Lawsuit Lollapalooza

Original article

EDWARDSVILLE, ILLINOIS–The Madison County Courthouse is an imposing structure: a full block long, four stories high, a marble edifice built in 1921 as a symbol of the era when Madison was the most industrialized county in Illinois.

Today the county seat, Edwardsville, is home to only 21,000 people, and the surrounding county has been through a wrenching de-industrialization. Yet the county’s civil courts are expanding so rapidly that the entire criminal court system is about to move to a new three-story building two blocks away in order to open up more room in the sprawling main courthouse for non-criminal trials.

You see, lawsuits are the major industry in Madison County. Business is good. Law firms are expanding to occupy former banks, former oil company headquarters, and other facilities of the old economy. Firms from other parts of the country are opening branch offices here. While the downtown shopping districts of most other small towns are all but abandoned, Edwardsville thrives. Lawyers act as the new captains of industry. One has revived a local steel mill. Another is buying a minor league baseball team.

But 160 doctors have left Madison and neighboring St. Clair Counties over the last two years. Pregnant women are now traveling as far as Nashville to get care. One reason President Bush visited the county in January was to dramatize out-of-control suits.

Madison County, Illinois has been called “the nation’s leading judicial hellhole” by the U.S. Chamber of Commerce. Nothing much is made here any more, yet money continues to pour in from around the country. Because Madison, as one local wryly observes, has become a center of the “wealth extraction economy.”

The making of lawsuit heaven

It wasn’t always thus. A flat bottomland beside the Mississippi River, just a bit north of St. Louis, Madison County is where Lewis and Clark spent the winter of 1802-03 before their 8,000-mile journey up the Missouri and back. By the early twentieth century, Madison and the county just south, St. Clair, had become a huge industrial annex to the thriving port of St. Louis.

Thanks to a confluence of barge traffic and a network of railroads that stretched from Chicago to New Orleans as well as east and west, the region became the home of steel mills, brass foundries, and a monstrous oil refinery. The intense industrial economy brought wealth, but also environmental woes. “My father took me out to the refinery when I was a kid, and I was sick for two days,” says a veteran lawyer eating lunch at the Sunrise Cafe directly across from the courthouse. “I remember walking to school some days when you couldn’t see twenty feet in front of you, the air was so filled with smoke,” says Rex Carr, the legendary 78-year-old attorney and “godfather” of Madison’s trial bar.

Industrial grievances soon became a local way of life. Before Worker’s Compensation laws took effect across the nation between 1910 and 1920, the railroads had their own compensation system in which industrial accidents were adjudicated in the state courts. By 1915, 80 percent of the nation’s railroad claims, involving accidents that occurred from Georgia to Oregon, were being resolved in Madison County. The reason was simple: Claims could be filed in any jurisdiction where the railroad did business. Since just about every railroad in the country had lines that wound through Madison, injured persons were eligible to file there–and the judges of Madison County had proven themselves particularly favorable to such appeals. Word of easy judges travels fast.

As the area’s steel plants and oil refineries unionized in the ’20s and ’30s, Madison became a Democratic stronghold. “Even though a lot of the industries have left, this is still a union town,” says Carol Foreman, executive director of the Edwardsville & Glen Carbon Chamber of Commerce. “A couple of years ago they built a Jack in the Box fast food joint out on the highway, and people wouldn’t go in because the builder didn’t use union labor.” Illinois elects its judges, like half the states, and Madison’s hard one-party cast gave its judiciary a distinct flavor. Even today, county judges proudly proclaim that their mission is to right grievances–across the entire country.

Two years ago, 73-year-old Judge Nicholas Byron, the dean of Madison’s judiciary, interrupted a defense attorney who moved that the trial ought to be held where the events occurred–three states and 700 miles away in Pennsylvania–rather than in Madison County. “You know, as a result of certain events that have occurred, and most of them concern me, I have come to certain revelations,” said Judge Byron. “I want this on the record…I am not a Madison County judge…. I am concerned with all Americans. And you know what? …I am going to expand the concept that all courts in the United States are for all citizens of the United States…. Motion denied.” Judge Byron’s advertising of his willingness to entertain suits from anywhere was no idle boast. At that point he was presiding over 25 percent of the national docket for cases of mesothelioma, the most deadly form of asbestos lung disease.

The tort industry

America’s lawsuit industry can be divided into three spheres. First there are personal injury suits against large corporations for the products they manufacture. Second, there are medical malpractice claims against doctors and hospitals. Finally there are “class actions,” which involve taking large numbers of individual claims and combining them into one giant procedure before a judge willing to “certify” the legitimacy of the claims. Fifty years ago, plaintiff attorneys who specialized in such claims were a bottom-rung contingent of the trial bar, generally dismissed by their peers as “sore-back lawyers.” “When I started this practice in 1950, I grossed $500 the first year,” says the silver-haired Carr, who twice held the Guinness World Record for the world’s largest damage claim. “After I finished my day in court, I would go over to the stockyards and chop ice from 3 to 11 so I could make a living.” An East St. Louis native, Carr still maintains his two-story office in that tumble-down shell of a city where, right across the street, an abandoned 12-story apartment house has closed off portions of Missouri Avenue because it rains bricks on the sidewalk.

Carr got his first big break when a client for whom he was handling a bankruptcy stopped at a gas station and heard a story from the attendant, whose son had suffered a railroad injury. The client lied and said he knew a great railroad lawyer. “I had never handled a railroad case in my life,” Carr recounts, “but I started doing research and settled the case for $30,000.” Soon he was representing a string of railroad workers in personal injury suits before sympathetic Madison and St. Clair County judges.

“Tort” is the legal term for a damaging action for which one can be held liable. Tort law–like many other parts of the legal profession–changed drastically in the 1960s. The revolt began in academia, where Yale law professor Fleming James crusaded for expanded workplace liability so that employers would be responsible for every accident, regardless of fault. James “conceived the principal function of tort law to be, not the resolution of disputes…or the expression of moral values, but compensation of the injured,” in the words of George Priest, John Olin Professor of Law and Economics and Yale Law School. James’ crusade was amplified by Friedrich Kessler, a refugee from Germany who–misreading his experience with the Nazis–became obsessed with the notion that “powerful commercial overlords” were imposing “a new feudal order upon a vast host of vassals.” Soon, legal academics had convinced many judges and attorneys that even if a manufacturer or individual “has exercised all possible care in the preparation and sale of his product,” a doctrine of “strict liability” should hold him responsible for any harm that comes from using the product .

Lawyer or banker?

In 1964, Dr. Irving Selikoff of the NYU School of Medicine published a study that found lung cancer rates seven times higher than expected in insulation workers in New Jersey. By 1967, the government warned that asbestos might be the cause, and it was banned in 1978. Since then, 750,000 compensation claims, paying out $70 billion, have been filed by Americans exposed to asbestos. Another half million suits are pending. Asbestos has proven to be the greatest industrial disaster in American history, bankrupting hordes of companies.

The most serious cases involve mesothelioma, a deadly cancer of the lung lining caused by inhaling asbestos fibers. Last year about 1,500 new claims for mesothelioma were filed in the United States. Of these, almost one third were filed in Madison County, of which 80 percent were filed by a single law firm, SimmonsCooper.

Asbestos litigation in Madison County really took off in 2000 when Randall Bono, an Illinois Circuit Court judge, stepped down to become the lead counsel in an asbestos case. Less than two months later, a Madison County jury awarded his client $34 million from Shell Oil for a case of mesothelioma. Bono has since joined the SimmonsCooper firm.

In person, Bono is charming, friendly, disarming. One of the revelations of interviewing plaintiff attorneys is that they are all lively and gregarious, real American characters. The defense attorneys working for most businesses tend to be a solemn bunch.

“Asbestos is the most heinous crime ever committed by corporate America,” says Bono. “Just sit for five minutes with someone dying of mesothelioma and you’ll know what I mean. Madison County is one of the few places in America where corporations don’t rule and where asbestos victims can get justice.”

In 2004, Bono allowed Paul Hampel of the St. Louis Post-Dispatch to sit with him as he negotiated with obsequious defense attorneys trying to settle their cases. “The atmosphere was loose, punctuated with off-color jokes, most of them cracked by Bono,” wrote Hampel in a four-part series. “In this locker-room environment, he’s the likable team captain.”

“His cell phone chirped. He answered it with a hearty, ‘Hello, sweetie!’ The caller was a female Cleveland attorney representing a materials manufacturer whose roofing product allegedly sickened one of Bono’s clients. ‘Yes, I am busy, but you are my top priority right now, sweetie,’ Bono said, smoke curling from his lips…. ‘Umm-hmm. I sympathize. But what’s the advantage of giving you a discount if you don’t pay it quick? I have people dying while you wait to pay?’ Bono hung up. He smiled broadly. The call had gone well.”

The reason Bono is able to play footsie with desperate defendants is because he has already gone to trial with two of them. After he won the $34 million award against Shell in 2003, defendants only challenged him once more. In 2003 he won $250 million from U.S. Steel for a 71-year-old mill worker who contracted mesothelioma in Gary, Indiana. Since then, defendants have been more than anxious to settle.

Medical lawsuits hit home

Medical malpractice, the second leg of the tort triumvirate, is practiced mostly by smaller firms and individual attorneys in Madison County. The number of suits is lower. But cumulatively, the effects are also large. “There are so many lawyers here, you can’t help but have a lot of malpractice suits, even if the plaintiffs don’t win too many of them,” says Foreman, of the Chamber. Doctors and hospitals are local businesses, and socking them with huge damage awards brings visible costs.

As a result, Madison County has its own medical crisis. “We’ve lost 160 doctors from Madison and St. Clair Counties over the past two years,” says Lynne Willett Nowak, a young intern who grew up in Belleville and now works at its Memorial Hospital. “We pay twice the insurance rates of neighboring states. The only sizable insurance company still functioning here is the doctor-owned cooperative, and they won’t write any new contracts unless you’re part of an existing group.” Less than a year after returning to Belleville to practice, Dr. Nowak has founded “Keep Doctors in Illinois,” a campaign seeking a legislative resolution to the malpractice crisis.

“We’re down to two neurosurgeons in the entire southern half of the state and neither of them has insurance to do brain surgery,” she continues. “If you have a car accident and have head trauma, you may be three hours in a helicopter before you can get care. I just talked with a woman who is six months pregnant and she’s on her third doctor.”

Harry Maier, CEO of Memorial Hospital since 1978, reports, “We’ve lost 65 doctors on a staff of 350 in the last two years. The only thing that’s keeping people now is their ties to the community. Our last urologist says he’d leave in a minute but he knows there wouldn’t be anybody left south of Springfield.”

Lawyers argue that the doctor crisis is a fabrication, or that it’s all the insurance companies’ fault. But local public opinion is turning. Last November, in an election in which the candidates spent $9 million, Republican judge Lloyd Karmeier defeated Democratic judge Gordon Maag in a race for one of seven seats on the Illinois Supreme Court. To everyone’s astonishment, even Madison County voted for the Republican.

Judge Maag–who also lost his circuit court seat–immediately filed a $110 million lawsuit (naturally) against the Illinois Chamber of Commerce and the Coalition for Jobs, Growth, and Prosperity, claiming they defamed him during the election. His attorney is Rex Carr.

Class action central

Class actions are the third leg of the lawsuit trilogy. In some respects, class actions are legitimate and useful strategies, allowing nearly identical grievances such as widespread asbestos damage or hiring practices by major employers to be consolidated into a single procedure rather than being tried on a case-by-case basis.

Using the mathematics of class actions, however, some law firms have become experts at filing claims over seemingly insignificant grievances–sometimes involving literally pennies –and pursuing actions that have no meaning to plaintiffs but promise millions of dollars in attorneys’ fees. Such “frivolous lawsuits” are the target of the Class Action Reform Law recently passed by Congress. Over 2003 and 2004, Madison County judges certified 200 class actions, more than any other jurisdiction in the country. The leading filer is the Lakin Law Firm, founded by Tom Lakin, a typical product of blue-collar Madison County. Even in semi-retirement with steel-gray hair, the 62-year-old Lakin still looks boyish and athletic. He spent part of his youth as a factory worker, janitor, deckhand, and sheriff’s deputy before graduating from Southern Illinois University and the University of Louisville Law School. Lakin then used his union ties to begin a 30-year practice in personal injury that won hundreds of cases for aggrieved workers.

Seeking a higher-stakes game, his 34-year-old son, Brad, has steered the firm into new waters, becoming what The National Law Journal called “the upstart frequent filer of class actions.” It has been a profitable journey. In a move emblematic of the changing economics of Madison County, the Lakin Law Firm recently took over Amoco’s former headquarters at the Wood River Refinery. Oil pipelines still run directly over the firm’s parking lot.

After doing an apprenticeship with Rex Carr, Brad Lakin began with a suit against AT&T for charging a 50-cent monthly fee to maintain the telephone wire inside homes after the breakup of the Bell System. Though customers were given the option to buy their own coverage, the attorneys convinced a court that the fee was a fraud.

“Lawyers are definitely initiating these suits,” admits Carr. “But that’s because they’d never be worth bringing for individual customers. When you roll them up into one big ball, you do a tremendous social good. You prevent these giant corporations from defrauding people and teach them not to do it again.”

Typically, beneficiaries of such class action suits get piddling sums, often nothing more than a discount on their next purchase. The majority may never bother to collect. The lawyers who engineer these suits, however, take their one-third contingency fees in cold cash. The Class Action Reform Act will seek to curb such suits by removing most of them to federal courts.

What has distinguished Madison County judges is their willingness to certify class actions. Pending class actions before the Madison County courts now include:

A charge in excess of $5 by USBank for faxing documents when customers paid off their home loans.

A $20.90 “courier fee” charged by Accredited Home Lenders while delivering papers in closing a mortgage.

A $10 filing fee charged by H&R Block for use of the company’s computer terminals.

The Madison County legal mafia pulled out all the stops in 2004 with a class action against Philip Morris. Judge Byron himself delivered a $12 billion verdict, deciding that Illinois smokers had been defrauded by the marketing of Marlboro Lights. The cigarette has a filter that makes them harder to inhale, aimed at reducing tar and nicotine consumption. Experts brought in by the lawyers insisted that smokers usually just smoke more of them to get to their nicotine comfort level.

Judge Byron arrived at his $12 billion penalty by accepting a plaintiff’s claim that smokers would demand a 92 percent discount to buy Marlboro Lights over some (non-existent) cigarette that was not just hard to draw on but actually contained less tar and nicotine. He took the amount of money Illinois smokers put down over the last two decades for Marlboro Lights and decided that 92 percent of it should be returned to customers.

The judge stipulated that any amount left unclaimed by consumers (which could easily be half the amount) should go to 11 Illinois law schools, as well as drug courts, domestic violence programs, legal-aid organizations, and the Illinois Bar Foundation. In the process, he inspired the law schools and the bar association to file numerous briefs in support of his verdict. Judge Byron also tacked on $3 billion in punitive damages that will go directly to the state of Illinois–after the local team of lawyers gets a cool $1 billion, of course.

While predictably thrilling to Illinois lawyers, this decision sent a wave of panic through lawyers and attorneys general in other states. That’s because an earlier industry-wide suit, the Tobacco Settlement of 1998, produced a lucrative rain of multi-year payments from tobacco firms that has made scores of lawyers obscenely rich and fattened the budgets of many states. If the Illinois Supreme Court upholds Judge Byron’s ruling, he may kill the corporate goose producing today’s golden eggs. Other lawyers will lose their fees and many states may face severe budget shortfalls.

Will sunlight disinfect Madison County?

If anyone can take on this monolith it may be Brian Timpone, a puckish 32-year-old entrepreneur who owns a string of weekly papers in Illinois and Iowa. “My father was a Chicago Democrat and we used to get in big fights during the 1980s because I supported Ronald Reagan,” he recalls. After graduating from the University of Missouri School of Journalism, Timpone worked as a TV newscaster, founded a software company during the dot-com era, and then moved to print journalism.

In 2004, Timpone was approached by the U.S. Chamber of Commerce about founding a newspaper devoted exclusively to the legal shenanigans in Edwardsville. “All you have to do is shine a spotlight on Madison County and it sheds significant light on national problems,” says Sean McBride of the Chamber’s Institute for Legal Reform. Timpone set up shop a block from the courthouse, and now puts out the Madison County Record once a week, attracting a Web readership that stretches from Brooklyn to Oregon.

“When we first got here, it was amazing how fearful people were of talking,” says Timpone. “Everybody said there’d be some kind of retaliation if their name appeared in the paper. But now things are starting to loosen up. Some of our best sources are now the judges.”

With national attention on Madison, things are changing. In December, Judge Dan Stack shocked everyone by dismissing six out-of-state asbestos claims, labeling the suits a “cash cow” for the county and ruling that Madison is not the most convenient venue for plaintiffs or defendants. No one could remember anything like that happening before. The election of Judge Karmeier in November also served as a wake-up call. Several prominent plaintiff attorneys are now calling for Judge Maag to drop his defamation case, which only inflames the dawning perception of this region as a hotbed of frivolous suits, easy judges, and forum-shopping to match any trial lawyer’s dreams.

Even Carol Foreman, the local Chamber of Commerce director, spends the better part of an hour declaring that, as far as the business community is concerned, Madison County courts are perfectly under control these days. “We’re striving to be bi-partisan,” she says. Then she takes a sidelong glance around her office. “Of course you’ve got to be careful about what you say around here,” she adds in a low voice. “You never know when somebody might sue you.”

William Tucker is writing a book on trial lawyers for the Seattle-based Discovery Institute.