State Medical Reimbursement Lawsuits After Tobacco: Is the Domino Effect for Lead Paint Manufacturers and Others Fair Game?

Abstract

In the early 1990s, I, and probably most other law school professors teaching torts and products liability at the time, would marvel with students about how powerfully liability claims over a single product--asbestos--influenced the tort system and the insurance industry in the 1970s and 1980s. I would cite the seemingly incredible statistic that by 1992 $12 billion dollars had been spent litigating and paying asbestos claims. I would point out that asbestos claims were so pervasive that they skewed statistics on tort litigation, encouraging a perception that injury lawsuits were skyrocketing out of control across the board.' I would note theories that this $12 billion dollars of asbestos litigation alone was largely responsible for a serious insurance crisis in the 1980s. I would recount the manner in which advocates of legislative restrictions on tort recoveries used asbestos litigation as their battle cry due to the enormity of its size and scope. 

All of this over 12 billion dollars. That is $3 billion less than the state of Texas alone garnered as its share of the states' 1998 settlement with tobacco companies. The total amount of the settlement was $246 billion-more than twenty times the amount spent on the asbestos claims that previously impressed so many observers as an overwhelming sum of money.

If asbestos litigation so powerfully influenced the tort system, the insurance industry, and political discourse, it is difficult to imagine how significant the $246 tobacco settlement will be in bringing about change. I now tell my students that at the end of their careers, thirty or forty years from now, they will still be working through the implications of this decade's tobacco litigation.

Ironically, this monumental transfer of wealth comes at a time when civil plaintiffs generally are facing increasing obstacles to winning judgments. Backed by powerful lobbying from the insurance industry and manufacturers, tort reform began sweeping the nation twenty years ago, and now virtually every state has enacted laws designed to make recovering tort judgments more difficult, and to reduce the amount awarded. Although not all courts have enthusiastically welcomed tort reform, the judiciary has been even less friendly to tort plaintiffs in the 1980s and 1990s. Even conservative scholars acknowledge that the courts have pulled back substantially from their expansionist tendencies in the 1960s and 1970s, and thatjudicially imposed restrictions have made recovery by tort plaintiffs much more difficult. The increasing restrictions include limitations on class actions-an effective vehicle for tobacco litigation and one that litigants will likely utilize in the wave of analogous litigation that will follow the successes against tobacco.

Jurors also are perceived as more anti-plaintiff than in an earlier era. Intense publicity about the social costs of litigation and the asserted torts "crisis" has found its mark. Whereas a typical juror twenty years ago may have associated sympathetically with the plaintiff as an underdog victimized by an impersonal, unfeeling corporate defendant, today that same juror might suspect that the plaintiff is trying to milk the system, and that awarding money to the plaintiff will contribute to higher prices for products and higher insurance rates.

At least prior to the tobacco settlement, this pro-defense trend in tort law revealed itself in lowering insurance rates. Although little noted in the media - particularly when contrasted with the attention paid to rises in insurance rates in the 1970s and 1980s - business insurance rates dropped seven percent overall from 1985 to 1991. Between 1986 and 1996, the average product manufacturer spent only 16 cents on products liability insurance for every $100 of merchandise sold. 

Thus, the torts landscape presents a picture comparatively favorable to defendants in most respects, but featuring truly enormous spikes in select mass torts claims. Indeed, the enormity of the tobacco settlement is such that it alone far outweighs the general decline in most areas of tort law. Cognizant of the unprecedented opportunities potentially offered by litigation modeled after the tobacco lawsuits, and the lessening of opportunities in other areas, elite plaintiffs' lawyers will focus powerfully in coming years on generating mass tort claims analogous to tobacco litigation. The power and moral authority of state and local governments will aid them in a newly emerging alliance.