ADVOCATE. A Decade of Political Action APRIL 2004 APRIL, 2004

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1 APRIL 2004 ADVOCATE TEXANS FOR LAWSUIT REFORM: MAKING TEXAS A BEACON FOR CIVIL JUSTICE IN AMERICA APRIL, 2004 IN THIS ISSUE A Decade of Politics... 1 Ten-gallon Tort Reform... 4 Asbestos Litigation Reform... 6 Asbestos Facts... 6 Spotlight on Matt Welch... 7 Regional Chairman s Council OUR MISSION Texans for Lawsuit Reform is a volunteer-led organization working to restore fairness and balance to our civil justice system through political action; legal, academic, and market research; and grassroots initiatives. The common goal of our more than 11,600 supporters is to make Texas the Beacon State for Civil Justice in America North Post Oak Road Suite 315 Houston, Texas tlr@tortreform.com A Decade of Political Action When Texans for Lawsuit Reform was organized a decade ago, our founders understood that an essential element of reform was to stay vigilant and engaged in the election process, to assure that pro-reform candidates serve in government. At that time many of our courts, our Legislature, and most important statewide offices were controlled by people who served the agenda of personal injury plaintiffs lawyers. The strong influence of these lawyers enabled them to manipulate our civil justice system for personal gain. That s why along with the educational, legal, lobbying, and research efforts we undertook in Texans for Lawsuit Reform, we also formed a political action committee. TLR PAC started its fund raising and support of candidates in 1994, and is currently in its fifth election cycle. The consistent goal of the PAC is to elect candidates dedicated to restoring litigation to its appropriate role in society, and to defeat candidates aligned with plaintiffs attorneys who seek to exploit the litigation system. O U R R E C E N T A C T I V I T I E S TLR PAC has had numerous victories, and is often credited with bringing about a new majority of officials Republican and Democrat who have worked together to make important, positive changes to the system. Already this year, TLR has been involved in over two dozen campaigns for Texas House, Senate, Courts of Appeal, and District Courts. In all but three races, the TLR PAC-supported candidate won. The work was not easy, as plaintiffs lawyers continue to be very active in the political process, Continued on page 2

2 A DECADE OF POLITICS Continued from front cover recruiting candidates and pouring hundreds of thousands of dollars into electoral campaigns. The races in which TLR PAC is most engaged are those where a personal injury plaintiff s lawyer is challenging a pro-reform incumbent. Examples of this were State Representative Allan Ritter (D-Nederland), who was challenged by plaintiffs lawyer David Bernsen, and State Representative Joe Nixon (R- Houston), challenged by plaintiffs lawyer Rick Plezia. TLR PAC strongly supported both incumbents. The plaintiffs lawyers spent fortunes on the candidacies of these challengers. The results of our efforts were rewarding, with Rep. Ritter winning an overwhelming 56% of the vote, and Nixon clobbering Plezia with 73% of the vote. The plaintiffs lawyers were also active in judicial races, one of which they won by what is best described as a stealth strategy. Recently in Harris County, the plaintiffs bar recruited one of their own, Sharon McCalley, to run against a very able District Judge appointed by Governor Perry, Reece Rondon. Even though Ms. McCalley was heavily engaged in personal injury plaintiffs work, she campaigned against lawsuit abuse and claimed to be a George W. Bush Republican. She was able to wage an aggressive campaign with bountiful funds received from the plaintiffs bar, allowing her to narrowly defeat Judge Rondon in the Republican primary, winning by less than 400 votes out of 70,000 cast. We will see the plaintiffs bar increasingly use this tactic in Republican primaries for judgeships. The elections that have taken place so far this year provide solid evidence that the plaintiffs lawyers remain a persistent and formidable force in Texas politics. Prior to the March 9 primary, TLR PAC was heavily involved in a Special Election for Texas Senate District 1 in East Texas the seat vacated by the retirement of Senator Bill Ratliff, one of the authors of HB 4 last session. The race was a match-up between former State Rep. Paul Sadler, an asbestos plaintiffs lawyer, and Kevin Eltife, a businessman who supports reforms. This was a clear choice between a candidate who wants to cure legal abuses, and one backed by the largest asbestos plaintiff law firms in Texas. In the Texas Senate, 21 out of the 31 Members must vote to get a bill to the floor for consideration. Therefore, every Senate election in which there is a clear choice between a reformer and a non-reformer is critical. TLR PAC determined that it would raise and spend a substantial amount of money to oppose Mr. Sadler s election. Because of the short time period between the Governor s calling a Special Election, to the date of the election itself, TLR PAC decided to run its own educational campaign informing voters of Mr. Sadler s record. Sadler started the campaign with only 8% of the people having a negative impression of him. He ended with about 30% having a negative impression simply because TLR PAC informed his constituents of his voting record. The PAC used a variety of methods: newspaper, radio and television ads, and direct mail, as well as personal communication with our 400 TLR supporters in SD 1. One of the main issues in the race was the practice of plaintiffs lawyers who routinely file asbestos claims on behalf of persons who are not sick. (According to the RAND institute, recent studies have estimated that up to 90% of current claims are on behalf of persons who show no impairment from asbestos exposure.) This means that sick claimants have a more difficult time getting full and timely compensation. Abusive asbestos litigation has bankrupted over sixty-five American companies, destroyed more than sixty thousand good American jobs, and new claims are increasing. Personal injury plaintiffs lawyers, heavily engaged in asbestos litigation, bankrolled Paul Sadler s campaign with over $1,000,000. Data from the Texas Ethics Commission shows that 82% of Sadler s money came from this group. But TLR PAC was there to counter the plaintiffs lawyers wealth. We made sure that the voters of SD 1 had the facts they needed to make an informed, wise decision. Kevin Eltife defeated Paul Sadler by some 3,000 votes out of 90,000 cast. TLR s team of political, public relations, polling, research and media consultants along with our TLR staff members such as Matt Welch (PAC Director) and Ken Hoagland (Communications Director) produced an effective, hard hitting yet honest campaign to make sure that Mr. Sadler, a vigorous opponent of tort reform, was denied a seat in the Texas Senate. T H E B A T T L E R A G E S O N The elections that have taken place so far this year provide solid evidence that the plaintiffs lawyers remain a persistent and formidable force in Texas politics. In addition to the stealth strategies by individual candidates, these lawyers have employed a new tactic of organizing stealth PACs with innocuous sounding names. They use these to funnel money to their candidates in ways that make it difficult (or impossible) for voters to identify the true source of funding. In fact, just a couple of months ago personal injury plaintiffs lawyers created a new stealth PAC called Texans for Insurance Reform (how s that for an innocent-sounding name?), which spent hundreds of thousands of dollars in the closing days of the primaries to defeat legislators who supported tort reform last session. The general election is already well underway, and TLR PAC is engaged in several key races across the state. We will keep you posted on this important part of our overall efforts to prevent abusive lawsuits from undermining respect for the law, and harming our families and the economy. P A G E 2 P A G E 3

3 Ten-Gallon Tort Reform Took Ten Years A decade after beginning Texans for Lawsuit Reform, Richard Weekley, CEO and co-founder of people are very aware that lawsuit abuse hurts justice abuses, said Linbeck. To the contrary, Texans for Lawsuit Reform, is as determined as both individuals and society at large. They quickly understand the details of reforms necessary to ever to make Texas a model for the rest of the nation. We have shown the country that it is possible to win common sense reforms, even against Texas citizens are more sophisticated about politics bring about a fair and balanced civil justice system. virtually unlimited spending by personal injury and policy than our opponents ever imagined. plaintiffs lawyers, said Weekley. Both Trabulsi and Linbeck credited Dick We have learned important lessons in the Weekley with being the catalyst for creation of last ten years, he said, adding, Without the determination of TLR s talented team of volunteers and optimism to the cause, that he attracted peo- TLR. He brought so much energy, determination and thousands of grassroots supporters around the ple all over the state who had become disgusted state, as well as our excellent team of professionals, with the rampant lawsuit abuse that had corrupted we never could have made so much progress. our legal system, said Trabulsi. I had been involved in public policy and politics all of my life, One thing we learned is that winning real reform meant changing not only the civil justice Trabulsi continued, and I saw that Dick Weekley laws, but also changing what had become the status quo in political strategies in Texas, said Dick leadership that is necessary to achieve significant was going to provide the kind of total-immersion Trabulsi, President of TLR. Before TLR, it was reform. That s what caused me to devote so much rare for an issue-oriented Political Action Committee to contribute to a candidate challenging an that Weekley s enthusiasm and idealism was conta- of my time and energy to TLR. Linbeck noted incumbent elected official. That meant that once gious, and that even some of Austin s toughest political leaders admired Weekley s civic-mindedness. an anti-reform individual was elected to office, they were pretty much there to stay, making real, In fact, remembered Linbeck, Bob Bullock used systemic change almost impossible. to call Dick Mr. Smith Comes to Washington, We have confirmed that the people of Texas after the idealistic and effective movie character can still be the single most influential voice with played by Jimmy Stewart. elected officials, said Leo Linbeck, Jr., Senior Since the 1995 legislative session, TLR has Chairman of TLR. In the beginning, our opponents assumed that average Texans would not prehensive civil justice reforms of any state in the been credited for its help in enacting the most com- concern themselves with the complexities of civil nation. That could be because we had the farthest TEN GALLON TORT REFORM WOULD NOT HAVE BEEN POSSIBLE WITHOUT THE HARD WORK OF OUR 11,600 SUPPORTERS IN MORE THAN 615 TOWNS AND CITIES, REPRESENTING OVER 1,100 TRADES, BUSINESSES AND PROFESSIONS. to go, said Hugh Rice Kelly, one of TLR s cofounders and currently its general counsel. Solid reform effort, you look at Texas. When you want to When you want to describe a model civil justice legal research, broad grassroots support and advocacy, a principled electoral strategy, and a small but for their determination, can-do attitude, and know why, you look at Texans for Lawsuit Reform, very determined, dedicated professional team have drive. With a lot of hard work, TLR has changed helped us make a real difference in the future of the political reality in Texas to bring about fundamental changes. Texas, he added. It is a difference that has been noticed outside Our work is not finished by a long shot, our state. The Wall Street Journal recently lauded said Trabulsi. The goal is nothing less than returning litigation to its appropriate role in society. Texas for enacting what it called, Ten Gallon Tort Reform. Lisa Rickard, President of the U.S. Chamber Institute for Legal Reform was more specific: hands effort, and it s well worth Weekley, a former Naval officer, added, It s an all- it. P AP GA E G E 4 4 P A G E 5

4 Asbestos Litigation Reform One of Texans for Lawsuit Reform s top legislative goals for the coming session is reform of asbestos litigation. It is the most serious abuse of the civil justice system in the history of our nation, said Dick Trabulsi, TLR President. Professor Lester Brickman of the Cardozo School of Law agrees. A recent paper authored by Prof. Brickman to the Pepperdine School of Law asserts that asbestos litigation abuse may be one of the most pervasive frauds ever perpetrated on the civil justice system. Asbestos litigation has become a malignant enterprise which mostly consists of a massive client recruitment effort that accounts for as much as 90 percent of all claims currently being generated, supported by baseless medical evidence which is not generated by good faith medical practice, but rather is primarily a function of the compensation paid, and by claimant testimony scripted by lawyers to identify exposure to certain defendants products, wrote Prof. Brickman. A reporter for the National Journal, a Washington, D.C. magazine devoted to public policy, wrote: Brickman s empirical research is so massive, his scholarship so meticulous, and his 526 footnotes so crammed with compelling evidence, that his article together with the work of a handful of investigative reporters should shift the burden of proof in public debate to those who defend the legitimacy of the asbestos-claims industry. The heart of the problem is that lawyers are filing the majority of claims for people who are not sick. Thousands of non-sick claimants are flooding the judicial system, bankrupting defendants and, as a result, preventing sick claimants from getting the help and compensation they need, observes Hugh Rice Kelly, TLR s general counsel. Prof. Brickman concluded that the combination of huge plaintiff lawyer-funded faulty health screenings and witness coaching, in search of billions of dollars of legal fees, had corrupted the administration of justice. The United States Supreme Court has twice admonished the U.S. Congress to address this growing problem. Political clout by billionaire plaintiff lawyers has frustrated every attempt in recent years to legislatively end the abuse. Ultimately it is both businesses sued into bankruptcy and legitimate victims of asbestos exposure who will pay. Not only have tens of thousands of jobs been lost to predatory and corrupt lawsuits, but many experts predict available funds will be exhausted before legitimate asbestos victims can be adequately compensated. TLR is currently working with a broad coalition of groups interested in legislative solutions for Texas which would protect the rights of persons who are ill (or will become ill), but would stop the practice of rewarding plaintiffs lawyers for filing claims for persons who are not ill, and are unlikely to become so. Texas can again serve as a model for the United States Congress, as well as other states, in restoring common sense and decency to this destructive, corrupt area of civil law, said Richard Weekley, TLR CEO. You and the 11,600 other supporters of Texans for Lawsuit Reform have a key role to play in making your voices heard at critical points in the legislative process. Be sure to encourage your local legislators and candidates to support asbestos lawsuit reform, so people who actually get sick can get the help they need. S P O T L I G H T O N M A T T W E L C H Matt Welch, Director of TLRʼs Political Action Committee since 1996, is a native Texan and a graduate of Texas A&M University. As PAC Director, Matt has been actively involved in over 100 legislative, judicial and statewide campaigns. Matt reports regularly to our PAC Board, making recommendations for endorsements and contributions. He personally manages the PACʼs involvement in the races in which we are most heavily engaged. Matt is known for his strong work ethic, sound judgment, and vast knowledge of Texas politics. He has unique instincts about how to conduct winning campaigns. Matt is a man of high principle and extraordinary effectiveness, and we are proud that he is an integral part of the TLR team. ASBESTOS FACTS» At end of year 2000, over 600,000 people had filed claims for asbestos-related personal injuries, typically against dozens of defendants.» Over 8,000 companies have been named as defendants, including many small businesses with 20 employees or less.» Mesothelioma cases represent a tiny fraction of all pending claims. In fact, it is estimated that 89% of asbestos claims are filed by people who do not have any form of cancer.» Asbestos-related bankruptcies are becoming more frequent: a total of 16 bankruptcies were filed in the 1980s, 18 in the 1990s, and 29 from 2000 through the summer of So far, 67 companies have gone bankrupt as a result of asbestos liabilities, and many more are threatened with bankruptcy.» More than 60,000 jobs have been lost as a result of asbestos-related bankruptcies. The total could reach as high as 423,000 jobs.» Workers at the bankrupted companies have seen their 401(k)s drop by an average of 25%.» A total of $54 billion has already been spent on asbestos litigation. Attorney fees and other transaction costs have consumed more than half of all amounts paid by defendants.» Of amounts paid after transaction costs, experts estimate that about 65% of the compensation has gone to claimants who are not sick, and may never become sick.» Estimates of the total costs of all asbestos claims range from $200 to $265 billion, creating a huge drag on the American economy.» The Los Angeles Times estimated that the number of people expected to file injury claims could eventually reach 2.5 million, and that the economic toll of asbestos could run as high as $200 billion, higher than estimates for all Superfund sites combined, Hurricane Andrew, or the Sept. 11 terrorist attacks... (1/27/02) P A G E 6 P A G E 7

5 Formation of TLR Regional Chairman s Council When Dick Weekley, Leo Linbeck, Dick Trabulsi, and Hugh Rice Kelly created Texans for Lawsuit Reform in 1994, their objective was to establish a vibrant statewide organization to promote comprehensive civil justice reform. TLR s successes over the last decade are due to the more than 11,600 dedicated volunteers in over 650 separate communities across the state. At the end of this last legislative session, TLR s leadership asked itself: How can TLR do an even better job of informing, activating, and utilizing its unique and invaluable reservoir of volunteers? We determined that there was a need for more structured input from TLR supporters, to engage them more actively on a broad range of our activities, and to recruit new financial and volunteer support from people not currently involved with TLR. The result is the new Regional Chairman s Council ( RCC ). This Council formalizes the ad hoc leadership that has been in place statewide and has served TLR well for the past decade. The RCC is comprised of 21 Regional Chairmen and 21 Regional Co-Chairmen, representing the major cities of Houston, Dallas, San Antonio, Fort Worth and Austin, as well as sixteen other regions encompassing the entire State. These 42 Chairmen and Co-Chairmen are dedicated, loyal supporters who have consistently proven their commitment to tort reform through pro-active involvement and financial support. Each is an accomplished leader in their community. Mary Tipps, Director of Community Outreach, and Bud Shivers, the Regional Chairman for Austin, reviewing the agenda for the Regional Chairmen s meeting. Leo Linbeck, Jr., who is TLR s Senior Chairman, believes that the establishment of the RCC is a logical step in TLR s ongoing effort to maximize citizen involvement in the government of Texas. Leo observes Our nation is unique in its founding, in that it is based on the principle that the citizen is sovereign not the state. This reality requires the citizen to engage in the political process as a volunteer, so that government reflects the will of the people, not the will of narrow special interests. Over the next few months, there will be events in many of the Regions. Dick Weekley, TLR s Chairman and CEO, and Dick Trabulsi, TLR s President, will attend to discuss recent accomplishments, the current status of tort reform in Texas, and the agenda of TLR all with the goal of establishing Texas as the Beacon State for Civil Justice in America. We would appreciate any ideas you have on how an active Regional Chairman could promote your personal involvement in TLR grassroots activities and encourage financial support of our overall efforts. T L R R E G I O N A L C H A I R M A N S C O U N C I L M E M B E R S Mr. Ernest Angelo Jr. Mr. Lonnie Arrington Mr. Robert Barnes Mr. Louis Beecherl Jr. Mr. Sam Beecroft Mr. Rohn Boone Mr. Tucker Bridwell Mr. Joe Canon Mr. Jack Cawood Mr. Tom Cravens Mr. William Daniel Mr. Vicente Garza Jr. Dr. Cameron Godfrey Mr. Tom Granger Mr. Curtis Griffith Mr. William Hartley Mr. Robert Hoy Jr. Mr. Chris Hughston Mr. Jerry Kane Mr. Ira Lawson III Mr. Cadell Liedtke Mr. Leo Linbeck Mr. Ruben Martin III Mr. Delbert McDougal Mr. Bert Mijares Mr. Joe Phillips Mr. Michael Portman Mr. Thomas Salome Mr. John Schweitzer Mr. Mike Scott Mr. Ralph Shelton Mr. Robert Shepard Mr. Allan Shivers Jr. Dr. David Teuscher Mr. Joe Thompson Mr. Rice Tilley Mr. Richard Weekley Mr. M.S. Wright III Mr. Charles Wyly Mr. F.M. Young