciary Committee, in favor of a similar bill appear to have failed, and malpractice legislation is now facing a difficult battle in the Senate. Class action legislation, however, enjoys good prospects despite ATLA’s opposition. Feinstein recently signed on as a sponsor of that bill, approved April 11 by the Judiciary Committee. “Senator Feinstein’s embrace of the basic concept will help us tremendously on the floor,” says Mark Gitenstein, a partner at Mayer, Brown, Rowe & Maw who lobbies on the issue for the U.S. Chamber of Commerce. In the last two weeks, as the prospects for a medical malpractice measure have dimmed, the class action bill seems to have moved to the head of the queue among the various litigation reform measures. The bill, which Gitenstein says constitutes a reasoned, moderate change in federal civil procedure, would permit defendants in class actions to move cases valued at $5 million or more from state to federal court. The threshold amount was raised from $2 million to $5 million at Feinstein’s request — a small victory for ATLA’s side. “When you have the interests of 10 or 15 different states at stake, the federal courts are the only place to resolve them,” says Gitenstein. But Carl replies that the bill “is simply another effort by the tobacco, drug, and chemical industries to set up additional obstacles to holding them responsible for the harm that they do.” “There’s no constituency for this bill except for the corporate community, who want this badly,” says Carl. “They are saying they don’t trust state legislators, courts, or judges.” Both sides agree that a filibuster is likely on the floor and that its supporters will have to try to muster 60 votes to end debate. Gitenstein predicts that the filibuster will be broken, but Carl disagrees. “I doubt that there will be 60 members of the Senate who will vote to deprive their constituents of justice at the state level,” says Carl. “The civil justice system is as strong as ever, for now.”

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