Dec. 20, 2008
(CBS) Attorney Andrew Cohen analyzes legal issues for CBS News and CBSNews.com.Made in America: Corporate Gall
CBS News Legal Analyst Andrew Cohen On Corporations Seeking To "Reform" The Very System They Broke
Like the child who kills his parents and then begs for mercy because he is an orphan, the U.S. Chamber of Commerce now is begging President-elect Barack Obama to protect corporate interests in the nation’s civil litigation system as a way of restoring jobs and bolstering an economy shattered largely (as we now know) by corporate greed and misfeasance.
Talk about your gall.
Here is what the president of the Chamber’s legal arm wrote in an open letter to Obama: “We understand the critical necessity of revitalizing the economy by restoring American jobs, encouraging the growth of U.S. businesses, and protecting the savings and investments of millions of Americans. However, we are concerned that the potential expansion of legal liability significantly impairs these much needed steps toward a national recovery.”
The quote may be roughly translated this way: “Now that corporate America has helped screw everything up and led us into the greatest economic crisis since the Depression, we need to make sure that corporate America isn’t aggressively punished for its misdeeds or legitimately thwarted from misdoing them again.”
This is either an astonishing hypocrisy - Is corporate America unaware that the rest of us are in on the secret of the causes of the recession? - or the clearest indication there can be that Big Business is, always has been, and always will be about protecting Big Business.
The Chamber has been pushing tirelessly for decades to rein in plaintiffs’ attorneys (who look to punish corporate negligence or fraud with civil lawsuits), deregulate industry and commerce (we all know how well Wall Street did with its freedom), and nullify important consumer protection laws (like the one in Maine which is allowing smokers to go after tobacco companies for false advertising). The lobbying effort has been national and local, highly-public and super-secret, and devastatingly successful.
Thanks in part to the Chamber and its Orwellian-named Institute for Legal Reform, the Securities and Exchange Commission backed off its scrutiny of screwy deals and schemes, the Congress was lax in its oversight of the mortgage industry, litigators were thwarted or punished, and the White House and Justice Department pushed a legal doctrine ("preemption") that almost always helped employers over employees.
All of these things, and more policies and practices endorsed by the Institute, helped unshackle the savageries of corporate America and left individuals less protected against an ever-freer and more predatory market.
Indeed, aside from the occasional Supreme Court decision that has helped the little guy, and the heroic efforts of states to help protect consumers and the environment, the history of our “litigation system” (as the Institute puts it) over the past 20 years is one of unremitting advances for the Chamber and its fellow travelers in law, politics and governance.
The Environmental Protection Agency has been reduced to a shadow of its former self so that polluters have gone unpunished, the Madoffs of the world have been nurtured and coddled and thus have flourished, and the brutal Savings and Loan crisis of the late 1980s has been made to look like a bake sale compared to the trillions of investment dollars lost and the hundreds of billions soon to be spent by our government.
Even the Web site for the Institute reads like a cruel parody. Not surprisingly, it does not highlight the personal stories of the millions of victims of corporate greed or managerial incompetence. It does not measure the number of lives saved, and fortunes protected, and pollution cleaned through these lawsuits. Instead, under the banner of “lawsuit abuse,” it tracks the lives of people who believe for one reason or another that they have been unfairly sued.
[Now, tell me, have you ever known someone who believed that he or she had just been fairly sued?]
Plaintiffs’ attorneys aren’t responsible for the mortgage-fueled economic meltdown. Class-action litigation isn’t, either. And don’t blame overzealous regulators or greedy employees who want better pay or conditions in their own factories. The people with whom the Chamber and the Institute do battle are not the people who invented or allowed the great pyramid schemes which brought down Freddie Mac and Fannie Mae. They did not force consumers to spend more than they earned or save less than they should. Corporate America is directly responsible for what has just happened to corporate America, and if you don’t believe me, ask the folks at Ford, GM and Chrysler.
The economic meltdown came about because business interests were able to greatly decrease the vital tensions between industry and regulation, between oversell and oversight. And it will take the restoration of those tensions by government leaders not just to help bring us out of our slump but to help ensure that the next downturn doesn’t come again for a long time.
So it seems to me that the last things the Obama administration ought to do once it takes over is further shackle lawyers, or stifle well-meaning state laws, or make it easier for businesses to avoid liability and culpability for their actions.
The Chamber and the Institute want us to believe that one of the problems which created our misery also happens to be one of the solutions to it. They call it “reform.”
I call it nonsense.
By Andrew Cohen
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See all 27 CommentsIf everybody has your attitude, Zimbabwe will be sending us aid.
The only voice the middle class has that anyone listens to is their vote and their spending habits.
I voted strait Democrat and I will spend as little money as possible until things improve for the middle class.
Corporate America be DAMNED!
It all boils down to the perception that a product gives to the consumer. You are right that American car quality is much better than people give us credit for. But once a general impression has been formed by the consumers it is very hard to change. It''s also very hard to establish initially. You have to be intentional and it has to permeate the entire industry.
So for pharmaceutical companies the very great danger is that a poor general impression is being formed of them little by little by the consumer. We read every day of the dangers of prescription drugs, corruption and ineptness in the FDA management ranks, doctors on the take, hidden trial results, the list goes on and on. Eventually the general public''s perception will define American Pharmaceutical Companies to be synonymous with dangerous and untrustworthy. Recovering from that perception will be a monumental task. I hope this never happens but it seems to be a repeat of the auto industries slide.
The true reason that Americans have the highest litigation rate, is because we allow far more rights to prisoners, to tie up and stall courts, then changes to laws to make there lives so easy and comfy in prison, and they have nothing better to do, than think up other things to sue over again.
Don''t kid yourself there is much of an American pharma. A lot of the medicines are made in India and bottled in the US.
As to Japanese cars, I had one of the greatest lemons ever, and it was Japanese. It was a new Nissan with 35 faults discovered in the first six months, including headlights and tires that refused to remain aligned, a window that fell out, a brake that nearly fell off and a head gasket that blew.
With cars these days, it is a form of snobbery that Americans do not buy the American models.
Americans buy foreign manufactured goods, not because the quality is any better, but because they are price competitive. I have been guilty of this myself, even though I try to buy American as often as possible. A major component of the price of American manufactured goods is the cost of legal compliance, legal threat and legal insurance. Certainly Chinese goods are often inferior to American goods, and sometimes dangerously so. Examples range from lead paint, poisonous additives to food and items that break apart easily, meaning sharp edges.
I certainly am not advocating removing the oversight of industry nor the removal of the right to sue when it is warranted.
It gets back to the old legal saying: "It''s not whether you win or lose the case, it''s how many billable hours you can turn it into."
If somebody is sued, it is ultimately the consumer that pays and the lawyer that walks away with the lion''s share of the money.
Granted there are exploitive law suits but not to the degree that industries would like us to believe. Total elimination of lawsuits is not the answer.
About other countries coming in and taking over the American pharmaceutical industry. Well, we have a good example of that. Look at automotive. Americans will not pay for high priced, low quality product regardless of who produces it. If China or India can do it better we only have ourselves to blame.
If lawyers continue to run riot, it is only a matter of time before all manufacturing is pushed offshore and then we will all be at the mercy of Chinese and Indian goods where controls are minimal.
I always enjoy reading the Overlawyered website.
It should be noted that corporate America has found another way to avoid lawsuits -- predispute binding mandatory arbitration clauses in every contract you sign today. From home builders to nursing homes, credit cards, cell phones, doctor offices, etc., in the fine print you will find this clause. It removes our 7th amendment right to use the civil court system, by forcing us into a "kangaroo" system of justice that they control by naming the arbitration service that must be used. These arbitration services like CAS and AAA are employed by the corporations -- who do you think wins? NOT THE PUBLIC that''s for sure. Then they slap you with a gag order so you can''t talk about the injustice that you have just experienced.
Support the Arbitration Fairness Act that will give us back our 7th amendment rights!!!
The only reason that product liability lawsuits do not do an adequate job of consumer protection, as evidenced by the continued existence of poor producers, is that the producers have sufficiently insulated themselves from the effect of liability responsibility. This has been achieved by increasing product prices and by out of court settlements requiring nondisclosure of damages.
Eventually we must establish a system that impacts the producers sufficiently to cause changes toward good management practices. Until then we will live with a fraud, corruption, poor products and yet high producer profits.
The current system is incapable of keeping poor producers out of the market which is a requirement not only for the consumer but also as a means of reward for good producers.
The only reason that product liability lawsuits do not do an adequate job of consumer protection, as evidenced by the continued existence of poor producers, is that the producers have sufficiently insulated themselves from the effect of liability responsibility. This has been achieved by increasing product prices and by out of court settlements requiring nondisclosure of damages.
Eventually we must establish a system that impacts the producers sufficiently to cause changes toward good management practices. Until then we will live with a fraud, corruption, poor products and yet high producer profits.
The current system is incapable of keeping poor producers out of the market which is a requirement not only for the consumer but also as a means of reward for good producers.
Murder, stealing, insider trading, monopoly, pollution, bribery, graft: all of these are perfectly acceptable to the free market. We pass laws, and enforce them, precisely because we don''t want to live in the kind of society the free market would allow. Somehow, this simply truth has been lost on the Chamber of Commerce, and much of the business community. It''s time to put an end to that nonsense.
Posted by d7767w at 08:45 PM : Dec 20, 2008
You failed to mention that Europe has Ton''s of Regulations that we do not have to rein in Corporations. The solution you propose only favors the well to do and corporations even more. THEY have the deep pockets to use this king of law, the average citizen does not.
That does happen fairly often. There are actually very few "frivolous" lawsuits--that is just a term invented by companies tired of getting sued (most of the time deserving it). The fact is in any business lawsuits are a part of the deal, and of course everyone who has ever been sued called the suit "frivolous."
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