Monday, September 27, 1999
Tristate heavyweights at odds
Chesley, P&G differ on class-action bill
BY JOHN J. BYCZKOWSKI
The Cincinnati Enquirer
A bitter fight in Washington over class-action lawsuits has put two of Cincinnati's most prominent citizens — Procter & Gamble Co. and lawyer Stanley M. Chesley — on opposite sides.
The House of Representatives last week passed a bill that would require state judges, who are often sympathetic to plain tiffs in class-action lawsuits, to transfer most new cases to federal courts, where rules on class-action suits are much tougher.
The Interstate Class Action Jurisdiction Act of 1999 passed with support largely along party lines, Republicans for and Democrats against. Once reconciled with a similar Senate bill, it will head to the White House, where it's expected that President Clinton will veto it.
Proponents say it's only fair that cases involving plaintiffs and defendants from many states be heard in federal courts. Opponents of the bill say it would make it much tougher to bring class-action cases against such industries as tobacco and guns and that federal judges are already overburdened with bloated caseloads.
“I think it's time to overhaul the system,” said Rep. Steve Chabot, R-Cincinnati, who voted for the bill. “Attorneys have really learned how to game the system to keep class-action lawsuits out of federal courts.”
Mr. Chabot, a member of the House Judiciary Committee, said lobbying for the bill was strong from both sides — not as intense as that over impeachment, he said, but still vigorous.
Proponents of the bill say class-action abuse happens like this: Trial lawyers find states friendly to class-action suits — Alabama, Illinois or Texas are most often cited. A consumer sues a distributor or other distant link to a big company based in another state. The friendly judge certifies a class, representing all users of the product nationwide.
The suit “becomes too costly to fight, and (companies) have to settle,” said Matt Webb, staff attorney for the U.S. Chamber of Commerce Institute for Legal Reform.
It's difficult to say how often that happens. Lacking statistics, the bill's proponents roll out their worst-case scenarios. Mr. Webb and others cite Alabama, where a particular judge certified many classes over a two-year period, often without notifying the defendants of his action.
Alabama has since fixed that problem, however, with six higher court decisions and new legislation, said Deborah Fleischaker of Public Citizen, a consumer advocacy group that opposed the legislation. “And, that judge is dead,” she said. Arguments that state courts can't handle complex cases don't hold water, she said.
“We oppose making it harder for injured consumers to receive compensation for their injuries,” Ms. Fleischaker said. “This bill would allow corporate defendants a big tactical advantage. Plaintiffs have typically had the choice of forum, and this would turn that upside down.”
The bill would heap cases now handled by thousands of state judges on about 650 federal judges, including 64 judgeships that are vacant. Proponents of the bill regard the vacancies and workload to be a separate issue.
Mr. Chabot, who received $5,000 from the Procter & Gamble Political Action Committee for his 1998 campaign, said he opposes expanding the federal judiciary. “It would be my goal to not increase the size and the personnel of the federal courts if at all possible. We should economize.”
It's no mystery why the bill is opposed by Mr. Chesley — the University of Cincinnati graduate considered a pioneer of big class-action lawsuits against powerful corporations. He has worked on the national tobacco settlement, the MGM Grand Hotel fire in Las Vegas and breast implant litigation. He is currently negotiating litigation against American Home Products Corp. over the fen-phen diet drug.
Mr. Chesley also is a major Democratic fund-raiser, having hosted events for Mr. Clinton.
Opposition includes not only trial lawyers and consumer groups, but the American Cancer Society, the American Heart Association, the American Lung Association, the Conference of Chief Justices representing state justices, 15 attorneys general and a coalition of federal judges led by Chief Justice William Rehnquist.
“Ironically, on many occasions, the people that want the class action are not the plaintiffs' lawyers but the defendants,” Mr. Chesley said. “They want closure.”
The fen-phen case is an example: Without a class, American Home Products might find itself battling these cases one by one for years, Mr. Chesley said.
P&G's interest isn't so obvious. Litigation over the infamous Rely tampon — suspected of causing several deaths in 1980 and health problems in women who used the product — ended years ago, and the company hasn't had a serious problem with such cases since.
But the company doesn't like the trend, spokesman Simon Denegri said. “We feel (the legislation) would ensure class action suits with a national impact would be heard at the appropriate level — in a federal court,” he said. “It's about making the law work in the fair way it was meant originally.”
Mr. Denegri acknowledged P&G's connections and prominent involvement with organizations supporting the legislation — including the U.S. Chamber of Commerce, the National Association of Manufacturers and the Chemical Manufacturers Association.
“We are obviously supporting this in a number of ways, talking to and writing to congressmen and congresswomen, asking them to support the legislation,” he said.
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