PRIVATE RIGHTS & PUBLIC WRONGS
By David Sharp


At a meeting in Melbourne on the 24 / 3 / 2000 of the Standing Committee of Attorneys- General it was agreed to set up a working party to consider the Australian states and territories joining with New Zealand to sue the Australian tobacco industry. This is bad news for the public. For the reasons why this is so it is worthwhile considering the American experience.

Like the Australian , the American legal system is a part of the world-wide Anglo-American legal system which has proved to be one of the more enduring aspects of the erstwhile British Empire. Legal practitioners of one country are usually capable , with little adjustment , of practicing in the other. The basis of much of the law , including that of the law of torts [or civil wrongs ] , is the same. Moreover it has tended to develop along similar lines , often following the American lead .

Traditionally , Anglo-American torts law provided for 4 requirements to be met for a plaintiff to make a successful claim in court against a defendant . They included

{a} the existence of a duty arising at law owed by the defendant to the plaintiff

{b} a breach of that duty by the defendant

{c} determinable damage being suffered by the plaintiff

{d} which damage was proximately caused by the breach.

By exercising strict control over the 4 requirements , judges in the past were able to prevent unjustified and unmeritorious claims from multiplying and becoming unduly burdensome to society. They were assisted in this task by the accepted view that torts law was essentially the province of private individuals.

Following the Second World War , for a variety of reasons , the strict constraint exercised by the judges has declined significantly . One factor has been the rise of the notion that fault is largely irrelevant in matters concerning business ; businesses [and hence businessmen] are expected to bear the cost of any damage arising from business activity due to the perceived greater ability of businesses generally to pay , to control the circumstances in which they operate and to diffuse and pass on any such cost by means of increased prices . It is part of this view that the beneficiary of business activity is business. Paradoxically this judicial change has occurred at a time when the ability of business to control the circumstance of its activities was declining due to such things as compulsory unionism, minimum wages, affirmative action and unfair dismissal laws and its ability to increase prices curtailed by a variety of price control and fair trading measures.

Another significant factor has been the effective unleashing of the procedure known as the class action. This occurred in the U S A in 1966. Although the law has traditionally allowed for a single representative to sue or be sued on behalf of a group or class of persons such action on behalf of plaintiffs was constrained by the requirement that all members of the plaintiff's group or class had to specifically opt in by signifying their assent to the action . This was consistent with the view that litigation was essentially the province of individuals . In 1966 however the U. S. Federal Rules of Civil Procedure were changed to allow rather for members of the plaintiff's group or class to opt out. This facilitated the bringing of such suits and had the effect of increasing the size and attractiveness of potential lawsuits against business, particularly to lawyers who began specialising in the area. The result has been a huge increase in the number of such class actions.

Recently entrepreneurial lawyers in America have created a new trend ; lawsuits are being brought by government , federal , state and local against whole industries seeking recovery for damage allegedly suffered by such governments in the course of acting on behalf of their respective public. In 1997 in an action brought by the Attorneys-General of 38 states , largely conducted for them by private attorneys appointed on a contingency basis , the American tobacco industry agreed to settle the claim against it for an amount reported to exceed in value US $250 billion payable over 25 years. Approximately 400 lawyers are expected to share more than US $40 billion in fees. Lead lawyers are expected to receive more than US $1 billion each.

The position of Attorney-General ["A-G"] is a time-honoured one in Anglo-American law. He or she is the nation's or the state's chief law officer and typically prosecutes criminal matters on its behalf as well as representing it in various civil and quasi-criminal matters such as those affecting the revenue. Another traditional role of the A.G. is to represent the Parens Partriae [or Father of the Country]. In a monarchy Parens Patriae is traditionally a role of the crown whilst in a republic it lies in the head of state or with the people as sovereign. As such the A.G. acts on behalf of those who might need protection such as orphans and the mentally incompetent or to remedy wrongs affecting the public generally. The recent A.G.s' action against the American tobacco industry however and more recent moves against gun manufacturers and the producers of alcohol are unlike anything that has occurred previously. It represents a merging of the class action with the traditional role of Parens Patriae thereby effectively eliminating the need for a class.

Recently in an endeavour to share in the action city governments , which do not normally possess an A.G. , have also started to bring legal actions against various industries and businesses. The nature of such actions is that they are almost invariably settled since even industries and businesses with the deepest pockets can not afford to fight. The terms of settlement can provide a revenue windfall for the government or governments involved whilst at the same time require the industry or businesses concerned to agree to various controls and constraints which the governments involved might for legal or political reasons have been unable to procure by legislation or regulation. Paradoxically as is in the nature of settlements the government or governments involved in order to secure the revenue windfall , can end up making concessions or providing benefits to the industry or businesses which they could otherwise for legal or political reasons have not been able to do.

As a result of such actions it is suggested in America that litigation has become the fourth arm of government after the legislature , executive and judiciary . Lawyers are undoubted beneficiaries of such actions and much of such litigation is lawyer driven. The rule of law is in danger of becoming the rule of lawyers.

The suggestion that such or similar actions might be brought in Australia is to be deplored. If government believes a particular industry or business should be contributing more to general revenue then it should legislate to impose an appropriate tax. If its activities need to be controlled or constrained it should regulate. The belief that the assailing or destruction of the nation's industries or businesses by litigation can benefit the public is a myth. Rather the reverse is likely to be true. Industrialists and businessmen are not the sole or even major beneficiaries of business and industry. Rather we all are as workers and consumers. Settlement of such claims by the defendants may have little to do with the justice thereof and much to do with whether the particular industry or business is currently in or out of public favour. An injustice does not cease to be an injustice merely because the victims are businesses or more precisely the businessmen running them.

If the American experience is repeated in Australia it is likely that the targeted industries will in fact settle the action and agree to pay a mammoth sum over a period of time to the plaintiff states. However in order to ensure the ability of the defendants to continue to meet their settlement commitments the plaintiffs will make concessions to enable the defendants to stay in business and retain market share. Prices will rise . Significant sums will be expended in legal costs and public respect for and expectations of the law and the legal profession will diminish.

 



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