Cornered (8 page)

Pragmatic and serious, she has a strong social conscience. To any liability class action, Cabraser would bring a well-defined concept of her role. “I don't think that corporations are the guardians and insurers of American health, welfare, and safety,” she has said, “but they do have a responsibility not to hurt people if they can help it. And they can actually help it.”

Gauthier's next call was to Stanley Chesley of Cincinnati, who is one of the least liked of the leading members of the plaintiffs' inner circle, mainly because of his seemingly uncontrolled vanity and relentless name-dropping. Chesley is a big contributor to local charities as well as to the Democratic Party, which has earned him invitations to the White House. His vast office is fitted out to look like an old-fashioned Manhattan ballroom, with leather upholstery and horse paintings. Among his victories, Chesley lists the 1977 Beverly Hills Supper Club fire that killed 165 people in Southgate, Kentucky, across the river from Cincinnati. There, he put all the plaintiffs together in one class action, which was a novel approach to personal-injury cases at the time, and then he went after every manufacturer and contractor he could find with any liability. He won an out-of-court settlement of $49 million when most people thought he would be lucky to get $2 million because the club itself carried so little insurance. Chesley charged about $3 million—or about $875 an hour for his services. Chesley also has a reputation for rushing his clients into out-of-court deals. One colleague described his deals as “the ultimate grotesque, exaggerated perversion of what it means to be a lawyer.” Chesley shrugs off the criticism. “I've learned to understand that goes with the territory.”

Gauthier pulled in other famous trial lawyers, including Peter Angelos, owner of the Baltimore Orioles, and John O'Quinn of Houston, who is worth half a billion dollars, according to
Fortune
magazine. But one of the most important calls Gauthier made was to John Coale in Washington, D.C. If Gauthier's grand national strategy was to come to anything, he needed a person he could trust in Washington. Though younger than many of the Castano lawyers—Coale was then forty-two—his exploits as a liability lawyer had already landed him in enough controversy to be profiled on CBS's
60 Minutes.
The accounts were not flattering. CBS correspondent Ed Bradley suggested that at the Bhopal chemical disaster in India, Coale was really no more than a vulture who circled in on his victims to pick the bones. “No,” replied Coale, “I pick the bones of the corporation bastards who did it to these people. That's the bones I'm picking.”

Born of a large and wealthy Baltimore family—his grandfather was one of the founders of the Baltimore Orioles—Coale had been an errant youth. He was kicked out of private school in the eleventh grade for general misbehavior. After graduating from Baltimore Law School, he made a living as a courthouse hustler representing drunk drivers in Washington. A profile of him in the
National Law Journal
was headlined “Red Hot Coale” over a front-page picture of his portly frame in rumpled shirt, loose tie, and suspenders. Some of his colleagues despised him so much that they routinely mumbled derogatory remarks at the mention of his name, but Coale shrugged them off. “They're too self-important and they're way too complex.”

Coale's career was launched with the release of toxic gases in 1984 at the Union Carbide chemical plant in Bhopal, India. A total of 1,861 people died and another 27,000 were injured. Coale was in a Washington, D.C., taxi when he heard the news on the cab radio. He decided to fly immediately to India, a country he had never visited, and search for clients. He called up the one Indian he knew well, his tailor, the man who provided him with his outsize suits. After Coale offered an all-expenses-paid trip to his homeland, the tailor agreed to help. He fixed the visas at the Indian embassy, and four days after the accident, Coale, his tailor, and two assistants were on a flight to Bombay.

Coale expected the competition to be fierce, and it was. On the day Coale flew to Bombay, Belli filed a $15 billion class-action suit in San Francisco claiming, falsely, that he already had two Bhopal survivors as clients. In the high-stakes game these liability lawyers play, it is crucial to be the first to file because then you get to manage the lawsuit, oversee the pretrial discovery process, and decide when, and if, to enter into settlement talks. The all-important instrument is the steering committee, and to get on it, you must be a decorated veteran of the bar or have clients. The more you have, the more clout you can command on the committee.

Belli arrived in Bhopal declaring, “I am here to bring justice and money to these poor little people who have suffered at the hands of those rich sons of bitches,” but by then Coale had “fixed” the local mayor and had the names of 30,000 local people who had retained him as their lawyer. His story was that they had implored him to take their case as he walked around the devastated villages before the other American lawyers got there. He even claimed that “through an intermediary” he had been contacted in Washington by the mayor of Bhopal. What actually happened was that Coale, on arrival, had arranged to have an invitation typed up from the mayor's office asking him to come to Bhopal “because of our business relationships and common problems.” It was backdated to the day after the accident.

Coale returned to the U.S. to face the wrath of the more senior members of the bar, who considered him an irritating upstart. Chief among them were Stanley Chesley and Wendell Gauthier, neither of whom had been to India or, in fact, done anything more than attach themselves to Belli's lawsuit. Chesley was co-counsel on Belli's $15 billion suit and wanted Coale to hand over the names of his clients. Coale would receive a fee but not the riches he might earn if he got onto the committee. Once they had his names, Chesley and Gauthier were planning to settle out of court and walk away with a large percentage of the $350 million offered by the company.

Sensing that Coale would not be a pushover, Gauthier, the consummate manager, asked him and a few other lawyers to lunch in New Orleans. Coale recalled, “Wendell sent his Rolls-Royce and an attractive legal assistant to meet me at the airport. I wasn't impressed. I knew you could pick up an old Rolls for next to nothing.” Over lunch, Coale was noncommittal. He knew that if he simply handed over his client list he would be in on any deal, but he would be way down the line for a decent payoff.

After lunch Gauthier took Coale aside and asked what he was going to do. Coale replied that he had had a lot of fun with the case, that it had been interesting for him watching how it all worked—the formation of the committee and so forth—but he was upset he wasn't on the committee. Waiting outside the room, Coale told Gauthier, was a reporter from
Playboy
to whom he intended to give the whole story of the American lawyers seeking to settle the cases of the unfortunate Bhopal victims and make a bundle of money doing it. That was also a lie, but Gauthier and Chesley weren't sure. They agreed to let Coale onto the committee. Coale struck his own deal for his clients names: 45 percent of the lawyers' award money, when it came, and all his expenses—amounting to $80,000—for his trip to India. Coale was now a member of the club.

As it turned out, none of the American lawyers made a cent. One of those who worked with Chesley and Gauthier was Mike Ciresi, then thirty-eight and a member of the big Minneapolis firm of Robins, Kaplan, Miller & Ciresi. Ciresi had earned his spurs in several landmark liability cases, including the 1985 Dalkon Shield contraceptive litigation that resulted in a settlement award of $38 million against the manufacturer, A. H. Robins Co. Unlike Chesley and Belli, Ciresi's instincts were to spend a lot less time with the leaders of the committee and a lot more time checking out other opportunities. He got himself hired to represent the government of India in its own suit against Union Carbide. While the others were trying desperately to arrange a quick settlement in the United States, Ciresi was biding his time waiting for the case to be transferred back to India. He was sure that was what the New York judge would eventually do, given the potential for endless squabbles among the American lawyers. And that's what happened. Ciresi was the only one who got paid. Union Carbide eventually paid $470 million to victims and their survivors. Coale got nothing—except a lot of experience and publicity, which, of course, he could take straight to the bank. Publicity is everything for lawyers starting out in the personal-injury business.

Ciresi ended up despising Chesley and Gauthier for being prepared to accept Union Carbide's earlier settlement offer. And Ciresi was full of scorn for the shabby way Coale had collected his clients. “I'm the bad boy, I'm a known sleazebag,” Coale would chuckle later. But the truth was he didn't care what they thought of him. He was at the table with the big boys now. Because of the Bhopal experience, Gauthier was never going to invite Ciresi to join the Castano case. But Ciresi had another surprise. He was already putting together his own case—a Medicaid reimbursement lawsuit for the state of Minnesota. The next time they would all meet would be in the biggest contest of all for the riches of the tobacco industry.

In the meantime, the liability lawyers went back to plane crashes and hotel fires. The next big disaster—the fire in the Dupont Plaza Hotel in San Juan, Puerto Rico—put Coale even more squarely in front of the cameras. He worked on the case with Gauthier and took a one-third cut of the lawyers' fees from the $235 million settlement. Having at first circled each other like wary predators, Gauthier and Coale would now hunt as a pair.

*   *   *

T
HERE WAS ONE
other notable exception to Gauthier's first list of recruits—Ron Motley, of Charleston, South Carolina, the ostentatious, self-appointed heir to the throne of Melvin Belli. His colleagues looked on him as a not entirely benign dictator who inhabited a strange Southern retreat of gated compounds, beach houses, garish motor yachts, and private jet planes, all funded through Motley's gains from ingenious and highly successful litigation in asbestos cases. The son of a used car salesman, Motley's meteoric rise to riches had shown flashes of brilliance in the courtroom as well as the back room where the deals are made. Most members of the plaintiffs' bar would regard him and his strategist, Joe Rice, an expert in out-of-court class-action settlements, as a necessary addition to any large class-action suit, especially of the kind Gauthier was putting together. But one of those deals had also put his colleagues on guard, creating a deep division at the bar over Motley's trustworthiness.

At the beginning of 1993, a full year before the launch of the Third Wave, Motley, Joe Rice, and a Philadelphia personal-injury lawyer named Gene Locks attempted a new type of $1.3 billion backroom settlement of thousands of asbestos cases with a consortium of twenty companies. The deal sought to settle the claims of the millions of victims exposed to asbestos at work who had yet to show any sign of disease—and, therefore, had not even made a claim. The idea was to take the companies out of asbestos litigation altogether; provide an annual fund to settle claims, and give Motley and Locks attorneys' fees for victims they had never met—a novel approach to class-action lawsuits.

Fred Baron, a Dallas lawyer who had been an ally of Locks, charged that the deal was a corrupt, unconstitutional sellout that benefited the companies and greedy lawyers. Other critics accused Motley of engaging in a collusive attempt to use the court system to resolve future claims of third parties who were not yet in the court system.

Motley retorted that it was a “creative alternative” to dealing with the tens of thousands of asbestos cases that were clogging the courts and forcing asbestos victims to wait years for compensation. Legal ethics experts were divided on the deal. Those in opposition were branded by Motley as “ivory tower academics” unfamiliar with the real world of trial law.

The problem of asbestos cases swamping the courts was a real one. In 1990, the Supreme Court warned of a “major disaster to both victims and the producers of asbestos products.” In a special report, Chief Justice William Rehnquist suggested Congress should pass legislation similar to the black lung program, which had given compensation to coal miners in the 1970s. But Congress did nothing—even though more than 27 million people had been exposed to asbestos on the job, 350,000 of them would develop fatal cancer, and more than a million would suffer from nonmalignant asbestos-related diseases.

In an effort to expedite the cases, eight federal judges experienced in asbestos litigation had urged the consolidation of all complaints then pending in federal courts. Officials transferred a large chunk of the cases—26,000 of them—to the district court in Philadelphia, but they bogged down there as well.

The response to this was the Motley-Locks side deal. A consortium of twenty companies—half the nation's asbestos enterprises—proposed the $1.3 billion deal to Motley and Locks. The deal, which became known as Georgine after one of the class-action representatives, Robert Georgine, president of the Building and Construction Trades department of the AFL-CIO, envisioned that 100,000 claims would be paid out over ten years. Under the settlement, Motley claimed, victims would be paid in six months and more of the award money would actually reach the victims. About 65 percent of it had been going to lawyers, so far.

The labor movement was split on the deal. Critics charged that the money was less than plaintiffs could get if they filed individually; there was no adjustment for inflation, and many victims would not be compensated rapidly because there was a cap on the yearly award fund. Moreover, the settlement unfairly barred people who may have been unaware that they had been exposed to asbestos—it takes fifteen to thirty-five years after initial exposure for related diseases to appear.