Keynote Presentation by Richard T. Phillips at the 9th Annual Consumer Rights Litigation Conference in Denver Colorado, sponsored by the National Consumer Law Center and the National Association of Consumer Advocates.
The THIRD AGE
Civil Litigation at the Dawn of the 21st Century
by Richard T. Phillips
“It cannot be helped,” Oliver Wendell Holmes wrote at the dawn of the Industrial Age,
“that the law is behind the times.”
“It is the job of the effective litigator,” I would humbly add today,
“to keep it a close race.”
Tofflers “Third Wave”
In the late 1960's, sociologist Alvin Toffler wrote a book called Future Shock. In it, Toffler described the premature arrival of the future, i.e., the accelerated rate of change in modern society. It was obvious to those of us immersed in “the Sixties” that Toffler was on to something. Thirty years later, society has borne out this belief.
Twenty years after Future Shock, Toffler wrote another book, The Third Wave, described when written as a study of tomorrow. In The Third Wave, Toffler introduced the concept of an Information Age which, according to Toffler, would replace the Industrial Age thereby impacting every aspect of human life.
The premise of The Third Wave was that mankind has experienced three waves of change. These waves were critical turning points in human social development. The First Wave of change was the Agricultural Revolution. With the rise of agriculture, human society evolved from small, migratory hunter groups or tribes into civilizations. The Second Wave was the Industrial Revolution of the eighteenth and nineteenth centuries. Starting in the mid-1700s, industrialization revolutionized life in Europe and North America and quickly spread around the globe. Toffler posits that the tide of industrialism peaked during the decade after World War II. At some time around 1955, a new, little-understood Third Wave began, ushering in a new age an Information Age that would change every aspect of life as we know it.
Today, of course, the revolutionary premise of The Third Wave is an accepted principle of everyday life. Furthermore, Tofflers earlier Future Shock thesis of an accelerated rate of change holds true and the Information Age future has arrived much faster than even Toffler predicted. Today, we live, work and play in a new Information Age.
Holmes Common Law
A hundred years before Toffler, another revolutionary thinker, Oliver Wendall Holmes, addressed the concept of change in the area of the law. In The Common Law, written as a series of essays entitled “Primitive Notions in Modern Law” beginning in 1876, and published as a book in 1881, Holmes introduced and defined many of the concepts of American law as we know them today.
Writing at the dawn of the Industrial Age, Holmes laid the foundation for tort litigation as todays trial lawyers have practiced it throughout our legal careers. Holmes book has been called “the cornerstone of jurisprudence during the twentieth century.” In two chapters in The Common Law, “Torts — Trespass and Negligence,” and “Fraud, Malice, and Intent — The Theory of Torts,” Holmes described tort law as we have known it for the past 100 years.
A principal argument of The Common Law — a concept now generally accepted, but considered revolutionary at the time — is that law evolves in response to societys changing conceptions of public policy. Because society changes first and then the law changes it cannot be helped, asserted Justice Holmes, that the law is always behind the times.
Evolution of Law
Holmes vision of change in the law is similar to Tofflers vision of change in society. Toffler says the evolution and development of society occurs in waves. According to Holmes, the law evolves in much the same manner, i.e., in occasional bursts of development followed by “periods of dry precedent . . . found midway between a creative epoch and a period of solvent philosophical reaction.”
In the twenty years since The Third Wave was penned, the information society envisioned by Toffler has engulfed the world. Evolving to address the problems of a changing society, civil litigation has entered what Holmes calls a “creative epoch.” The practice of civil law as we know it is changing before our eyes.
Industrial Age Litigation
Tort law as we have known it for the past 100 years is predominantly a product of the Industrial Age. Todays system of civil litigation was designed to address the ills of an industrial society. Its genesis rests in the early 1900's, when a new generation of mobile, salaried industrial workers replaced the agricultural laborers upon whose toils the first age agrarian society had been based. With the advent of the industrial age, the limited social safety nets of personal relationships which protected agrarian workers and their families disappeared. When stricken by adversity, the new class industrial laborer was left with no type of social protection.
Labor exploitation and industrial safety issues came to the front as vast fortunes were made at the dawn of the industrial age. The new age produced vast fortunes for industrialists in the 1880s and 1890s — some said at the expense of working men and women. High profile tragedies such as the 1911 fire at the Triangle Shirtwaist factory in New York City, where 145 employees died trapped in a factory fire because the exit doors had been boarded up to prevent pilfering, caught the attention of the public. Indignation at workplace safety issues and social ills such as child labor erupted.
Products of the new industrial age, such as railroads and automobiles, rapidly changed the face of society, giving rise to new types of injuries. New applications of tort law arose to provide recompense to the victims of these injuries. Workers compensation and employee safety laws were enacted, and tort litigation evolved to provide recompense to those injured by the products and processes of a new age. Tort law experienced one of the “creative epochs” as civil litigation adjusted to the massive societal changes brought on by the Industrial Age.
Since the early 1900s, tort law has been in a relatively dry period of precedence. While there was a gradual evolution of new theories such as strict liability, civil litigation throughout most of the 20th century addressed problems of the industrial age. The world in which we live, meantime, changed significantly. Medicare, Medicaid, Social Security and a host of social programs non-existent at the dawn of the Twentieth Century, alleviated many of the problems for which civil tort law was originally developed. Voluminous labor laws, safety laws, OSHA regulations, etc., have eradicated many of the egregious practices that gave rise to todays tort law. Todays new age, however, is giving rise to new problems in society, and following Holmes theorem, civil litigation is evolving to address those problems.
Civil litigation today is rapidly evolving into a product of the Information Age. Technology and commerce have again out-paced the rules of conduct by which society governs itself. As in the early years of the Industrial Revolution, greed kicks in and exploitation arises. Todays technologies have given rise to new types of exploitation. Consumer exploitation has replaced labor exploitation as the problem of our times.
Three significant trends or characteristics of post-industrial civil litigation can be identified: (1) an increase in the use of mass litigation techniques, (2) a shift of the underlying goal of civil litigation from compensation to accountability, and (3) an increasing globalization of civil litigation. The changes in todays civil litigation reflect fundamental shifts in the purposes as well as procedures of civil litigation.
The problems addressed by Industrial Age civil litigation were generally “one-on-one” disputes. One person was injured in one accident; One entity was involved in a contract dispute with one other entity. The wrongdoing giving rise to todays litigation is often one-on-millions. It arises from an unprecedented mass society, in which multi-national corporations do business with consumers globally. Civil litigation is responding with the movement to mass litigation techniques.
The trend toward mass litigation reflects the transformation of life in the modern world to a mass society. No longer does a cook fry one hamburger; Global corporations serve “billions and billions.” No longer is there a problem with one tire; Hundreds of persons are injured or killed by thousands of tires improperly designed and manufactured. The concept of an individually negotiated contract in todays commerce is an antiquated fiction. Financial institutions draft instruments which millions of customers must sign if they want financial services or products. Class actions, multi-plaintiff aggregate actions, and Section 1407 Multidistrict Litigation proceedings all represent efforts by civil litigators and the courts to deal with the new realities of litigation in a mass society.
Class actions and mass litigation are the subject of intense study today. Two recently-released works reflect the extent and complexity of the mass litigation phenomenon. The United States Supreme Court Advisory Committee Report on Mass Litigation, published in 1999, represents the culmination of seven years of study of class actions. In it, the Advisory Committee on Civil Rules notes: “Although mass injuries caused by human acts have long been witnessed, the opportunities for mass injuries caused by a common course of conduct have substantially expanded with advances in modern technology, manufacturing, distribution, and marketing. The very wealth and scale of our society have brought more and more people into contact with injury-causing agents, whether at work, at play or at rest.” The Committee concludes: “Mass tort litigation is not a temporary phenomenon.”
This year, the RAND Institute for Civil Justice released the results of its study of class actions from 1996 to late 1999. The RAND report, entitled “CLASS ACTION DILEMMAS: Pursuing Public Goals for Private Gain,” included a comprehensive analysis of many of the issues facing society regarding mass litigation. The Report states insightfully: “How to respond to the dilemma at the heart of damage class actions is a deeply political question, implicating fundamental beliefs about the structure of the political systems, the nature of society, and the roles of courts and law in society.” The RAND Report concludes: “Notwithstanding the controversy they arouse, history suggests that damage class actions will remain a feature of the American civil litigation landscape.”
Regulation through Litigation
The primary goal of industrial age litigation has been compensation for an individual litigant. More and more frequently, post-industrial litigation seeks to serve a second, regulatory purpose, its goal being punishment for a defendants conduct. Society uses civil litigation to accomplish its desired goals not being accomplished through other means. As societys needs have shifted from compensation to accountability, a primary purpose of civil litigation has shifted accordingly. The role of civil litigation in the Third Age, thus, has shifted from solely a compensatory function to a regulatory function.
Increasing corporate power and a lax regulatory environment have given rise to a pervasive perception consumer abuse. Insurance, health care, financial services, and other areas of modern life foster a growing sense of impotence by consumers. A recent issue of BUSINESS WEEK, featured the phenomenon in its cover story, “Too Much Corporate Power?”
The social and political regulatory environment in which business operates has grown increasingly permissive over the past twenty years. In his memoir, “On Money and Markets,” former Federal Reserve Bank officer and 1980's Wall Street brokerage partner, Henry Kaufman observes a permissive style of leadership that allows too many abuses to go unchecked in financial industries today. There exists, Kaufman states, “an urgent need for regulatory and supervisory reform at home and abroad, as financial innovation and global integration outpace an already obsolete regulatory purpose.”
It is significant that a front page story in The WALL STREET JOURNAL the first week of this century [January 3, 2000] was entitled “Civil Action: Why Americans Look to the Courts to Cure the Nations Social Ills.” Subtitled, “Evolution of Mass Litigation,” and “One Lawyer Says He Does the Jobs Congress Shirks,” the JOURNAL noted increasing frustration by the public with the political process, concluding “More and more frequently [people] turn to courts when the traditional avenues of politics or activism seem obstructed.” The JOURNALs observation is reminiscent of this authors statement to Jane Bryant Quinn, quoted in NEWSWEEK in 1994 at the inception of the life insurance Deceptive Sales Practices Litigation: “When public opinion gets ahead of the legislative process, the place people turn is to the Courts.”
In July, TIME Magazine ran a lengthy spread entitled “Are Lawyers Running America.” Responding to the criticism that lawyers are operating as an unelected fourth branch of government using litigation to resolve social issues that should be resolved by the legislative process, TIME noted the following sentiment: “Congress and the White House are so dependent on special-interest campaign contributions and so mired in partisan gridlock . . . that it is often impossible to get anything done there.. . .Leaving important public-policy decisions to elected branches might make sense if those branches did their jobs. But they are so indebted to special interests . . . they tend to stay gridlocked.”
As former Secretary of Labor Robert Reich noted, the era of regulation by Big Government may be ending, but the era of regulation by litigation is just beginning. Tobacco litigation, gun litigation, insurance, health care, products liability, and multiple other cases, are examples of civil litigation serving an increasingly important regulatory purpose in post-industrial society.
Globalization of Litigation
Finally, the globalization of business is giving rise to the corresponding post-industrial globalization of civil litigation. In a world of instantaneous global communications and multi-national corporations, consumers in other nations are observing and demanding the rights enjoyed by consumers in the United States.
The recent life insurance deceptive sales practices litigation and the Bridgestone/ Firestone defective tire situation provide vivid examples of this phenomenon. “Vanishing premium” life insurance gave rise to high profile class action settlements by over 20 life insurance companies, including multi-billion dollar settlements by Prudential and Met Life. Among the most active purveyors of vanishing premium insurance were Canadian life insurance companies. Canadian companies sold vanishing premium insurance products not only in the United States, but also in Canada and Mexico, South America and the Far East.
When Canadian and Mexican purchasers of the products saw U.S. purchasers obtain recompense for fraudulent sales practices by which their own purchases had been induced, suits were filed, and recoveries obtained, in the U.S. courts by life insurance policyholders from Mexico. Canadian policyholders filed consumer class actions in Canada undernewly enacted Canadian consumer class action statutes. Significantly, the new Canadian consumer statutes authorize for the first time contingency fees in civil litigation in Canada, profoundly impacting civil litigation there.
Similarly, Venezuelan purchasers of defective Bridgestone/Firestone tires are pursuing civil litigation remedies in the U.S., as well as potential criminal remedies in Venezuela, as a result of injuries and deaths caused by defective Firestone tires sold by the multi-national manufacturer in South America.
The technology of instantaneous global television news coverage and communications has empowered people of every country to strive for individual rights such as those enjoyed in the United States. Images broadcast live from Tiennamen Square and the fall of the Berlin Wall are icons of the changing political structure of the globe. What has happened in politics and nationalism is happening now in commerce and consumerism.
The International Business section of a recent issue of BUSINESS WEEK carried an article on Japan subtitled “Consumers Need to Get Tough.” In it were chronicled consumer “scandals” in Japan including corporate mishandling of uranium which exposed the public to radioactivity, distribution of contaminated milk and coverups of complaints regarding defective Mitsubishi automobiles sold in Japan. The situation will not long exist where consumers in a multi-national economy will stand for this type of conduct without a means of recompense and regulation similar to that they see in the United States. As corporations and commerce become increasingly multi-national, so too will the consequences of negligence in manufacturing or fraud in marketing.
When citizens of other countries are injured or harmed by defective products manufactured and sold world-wide by multi-national corporations, and when they watch via instantaneous, ceaseless live global news coverage as justice is served and recompense obtained for citizens of the United States through the U.S. civil litigation system, critics of the U.S. system notwithstanding, civil litigation in the rest of the world will become more like that in the United States, rather than vice versa.
The same information technology that gives rise to consumer abuses and post-industrial litigation, is being used to aid consumers in the successful prosecution of such litigation. Previously out-manned and out-financed, consumers representatives are able to stay the course in litigation against large opponents by forming virtual law firms. These temporary associations of multiple plaintiffs law firms, made practical by modern communication and litigation technology, enable consumers representatives to pool their efforts and resources for coordinated litigation against common defendants. New litigation tools make possible modern data mining and compilation techniques. Technology is helping level the playing field on which consumers assert their rights.
Civil litigation at the dawn of the Twenty-First Century is in a creative epoch. It cannot be helped, as Justice Holmes said, that the law is behind the times. It is the job of todays consumer advocate to keep it a close race.
RICHARD T. PHILLIPS
Smith, Phillips, Mitchell, Scott & Nowak
Attorneys At Law
695 Shamrock Drive
Batesville, MS 38606
Tel: (662) 563-4613
Fax: (662) 563-1546
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