ctr for legal policy Manhattan
https://media4.manhattan-institute.org/sites/default/files/trial-lawyers-inc-think-globally-sue-locally-JC.pdf
Trial Lawyers, Inc.: Think Globally, Sue Locally (2016? update)
james R. Copland is a senior fellow and director of legal policy at the Manhattan Institute. In those roles, he develops and communicates novel, sound ideas on how to improve America’s civil- and criminal-justice systems. Copland has testified before Congress as well as state and municipal legislatures, and he has authored many policy briefs, book chapters, articles, and opinion pieces in a variety of publications, including the Harvard Business Law Review, Yale Journal on Regulation, Wall Street Journal, National Law Journal, and USA Today. Copland speaks regularly on civil- and criminal-justice issues; has made hundreds of media appearances in such outlets as PBS, Fox News, MSNBC, CNBC, Fox Business, Bloomberg, C-SPAN, and NPR; and is frequently cited in news articles in the New York Times, Washington Post, The Economist, and Forbes.
In 2011 and 2012, he was named to the National Association of Corporate Directors “Directorship 100” list, which designates the individuals most influential over U.S. corporate governance. Prior to joining MI, Copland was a management consultant with McKinsey and Company in New York. Earlier, he was a law clerk for Judge Ralph K. Winter on the U.S. Court of Appeals for the Second Circuit. Copland has been a director of two privately held manufacturing companies since 1997 and has served on many public and nonprofit boards. He holds a J.D. and an M.B.A. from Yale, where he was an Olin Fellow in Law and Economics;an M.Sc. in the politics of the world economy from theLondon School of Economics;and a B.A. in economics from the University of North Carolina at Chapel Hill, where he was a Morehead Scholar.
tABLE OF CONTENTS 4 Localities as Well as States Shaping National Economic Policies Through Litigation, with Lawyers Expecting Big Paydays 5 Smoking Guns: The State and Local Lawsuit-Industry Business Line Begins 7 Uncertain Climate: States and Localities Sue over Global Warming 9 Sue for the State, Work for the Billionaire 10 Sue for the State, Profit for the Lawyer 11 Litigating Drug Rehab 12 Inverting the Federalist Model 13 Reining in the New Antifederalist–Trial Lawyers, Inc. Alliance 14 Acknowledgment and Endnotes
INVERTING THE
FEDERALIST MODEL
Aside from the perception of conflict inherent
in state and local lawsuits that enrich private
litigants—or effectively cede the state’s business
to attorneys paid by outside billionaires—most of these
state and local lawsuits also invert the normal federalist
structure. When he announced New York City’s litigation
against oil companies in January 2018, Mayor Bill
de Blasio was unabashed in asserting authority over the
most global of policy issues:
“We never make the mistake of waiting on our national government to act when
it’s unwilling to. This city is acting. We want other cities
to act.”57 The problem, of course, is that de Blasio was
never elected by a national constituency.
In some cases—as in the opioid lawsuits and the
multistate tobacco litigation that formed the template
for this litigation industry line of business—most, if
not all, states join the fray. But even when states and
localities unite their cases for strategic purposes, they
often assert different theories and interests and fight for
the spoils.
The emergence of local government plaintiffs
complicates these matters even more; some of the
state plaintiffs in opioid litigation have objected to local
governments’ involvement precisely because they want
to retain more settlement proceeds themselves. One
federal judge overseeing the cases recently characterized
the mess as a “family feud” between “cities and counties
and the states that they sit in.”58
Cases settle largely because of the massive potential
damages at risk, not because of the legal merits. In the
Alabama drug-pricing litigation farmed out to Beasley
Allen, three companies decided to roll the dice and take
the state to trial. They ultimately won their case; the
Alabama Supreme Court observed that there was no
evidence that the companies had made any misrepresentations
and that nothing prevented the state from negotiating its
pricing with the companies in any event.59 The
supreme court’s judgment reversed earlier jury verdicts
totaling almost $340 million, highlighting why so many
other companies had been willing to settle.
These issues are particularly acute when lawsuits
are premised on nebulous
“common law” theories
like public nuisance,
which predate the modern regulatory state. As
Justice Ruth Bader Ginsburg observed for a unanimous
Supreme Court in rejecting federal-law public-nuisance
litigation to regulate climate change, “judges lack the
scientific, economic, and technological resources an
agency can utilize in coping with issues of this order.”60
The problems are also pronounced when addressing
complex problems like opioid addiction.
Lawsuits for money damages also encourage outside
private lawyers to prioritize payouts over solutions.
Similar temptations abound for state officials when
they can hold on to settlement dollars to pad their
agency or departmental budgets or allocate their budget
dollars without legislative oversight. Indeed, some local
plaintiffs have argued that they need to file their own
opioid suits precisely because state attorneys general in
earlier litigation misappropriated settlement proceeds.
There is a reason that federal and state constitutions
give the power to tax to legislatures, not to the executive
branch or courts. There is also a reason that governments
no longer “contract out” tax collection to private
collectors who retain a share of the proceeds.
Moreover, not all cases are like tobacco or opioids,
where states and localities are mostly jostling for their
cut of the action. In other cases—as in lawsuits against
gun manufacturers and energy companies linked to
carbon emissions—a smaller fraction of states and municipalities
get involved, as political leaders from other
locales with different public views eschew the litigation
or file briefs on the other side. As de Blasio suggested,
state and local officials are often overtly trying to
win policy debates through large-scale litigation—in a
direct end run around Congress, which is vested with
interstate regulatory authority by the Constitution.
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Reining in the New Antifederalist–Trial Lawyers, Inc. Alliance
Is there a path forward? In general, state attorneys
general have broad “police powers.” However, Congress has the power to preempt states from action
in fields, as it did with antigun litigation, consistent
with its power to regulate interstate commerce. Climate
change may be an area in which Congress should pursue a similar approach.
Even when Congress would prefer a role for the states,
there is no reason generally to enable state-led shakedown lawsuits under federal law. Unfortunately, many
federal statutes do just that: they empower states to
enforce federal regulations through private “rights of
action,” without any limitation on contracting the job
out to private attorneys.61 Rather than inviting plaintiffs’ lawyers to approach state officials to file damages
suits on states’ behalf, Congress should require transparent hiring principles that deter abuse when states
enforce federal law.62
Although states may have little incentive to limit their
own officials’ interference with other states’ policy
prerogatives, state legislators should seek to cabin the
discretion of attorneys general and other state elected
officials to contract their services with private lawyers
on contingent-fee contracts—or to delegate state enforcement to “volunteer” attorneys paid by third-party
sources. The multistate legislative-drafting coalition
American Legislative Exchange Council has promulgated a model bill, the Private Attorney Retention
Sunshine Act,63 to that end. Other similarly intended
legislation also exists, and several states have enacted
variations.64 State legislatures should also consider legislation
limiting localities’ ability to engage in such litigation—often in serious tension with state interests.65