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    CIVIL JUSTICE REFORM - HOW EVERYONE CAN HELP

    11/01/2003
    on 11/1/03.

    Volume 11, Number 11
    Midatlantic Area Firms
    Copyright 2003 by The Metropolitan Corporate Counsel, Inc.

    November 2003
    Special Section
    Civil Justice Reform

    The Editor interviews Thomas A. Gottschalk, Senior Vice President and General Counsel, General Motors, and Chairman, Civil Justice Reform Group (CJRG).
    Editor: Tom, I understand that in October the CJRG hosted a general counsel conference. Please tell us about CJRG and the purpose of the conference.
    Gottschalk: The CJRG is a voluntary group that was founded in the mid-80s by Jack Martin, then general counsel of Ford, along with other general counsel to focus on civil justice reform efforts at the state level. It is comprised of a number of companies interested in civil justice reform, representing many different industries. In October, CJRG sponsored a conference to which we invited the general counsel of Fortune 500 companies to discuss priorities for civil justice reform for 2004 and beyond.
    We felt that a conference of this kind would be desirable because over the past several years, there have been a number of organizations advancing the cause of civil justice reform - all of which are doing good work. They all depend to some extent on corporate support. We wanted to be sure that we, as general counsel and responsible for legal affairs at our companies, were coordinating among ourselves and with these organizations to focus on the most important reforms and maximize our collective effectiveness.
    The purpose of the conference was to identify and prioritize the top reform issues and to make sure that we were working with all these various groups in a coordinated way so that we take full advantage of their respective resources and capabilities. A number of the participating general counsel led discussions focusing on several important issues. We had a good turnout of general counsel from over 50 companies and there were more who couldn't come but who asked to be kept in the loop. We identified a number of priorities for 2004 and beyond.
    Editor: What issues were identified for priority?
    Gottschalk: At the federal level, there are a number of important ongoing efforts. We are continuing to give priority to an attempt to work out a reasonable and fair legislative resolution to the asbestos litigation crisis at the federal level. The second federal issue in terms of prioritization is the Class Action Fairness Bill - also known as the Minimum Diversity Bill - that we hope will come up for a favorable vote about the time you go to press. We all agreed that this issue deserves priority until a satisfactory bill is enacted.
    There was a broad consensus that we need to continue to identify and focus on what we call problem jurisdictions. Some are at the local level - a county, a city or a township. Notable among these would be, for example, Madison County, Illinois. The U.S. Chamber of Commerce and American Tort Reform Association have been doing great work on putting the spotlight on what plaintiffs' counsel call "magic jurisdictions."
    Other priorities would be states where we believe reform efforts are either possible or very much needed. We noted in this connection that business, and the public at large, enjoyed considerable success in Texas recently with the enactment of a number of civil justice reforms. There was a feeling that there were other states that would benefit from a similar effort, including Mississippi and West Virginia among other jurisdictions.
    We also agreed that the business community needed to be better organized to work for reform in California, starting with the 17-200 statute. This law basically makes every resident of California a potential private attorney general, even though that person has not been harmed by a company's allegedly wrongful conduct. We recognize that the legislative environment in California in recent years has been very much tilted toward the plaintiff's bar and that we really needed to raise our voice there to present our point of view.
    I have mentioned the primary areas of focus but there was also interest in other issues such as state consumer fraud statutes. We need to prevent those statutes from being modified along the lines of 17-200 in California. They should not become omnibus licenses for individuals to sue without the elements that are customarily required to show consumer fraud.
    We also plan to follow the development of punitive damage law in the wake of the State Farm v. Campbell decision. We hope, through amicus participation or other means, to make sure that the due process limits adopted by the Supreme Court are, at a minimum, respected as that law develops at the state level. We will also continue to pursue legislative efforts to prevent egregious and unwarranted punitive damage awards.
    Editor: What about the politicization of judicial selection?
    Gottschalk: There was a feeling among the general counsel that to the extent one could move toward merit selection, rather than judicial elections, more qualified candidates would be attracted to serve as judges at the trial court and appellate levels. We recognized that this solution would take time and that, in the interim, corporations and groups reflecting their perspective would be faced with the need to be more active politically in support of qualified judicial candidates in elections. However, the general counsel at the conference did not have an appetite for participating as a group in judicial elections. Instead, they preferred to let individual companies make their own decisions about how to become involved. There was a general appreciation of the relationship between the quality of civil justice and our ability as a society to encourage fair, impartial, well qualified, and experienced lawyers to step into judicial roles.
    Editor: Was there any discussion of the model followed by LCJ of encouraging corporations to work with their law firms to achieve civil justice reform objectives?
    Gottschalk: There was quite a bit of discussion. In regard to the federal Class Action Diversity Bill, a number of general counsel commented that there had been a really substantial outpouring of support from many of the law firms that represent their companies. Many of the general counsel mentioned that, in response to their requests, their law firms sent letters supporting the legislation and had arranged contacts with congressmen and senators. Gary Van Graafeiland of Kodak, for one, noted the terrific response he received to his request for law firm support.
    It was also mentioned at other points in the meeting that, working with our law firms that have strong ties to the local communities where they have their offices, we could significantly increase our contacts with legislators, both state and federal. It was generally felt that we should be more cognizant of our law firms as a resource and enlist their help.
    Editor: The image of corporate America seems to have suffered in recent years. What can be done to overcome this?
    Gottschalk: The participants agreed that corporations tend to be targets - of the media, of prosecutors and of plaintiffs' lawyers - and acknowledged that often when corporations take the lead, they are perceived as Goliath and the trial bar as David. This makes it all the more important that we work with groups that reflect a broad coalition of entities, including small business, consumer groups, and governmental entities, that are also negatively impacted by some of the troubling trends in civil justice. We must align ourselves with some of these groups, particularly at the grassroots level, and let their voices be heard. Various local citizens groups are pushing for civil justice reform in many states, and organizations like Citizens for a Sound Economy are effective in supporting grassroots initiatives. The consumer is the David in this effort, facing the Goliath of the trial bar.
    Editor: Aren't the results of excesses in the civil justice system ultimately borne by the consumer?
    Gottschalk: Largely. At the conference, we noted that a lot of the costs of the excesses addressed by civil justice reform are really borne by every individual in society, not just corporations. Often companies decide they can't afford the risk of legal action and withdraw services or products from the whole community even though most of the community would say, if responsibly used, they are perfectly fine. Specifically, we discussed the impact on the medical profession and health care industry of the high cost of liability insurance that has resulted from large, and sometimes unjustified, damage awards. The compassionate urge to compensate individuals for injuries has allowed us to ignore the costs of large liability awards to society as a whole, whether it is in terms of freedom to travel, freedom of recreation, access to medical care, or other benefits. We need to support the work of groups such as Common Good, which Philip Howard has established, to try to give voice to these other societal interests.
    Editor: Was there any discussion of the value of involvement in pro bono efforts as a demonstration of interest in a level playing field across the whole spectrum of civil justice reform?
    Gottschalk: Yes, this subject was raised at the conference. Jim Jenkins from Deere, like many of the general counsel present, is a strong supporter of pro bono. In a discussion on the floor, he and I agreed that it is important to remember that corporations have the advantage of good lawyers and good resources to represent them, while too many in society do not have access to effective legal advice, much less enough access to the justice system.
    Editor: The Metropolitan Corporate Counsel has about 12,000 general counsel among its 30,000 corporate counsel readers. How can they help on issues that were discussed at the meeting?
    Gottschalk: There are many ways. They should become informed about what's going on and become engaged where it makes sense for their corporations. A number of participants said they were concerned about the impact of large damage awards and the adverse effect on their companies' stock prices and on employee morale, but they admitted they just didn't know how they could help. Through the CJRG or groups like Lawyers for Civil Justice, it is easy now to find out who is doing what in the civil justice reform area. General counsel have to recognize that it is up to them. It is part of their job to be involved in this.
    Working collectively, the general counsel of 12,000 companies can be a very prominent and very informed voice for meaningful reform. General counsel should give time personally to civil justice reform efforts, allow their staff to become engaged, and work with outside counsel to encourage their support on particular issues or initiatives. Getting involved is vitally important if we are to succeed in our efforts.
    This effort is not limited to the Fortune 500. The general counsel of small companies can also play an important role. Obviously, it gets more difficult with less staff and fewer resources. But, I could certainly arrange to provide the materials we had at this conference to solo general counsel or those with smaller staffs to make them aware of what is going on. They can e-mail me at t.gottschalk@gm.com. Even though they may not have a lot of resources, small businesses often can be the most effective voice with a congressman or a local state legislator. They can be effective at the level where they have contacts. Like a lot of situations, if you get thousands of people taking comparable action, a solo voice becomes part of a very large chorus.
    Whether you are in a large department or a small department, you still have the potential to offer good ideas. They come from all sources. Awareness will encourage more people to offer ideas about substantive reforms to support or tactics to try. There are a number of ways that people can participate without investing a great amount of time or giving away thousands of dollars that are not in their budgets.
    At the CJRG, we welcome the interest of any and all general counsel. None of us feel that we have the time to be the primary leaders in this effort or to supply all the content. So I really would encourage individual general counsel to give some time and effort to this cause. We have made a lot of progress over the last several years in a number of states, but this is a battle that is going to go on over a lengthy, indefinite period. We can't afford to allow ourselves to become tired or cynical about it. We need to be strategic and united as a general counsel community and to make civil justice reform our responsibility on behalf of our companies, our employees and our shareholders.
    11/03 METCC 43, (col. 2)