December 2010 Archives

The Wall Street Journal today commended Texas Gov. Rick Perry for proposing that a losing plaintiff in a civil suit pay all legal costs for the defendant, similar to what is used in the British legal system. Ironically, the WSJ refers to such a change as "revolutionary," which strikes me as rather ironic, since we fought a real Revolution precisely to stop doing things the British way. But there are substantive reasons to oppose a "Loser Pays" system imposed at any level of government.

My first objection is that any state-imposed economic disincentive artificially limits Americans from exercising their Constitutional rights. Over 500 years of experience with the British legal system led the Founding Fathers to assert time and again that Americans have a right to a civil jury trial equal to the right to a jury trial in criminal cases. James Madison, for one, called the rights enumerated in the 7th Amendment "as essential to secure the liberty of the people as any one of the pre-existent rights of nature." The Founding Fathers would never have thought about imposing economic barriers to the exercise of "unalienable" rights. Britain has used "Loser Pays" for centuries, but the Founding Fathers and their successors saw nothing about "Loser Pays" worth copying into the American legal system.

Second, plaintiffs often cannot afford to pay their own attorneys at all, except on a contingency fee basis. So "Loser Pays" is inherently pro-defendant, and would especially favor corporate defendants who can outspend any individual defendant. Already the vast majority of incidents of medical malpractice do not result in a legal claim because the costs of bringing the case outweigh the expected recovery. "Loser Pays" provisions will make it even more difficult for victims to assert their rights and seek fair compensation in court, because injured patients cannot risk the possibility of recovering little in damages but having to pay lots for the defendant's legal fees.

And is the British system really all that attractive? As one professor noted in 2005, a look at the British "Loser Pays" system "reveals a far more complex reality, one full of disputes over fees and related issues, and with plaintiffs... who can win paltry awards and still be owed astronomical legal fees." No one can reasonably assert that adding "Loser Pays" would magically reduce litigation costs; the American legal system has procedural safeguards not seen elsewhere that raise the cost to all parties, while dispute costs in Britain are set under strict standards. Maybe that's why only ONE state in the U.S., Alaska, has chosen to institute a "Loser Pays" system in its courts. The aforementioned professor wrote about the Alaska experience that "rather than reducing litigation, they often increased the amount of settlements, because the expenses at stake increased the value of a winning case." Florida implemented "Loser Pays" for years for medical malpractice cases, then reversed course amidst heavy criticism (even a "Loser Pays" proponent called it "imperfect.")

And it's not as if states haven't tried other forms of tort reform; to the contrary, most have imposed some limits on our 7th Amendment rights, claiming that tort reform would control health care costs. Texas already limits punitive damages and is recognized as one of the most pro-tort reform states in the country. That hasn't helped medical costs in Texas; the city of McAllen is one of the most expensive health-care markets in the U.S.

"Loser Pays" is another vehicle for limiting our cherished Constitutional rights. Civil suits didn't cause the Great Recession, the crackup of Wall Street, the Deepwater Horizon explosion and the worst oil spill in the world, or multiple deaths from bad products such as drop-down cribs or defective pacemakers. Civil suits protect our religious liberty and promote local control over excessive bureaucracy, and actually have added consumer protections to products such as toys and cars. Let's stop trying to take a hatchet to the Bill of Rights.

The ObamaCare ruling by Judge Henry Hudson (full text here) is a victory for our Founding Fathers' concepts of limited national government and the supremacy of individual rights. But it also reveals the inconsistency (or hypocrisy) of some Beltway legal experts who favor preemption, which is the takeover of state functions and state common law courts by federal bureaucracies in some instances, but oppose a federal takeover when it comes to health care. Indeed, some of the same groups participating in the federal preemption movement are also front and center in the fight against ObamaCare in the federal courts.

Case in point: the Cato Institute, which filed this amicus brief in the Virginia case, arguing the following:

"In other words, this case presents the Court with 'the arduous . . . task of marking the proper line of partition between the authority of the general and that of the State governments.'.. Congress identified the Commerce Clause as the source of its authority, a position the Government now asserts in its Motion to Dismiss... Congress may not enact laws that are not 'plainly adapted' to further an enumerated end, or that do so at the expense of the rights reserved to the States or the people under the Tenth Amendment."

But as I posted on December 6, Cato's Vice President for Legal Affairs Roger Pilon argued just the opposite at the National Convention of the Federalist Society, when it came to preemption of state common law suits for certain defective medical devices. He said, "if the Commerce Clause was meant for anything, it was meant to ensure the free flow of goods and services among the states, and jury trials can really make a mess of that if pharmaceutical companies, for example, have to have 50 different labels for warnings on their medications" Sure sounded to me as if he was arguing that the Commerce Clause trumps the 10th and 7th Amendments in that instance.

After the ObamaCare ruling, Pilon had the audacity to write, "for today, at least, the Tenth Amendment and the limited government it implies are alive and well." Well, at least for causes of his own choosing.

Pilon didn't sign the amicus brief filed in the Virginia case, and the Cato staff who did sign it apparently weren't at the Federalist Society when Pilon spoke. Maybe the folks at Cato need to have an in-house meeting and figure out whether the Bill of Rights limits the sweeping power of the Commerce Clause.

I previously wrote about a panel at the National Convention of the Federalist Society on November 20 about the potential for reviving the right to a jury trial for civil suits as enumerated in the 7th Amendment. One of the panelists, attorney Michael Carvin of Jones Day, and an audience participant, Roger Pilon, Vice President for Legal Affairs at the Cato Institute, had disturbing reactions to the pro-7th Amendment remarks of Gibson Vance, President of the American Association for Justice. Mr. Vance discussed the anti-7th Amendment nature of the Supreme Court's affirmation of federal pre-emption (the federal overruling of state statutory and common law, including jury decisions) in Riegel vs. Medtronic; and the use of forced arbitration clauses in consumer contracts, citing his family's experience with nursing homes. You can see his remarks starting at the 44-minute mark of the video.

Let's start with some of Mr. Carvin's remarks, which begin just after the 58-minute mark of the video.

Carvin first pledged allegience to the 7th Amendment, then denied that policies such as pre-emption and the use of forced arbitration clauses in consumer contracts have anything to do with the right to a jury trial for civil suits. "Circumstances have changed... this is really a policy debate and things have dramatically changed." So that was his bridge comment from a short affirmation of the basic right to his "explanation" of what he called "entirely separate questions" which have "nothing to do with the right to have a jury." That sounds a lot like the excuses used for decades by the Beltway gun control elitists to justify infringement on our rights enumerated in the 2d Amendment - "Well, we support the 2d Amendment but things have changed since the Revolution, and we can't have unlimited rights to carry guns all over the place!" The people of the United States didn't agree with Beltway legal elitists then, and ultimately neither the Supreme Court.

Carvin then termed the medical device pre-emption exemplified in Riegel as "entirely a debate about the Supremacy Clause, when and under what circumstances federal law trumps state law - state administrative agencies, state others, state decision-making, including juries - it has nothing to do with, whether or not, for the sphere of law left to the states, whether or not those will be adjudicated by juries or by courts... it really has nothing to do with it..." (referring to the 7th Amendment).

For those readers not expert in Constitutional law, the "Supremacy Clause" is in Article VI, Clause 2 of the Constitution, and begins with, "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land..." (Emphasis mine.) It basically stands for the proposition that federal law trumps state law on the same subject.

Roger Pilon then joined the discussion on preemption, supported the Commerce Clause over the 7th and 10th Amendments, and added a red hearing about federal vs state regulation of drugs (starting at about the 1:29:50 mark on the tape). "For Mike Carvin, I think you're absolutely right on your points about pre-emption, this is not a 7th Amendment issue... if the Commerce Clause was meant for anything, it was meant to ensure the free flow of goods and services among the states, and jury trials can really make a mess of that if pharmaceutical companies, for example, have to have 50 different labels for warnings on their medications."

But there is no doubt that the Riegel decision resulted in the summary dismissal of lawsuits filed by hundreds of victims of defective medical devices. The companies cited the Riegel decision in their Motions to Dismiss and judges agreed with them. The "supremacy" of federal law trumped the right to a civil jury trial for the victims.

Think about the sweeping nature of the Constitutional principles enunciated by Michael Carvin and Roger Pilon: The Supremacy Clause and the Commerce Clause trump the 7th and 10th Amendments, two key components of the Bill of Rights. I can think of no better definition of "dictatorship" in Constitutional law than, "The Supremacy Clause trumps the Bill of Rights." The Bill of Rights was drafted precisely as a check on the federal government's powers. The Bill of Rights should limit ALL clauses of the Constitution which grant power to the federal government, or it limits none of those clauses.

The Founders realized soon after the ratification of the Constitution that the the powers granted to the federal government had to be bound and limited by an express Bill of Rights, especially with an amendment that protected states' rights. I commend to readers the Tenth Amendment Center's excellent summary of the debate over the Supremacy Clause. One of the two men who are considered the "Fathers of the Bill of Rights," George Mason, refused to sign the Constitution precisely because the powers enumerated to the federal government were not limited by an express statement prtecting of individual and states' rights. In his Objections to the Proposed Federal Constitution, published in June, 1788, Mason wrote in his first sentence, "There is no Declaration of Rights, and the Laws of the general Government being paramount to the Laws & Constitutions of the several States, the Declarations of Rights in the separate States are no Security. Nor are the People secured even in the Enjoyment of the Benefits of the common Law." He then added more details of his objections to the Constitution.

And near the end of his Objections, George Mason pinpointed the limitation that the country needed to impose on the Supremacy Clause: "Under their own Construction of the general Clause, at the End of the enumerated Powers, the Congress may grant Monopolies in Trade & Commerce, constitute new Crimes, inflict unusual and severe Punishments, & extend their Powers as far as they shall think proper; so that the state Legislatures have no Security for their Powers now presumed to remain to them, or the People for their Rights." Mason predicted, 222 years ago, that Washington legal elitists would grant supremacy in federal law over states' rights and individual rights, unless those unalienable rights were guaranteed in writing and in law.

The Carvin-Pilon points echo the prevailing wisdom among proponents of federal preemption and among a majority of the current Supreme Court. In reading commentaries on the pre-emption issue written in recent years by Roger Pilon, a leading corporate defense attorney, and two attorneys who have argued for pre-emption several times before the Supreme Court, you read the same points: Pre-emption is all about the primacy in Constitutional law of the Supremacy Clause over states' rights enumerated in the 10th Amendment, and the right to a jury trial enumerated in the 7th Amendment is ignored. The two attorneys, as follows, noted their satisfaction at the lack of attention to the Constitutional issues in recent Supreme Court pro-pre-emption decisions:

A significant feature of this term's preemption cases is that rather than explicitly turning on sweeping philosophical debates about the merits of federal power versus federalism (sometimes embodied in presumptions about preemption or wading into administrative law battles about the degree of deference due federal agencies, many opinions hewed closely to the text of the federal statute, with a practical nod to the federal interests at stake in the overall federal scheme relating to that subject matter. Critics of judicial overreaching can take some comfort in this approach for interpretations that more closely follow the statutory text tend to give the political branches greater control.

Re-read that last sentence again slowly and note the authors' "comfort" over the "greater control" granted to "political branches" over our lives. Beltway legal elitists prefer that federal bureaucrats make the final decision over the safety of implanted medical devices or financial services, with no recourse to a local jury for a defective product or fraudulent action by a financial institution. They can then influence the federal regulator one way or another without fear that the people of this country will hold anyone accountable.

Not once, in any commentary I've mentioned in this post, does any of these Washington-based legal experts and attorneys consider that the pre-emption of state statutory law by federal statutory law also infringes on an unalienable right protected in American constitutional and British common law for almost 800 years, the right to a civil jury trial. It is established law, accepted like any ordinary statement of fact, that the Supremacy Clause, and probably the Commerce Clause also, trump the 7th and 10th Amendments. The 7th Amendment is never even mentioned in any of the linked documents - it is thrown into the ashheap of history. After so many years of political war against the 7th Amendment, we see Beltway elitists cavalierly waving away our Constitutional history and our God-given rights in the name of federal supremacy and commerce. I'm astonished that the Cato Institute, which splashes its love of "Individual Liberty" over its homepage, so readily dismisses the right that James Madison called "as essential to secure the liberty of the people as any one of the pre-existent rights of nature." It's as if George Mason never wrote his warning about the dangers of the Supremacy Clause.

Tea Party activists, Constitutional conservatives, and 7th and 10th Amendment champions will face enormous difficulties in overturning years of established legal precedent to ensure the primacy of the 7th and 10th Amendments. NONE of the iconic conservative Justices of the Supreme Court is on record supporting states' rights over the power already granted to federal bureaucracies by the business community and most of the "conservative" legal elite in Washington. The forces fighting for more Washington control over our lives while hiding behind the "conservative" label are rich, powerful, ensconced in high positions, and will not surrender without the people of this country demanding our unalienable rights.

In my post of September 15 titled Seven Reasons Why Protecting 7th Amendment Should Be Republican & Tea Party Priority, I noted that, "the 7th Amendment has been an important tool for the pursuit of terrorist financing, and civil lawsuits have resulted in some important judgments. The family of David Boim, an American killed by Hamas terrorists in Israel, successfully won a $156 million judgment against the Dallas-based Holy Land Foundation for its role as the biggest Hamas fundraiser in the U.S... A former official of the NSC under Presidents Clinton and Bush testifed to Congress that, 'civil litigation can substantially enhance the financial consequences that such entities face' (referring specifically to terrorist financiers)." The actual and alleged financiers know this, which is why they're pulling out all the stops to keep the victims of their attacks from pursuing justice in U.S. courts.

An incorporated charity identified by the U.S. as a terrorist financier is now opposing a civil suit filed in federal court by trying to assert that U.S. courts lack jurisdiction over it, simply by reason that it is a corporation and not an individual. If the attempt is successful, it will gut an important component of civil anti-terrorism penalties. Individuals who wish to raise funds in the U.S. to fund terrorist attacks overseas might only have to incorporate in order to avoid civil suits in U.S. courts by the terrorists' non-American victims.

First, some background. In October 2009, Sri Lankan family members of those killed and injured in bombings committed by the Liberation Tigers of Tamil Eelam (LTTE, a.k.a. "Tamil Tigers"), filed a lawsuit in federal court, alleging that founders of a group called the "Tamil Rehabilitation Organization" provided millions of dollars in funds used for LTTE terrorist attacks in Sri Lanka. The complaint was filed under the Alien Tort Statute of 1789 ("ATS"), which grants non-U.S. citizens access to the U.S. courts to seek justice for violations of "the law of nations," regardless of where the violations occur.

The Tamil Rehabilitation Organization (TRO) was designated by the Treasury Department on November 15, 2007, for serving as the funding and procurement network in the U.S. for the LTTE, which has been on the official list of Foreign Terrorist Organizations since 1997. In the 2007 designation, the Treasury Department noted, "In the United States, TRO has raised funds on behalf of the LTTE through a network of individual representatives. According to sources within the organization, TRO is the preferred conduit of funds from the United States to the LTTE in Sri Lanka. TRO also has facilitated LTTE procurement operations in the United States. Those operations included the purchase of munitions, equipment, communication devices, and other technology for the LTTE."

And the Tamil Tigers were a terribly deadly terrorist group at that time, as also noted in the 2007 TRO designation. "The LTTE is a terrorist group that has waged a violent secessionist campaign for over two decades to secure a separate state for Tamil-majority regions in Sri Lanka's North and East. The conflict between the LTTE and Sri Lankan military forces has claimed over 60,000 lives and displaced hundreds of thousands of Sri Lankan citizens."

Here's the issue raised last month by TRO that threatens civil suits by non-Americans against terrorist financiers. On November 23, TRO's attorneys filed a Motion to Dismiss the lawsuit. In a Memorandum filed with the notice, TRO's attorneys asserted that the 2nd Circuit Court of Appeals had ruled in Kiobel, et al., v. Royal Dutch Petroleum, et al., that "the ATS does not confer subject matter jurisdiction over corporate defendants, because such liability is not a 'specific, universal, and obligatory norm of international law.'" TRO's attorneys thus claim that the 2nd Circuit decision immunizes TRO from any liability for funding the Tamil Tigers' terrorist attacks, solely because it is a corporation.

Think about this outcome of the Kiobel decision and a potential dismissal of the lawsuit against TRO: Hamas could consider resuming fundraising in the U.S., through an incorporated "charity," for attacks against Israelis overseas, knowing that the Israeli victims could not pursue justice in the U.S. and penalize Hamas' fundraisers here. And it would be accomplished solely through judicial decision and without any input by Congress.

Not all federal courts agree with the 2d Circuit decision in Kiobel that immunized corporations from liability under the ATS. The 11th Circuit and 9th Circuit Courts of Appeals held in other cases that ATS claims may be brought against corporations, thus setting up a possible Supreme Court case over the conflicting appellate decisions. But the Supreme Court has already refused to enable American 9-11 victims to hold Saudi financiers liable for funding Al Qaeda, so it could foreeably close the courthouse door to foreign terrorism victims, even in cases in which the funding was raised in the U.S.

Congress need not wait for the Supreme Court to possibly immunize terrorists from raising funds in the U.S. by using incorporated charities. Congress could and should act to enable those foreign victims to hold the terrorist financiers liable for their fundraising in the U.S.