Between Fraud Heaven and Tort Hell: the Business, Politics, and Law of Lawsuits
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Between Fraud Heaven and Tort Hell: The Business, Politics, and Law of Lawsuits by Anna Johns Hrom Department of History Duke University Date: _______________________ Approved: ___________________________ Edward J. Balleisen, Supervisor ___________________________ Sarah Jane Deutsch ___________________________ Philip J. Stern ___________________________ Melissa B. Jacoby ___________________________ Benjamin Waterhouse Dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of History in the Graduate School of Duke University 2018 ABSTRACT Between Fraud Heaven and Tort Hell: The Business, Politics, and Law of Lawsuits By Anna Johns Hrom Department of History Duke University Date: _______________________ Approved: ___________________________ Edward J. Balleisen, Supervisor ___________________________ Sarah Jane Deutsch ___________________________ Philip J. Stern ___________________________ Melissa B. Jacoby ___________________________ Benjamin Waterhouse An abstract of a dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of History in the Graduate School of Duke University 2018 Copyright by Anna Johns Hrom 2018 Abstract In the 1970s, consumer advocates worried that Alabama’s weak regulatory structure around consumer fraud made it a kind of “con man’s heaven.” But by the 1990s, the battle cry of regulatory reformers had reversed, as businesspeople mourned the state’s decline into “tort hell.” Debates about the correct balance of power among consumers, businesses, and the state continue to shape political contests in both Alabama and on the broader national stage today, whether contextualized under the aegis of “consumer protection,” “access to justice,” “tort reform,” protecting “free enterprise,” or cultivating a positive “business climate.” This dissertation argues for analyzing such matters in terms of a regulatory ecology, following the interconnections across institutions, including formal rules of civil procedure as well as informal codes of conduct, that shape the law of lawsuits within the American civil justice system. Drawing on case files, interviews, and archival sources, it traces the development of Alabama’s first consumer-protection law and regulatory agency in the early 1980s, the construction and deconstruction of a comprehensive state tort-reform package in 1987, the rise of tort lawsuits and its invigoration of Alabama’s trial-lawyer bar, and the transformation of the Alabama Supreme Court in the 1990s. It then analyzes how political narratives, fashioned in part by powerful business lobbies, molded the terms of the tort-reform debate at the state and national levels in ways that effectively swayed public opinion and created favorable conditions for successful tort reform legislation. iv The dissertation does not propose a regulatory agenda; rather, it concludes that interdisciplinary perspectives on regulatory governance, drawing insights from legal, political, and business history as well as other social science disciplines, better frame problems than more simplistic assessments of tort reform. Tort lawsuits blossomed in Alabama where other avenues for resolving regulatory issues or expressing dissent closed. Tort reform is likely to unleash new pressures for addressing perceived instances of unfairness in the marketplace. v Table of Contents Abstract .......................................................................................................................... iv List of Tables .............................................................................................................. viii List of Figures ................................................................................................................ ix List of Abbreviations ...................................................................................................... xi Introduction: Framing Fairness from the Marketplace to the Courthouse ......................... 1 Chapter 1: The Last Consumer-Protection Frontier ........................................................ 22 Alabama Builds a Fraud-Fighting Consumer-Protection Agency ................................ 25 Toward Alabama’s First Consumer-Protection Law ................................................... 40 An Anatomy of Alabama’s Deceptive Trade Practices Act ......................................... 47 Alabama’s Deceptive Trade Practices Act in Action .................................................. 56 Centennial Pest Control & Construction: The Challenge of Fly-by-Night Operators ........... 58 Better Living Magazine: Selling Fraud Through the Mail ................................................... 73 International Figure: Protecting Consumers When Legitimate Businesses Go Bust............. 84 Conclusion ................................................................................................................. 92 Chapter 2: “Alabama Is Open for Business” ................................................................ 100 The Tort Specter ...................................................................................................... 105 Business Organizes .................................................................................................. 110 Alabama’s Unlikely Governor.................................................................................. 126 The Making of Tort Reform 1987 ............................................................................ 130 The Unraveling of Tort Reform 1987 ....................................................................... 148 Chapter 3: Sending a Message ..................................................................................... 155 Willie Ed Johnson Buys a Car .................................................................................. 159 Regulating Consumer Credit and the Lending Landscape ......................................... 168 vi Consumer-Credit Regulation Through Legislation ........................................................... 174 Consumer-Credit Regulation Through Litigation ............................................................. 183 Willie Ed Johnson Makes His Case .......................................................................... 219 Conclusion ............................................................................................................... 236 Chapter 4: Turning the Tide ......................................................................................... 245 1989: Shifting Ground ............................................................................................. 248 1994: Proving Ground .............................................................................................. 259 1996 and Beyond: Battleground ............................................................................... 283 Chapter 5: Tort Retort ................................................................................................. 298 A Tale of Two Tort-Reform Packages ...................................................................... 299 The Tobacco Lobby and the Court of Public Opinion ............................................... 320 The Power of Archetypal Lawsuits .......................................................................... 339 Political Narrative and the Construction of “Tort Hell” ............................................ 349 Trial Lawyers Attempt to Quench the Flames .......................................................... 355 A New Cast of Characters ........................................................................................ 366 Conclusion: Tort Reform and Beyond ......................................................................... 380 Coda: Alabama after Tort Reform ............................................................................ 380 Alabama in Context: The Broader Legal Landscape ................................................. 396 Bibliography ............................................................................................................... 408 Biography.................................................................................................................... 429 vii List of Tables Table 1: States with One or More Jurisdictions Identified by ATRA as a “Judicial Hellhole” (Alphabetically by Year) ............................................................................. 388 viii List of Figures Figure 1: Political Advertisement from Charlie Graddick's 1978 Campaign ................... 32 Figure 2: A Model Consumer Complaint Letter with Instructions .................................. 38 Figure 3: Former Home of Dot Carrington in Andalusia, Alabama, c. 2013 ................... 60 Figure 4: Mrs. Brownell’s Contract for Fly-By-Night Foundation Repair ...................... 71 Figure 5: Assistant AG Michael Bownes Holds a Summer 1983 Issue of Better Living .. 76 Figure 6: A Temporary, Handwritten Grave Marker at Greenlawn Memorial Gardens ... 91 Figure 7: The BCA’s Inaugural Issue of Alabama Today ............................................. 116 Figure 8: Governor Hunt Declares Alabama “Open for Business” ............................... 145 Figure 9: Willie Ed Johnson’s Contract, November 1991 ............................................. 163 Figure 10: Alabama Civil Filings by County per 1,000 Residents, 1979 to 2001 .......... 198 Figure 11: Total Enrollment in Alabama Law Schools, 1930–1970