Winning the White House in the "Lawsuit Lottery:" The Bush-Rove Ticket to Power

By Andrew Wheat

The “lawsuit lottery’s” all-time greatest winners are George W. Bush and chief Bush strategist Karl Rove, who purchased their first winning ticket together in Texas in 1994.

The four issues that Rove had candidate Bush hammer in the 1994 Texas gubernatorial race were education, welfare, juvenile crime and civil justice. Reporters James Moore and Wayne Slater, in their book on Rove, Bush’s Brain, write that education and juvenile crime already were hot political issues in Texas. Bush added welfare reform. “Later, we added tort reform,” the book quotes Rove saying. “I sort of talked him into that one.”

Rove “talked him into that one” because the other three issues were not cash cows that could finance the exorbitant campaign needed to beat Governor Ann Richards.

In contrast, Rove had learned that “tort reform” — limits on victims’ rights to sue corporations and other wrongdoers for compensation in the civil justice system — is a Republican treasure trove.

Rovian revolution

A debate-club wonk who won his first campaign — to be president of a Utah high school — in 1968, Rove is a college dropout who went from the College Republicans to a job at the Republican National Committee under George Bush the elder. Rove later moved to Houston to run the Fund for Limited Government PAC that would soon fuel the elder Bush’s first presidential bid. While on the payroll of the elder Bush’s PAC, Rove advised the younger Bush in his 1978 campaign to represent West Texas’ oil fields in Congress. Texas voters rejected George W. Bush in that election but did elect oil tycoon Bill Clements as Texas’ first Republican governor since the post-Civil War Reconstruction era.

In so doing, Texas voters gave expression to a gradual but powerful electoral shift that struck the South and rippled across the United States. Especially in the South, the welfare and civil rights policies of the Kennedy-Johnson era alienated many rural and blue-collar whites, who steadily abandoned the Democratic Party.

This shift was neither sudden nor complete. To prevail, Republicans needed to spend heavily to mobilize swing voters.

Bill Clements, for example, ran up a $7 million campaign debt in winning the Governor’s Mansion in 1978. Afterwards, the Clements campaign hired Rove to repay these loans through a direct-mail blitz of wealthy Republicans. If Rove’s success at retiring this debt was impressive, it arguably made the greatest impression upon Rove himself. Within two decades, Rove and the direct-mail shop that he opened in Austin in 1981 could claim enormous credit for kicking Democrats out of every statewide office in Texas — even as they catapulted George W. Bush into the Governor’s Mansion and ultimately to the White House.

Rove’s success came in fits and starts. After running Clements’ failed reelection campaign in 1982, Rove and Clements returned to retake the governor’s mansion from Democrats in 1986. Meanwhile, Rove’s client list soared, fed in part by Governor Clements’ appointment powers. One of these appointments would teach Rove all he needed to know about playing the “lawsuit lottery.”

“Justice for Sale”

In December 1997, “60 Minutes” broadcast “Justice for Sale,” an exposé of conflicts at the Democratic-controlled Texas Supreme Court. As the largest of nine states where justices win office through partisan campaigns, Texas long has been a hothouse of judicial corruption. Candidates for the Texas high court often spend more than $1 million, with much of this money coming from lawyers and litigants with cases before the court.

After the “60 Minutes” exposé, Democratic Chief Justice John Hill resigned midterm and Clements appointed Republican Tom Phillips, an attorney formerly with Baker Botts, the law firm of George Bush the Elder confidante James Baker, as his temporary replacement in January 1988. Phillips then hired Rove to help him face voters later that year.

Texas voters typically elect three or four judges to the high court at a time, but the scandal helped put six seats up for grabs in November 1988. Allied with defense-oriented businesses and doctors, Rove helped turn the 1988 judicial election into a referendum on the Supreme Court scandal. Chief Justice Phillips led the so-called “Clean Slate” of business-bankrolled court candidates, which was nominally “bipartisan” thanks to inclusion of conservative Democratic Justice Raul Gonzalez. The main thrust of this slate’s campaign — replayed for a decade until no Democratic justice remained — was that greedy trial lawyers had corrupted the court’s liberal Democratic majority.

The “Clean Slate” won four of the six seats on the ballot in 1988 (losing only to current U.S. Representative Lloyd Doggett). Rove now had an issue that his direct-mail machine could take to the bank. It did. In 1990, the business lobby gained a majority on the state court with the election of Republican John Cornyn (now a U.S. Senator).

The 1994 election witnessed the triumph of two more Rove candidates, conservative Justice Priscilla Owen — and Governor George W. Bush.

Governor Bush’s judicial appointments would help secure an all-Republican state Supreme Court by 1999.

Texas’ Republican justices — seven of whom were Rove clients — were raising an average of $1.4 million per election during the 1990s. The top sources of this money were corporate law firms followed by business interests with heavy legal liabilities. These same donors fared extremely well under the new court. In a single day in 1996, the court overturned lower courts with two tax decisions that saved hundreds of thousands of dollars for two major donors to the justices: Enron and HEB Grocery Co. In 1998, “60 Minutes” aired a sequel that found the “Clean-Slate” court to be strikingly similar to its predecessor. The chief distinction was that the justices now took money from — and ruled for — business interests.

This is what makes the tort issue a cash machine. Politicos such as Rove can make the pitch to businesses that contributions to lawsuit-hostile candidates in any branch of government are investments that pay themselves back many times over. Similarly, pitching lawsuit-sympathetic candidates allowed Texas Democrats to belly up to an open plaintiff’s bar in the 1980s.

Tex-Mex torts

In a 1992 Austin American-Statesman interview, Rove disavowed paternity for the trial-lawyer attack strategy, which the Bush-Quayle reelection campaign also was deploying at the time. Instead, Rove credited the Manhattan Institute think tank and Vice President Dan Quayle’s deregulatory White House Council on Competitiveness for developing this political issue.

Yet this account neglected to credit the contributions of one of Rove’s own clients. A year earlier Rove started a gig with Philip Morris, which paid him a $3,000-a-month consulting retainer through 1996. Documents released as part of the tobacco industry’s 1998 legal settlement with state attorneys general reveal that, during Rove’s Philip Morris period, the industry invested heavily in Texas judicial races and helped take Texas’ budding anti-tort movement national.

The Rio Grande Valley Chamber of Commerce started the non-profit Weslaco Citizens Against Lawsuit Abuse (CALA) in 1990 after two Mexican-Americans won a $2.5 million jury award for being illegally fired from a sugar mill near Texas’ Mexican border. Funded by local businesses and doctors, CALA put up billboards in January 1991 that took the anti-tort message to regular people by attacking “lawsuit abuse” [see “Corporate Astroturf and Civil Justice,” Multinational Monitor, March 2003].

CALA next ran a blitz of “lawsuit-abuse” ads in early 2002 and organized a state Senate candidate debate between Democratic primary challenger Juan Hinojosa and incumbent state Senator Eddie Lucio, who ran on the tort issue.

The timing of CALA’s ads is intriguing given that Philip Morris Vice President Craig Fuller reported in a February 1992 memo that his company was making two commercials “to test the impact of the tort reform issue in Texas state Senate elections.” The memo added, “Focus groups will be conducted in February; the primary is in March.”

If CALA already was not working with the tobacco industry, it would be soon.

Former tobacco attorney and then-U.S. Solicitor General Ken Starr wrote a 1991 Council on Competitiveness report that convinced the administration to make “tort reform” a priority. Martin Connor, who founded the industry-sponsored American Tort Reform Association (ATRA), then arranged to send Vice President Quayle on a national tort tour. Stopping in Weslaco in 1992, Quayle urged CALA to expand beyond the Rio Grande Valley.

Initial aid for CALA’s proselytizing came from ATRA, the Texas Chamber of Commerce and the Republican-aligned Texas Public Policy Foundation. Internal corporate documents reveal that the tobacco industry budgeted $200,000 to support fledgling CALAs in Texas and California during 1994.

To coordinate the 10 CALA chapters that had formed statewide, the tort lobby organized Texans Against Lawsuit Abuse (TALA) in 1996. Oversight of TALA soon passed to Rossanna Salazar — who worked with Rove when she was Governor Clements’ press secretary.

Governor Bush delivers

The CALAs did not play a big part in bankrolling George W. Bush’s 1994 and 1998 gubernatorial campaigns. This role fell to two larger business tort lobby groups: the Texas Civil Justice League (TCJL) and Texans for Lawsuit Reform (TLR). Bush and Rove raised $41 million for Bush’s two gubernatorial campaigns, with 10 percent of this money coming directly from these two PACs or from donors represented on the TCJL or TLR boards.

TLR, the better endowed of the two groups, was founded in 1994 by three Houston executives who made fortunes in the alcohol and construction industries. TLR received $15,000 in early seed money from the tobacco industry, but did not need to rely on this funding long. Capitalizing on the fact that Texas imposes no limits on how much individuals can contribute to legislative- or executive-branch candidates, a few dozen Texas tort tycoons quickly armed TLR’s political action committee (PAC) with a huge war chest.

During the five-year period covering Bush’s two gubernatorial campaigns, the TLR PAC raised more than $3 million. Donors who helped TLR become a major political force include Enron’s Ken Lay and homebuilder Bob Perry, who bankrolled the Swiftboat Veterans for Truth attacks on John Kerry.

This generous funding helped Rove engineer Bush’s 1994 upset victory over Ann Richards. The new administration quickly showed its gratitude. Soon after his January 1995 inauguration, Governor Bush met CALA representatives at a salsa factory near Austin and declared “frivolous and junk lawsuits” an “emergency issue,” thereby putting this issue on the legislative fast track. In 1995 and 1997, Governor Bush signed most of TLR’s then-existing agenda into law. This overhaul of Texas’ civil justice system included:

• Punitive Damages: Capping the punitive damages that juries award to punish the worst wrongdoers at $200,000 or two times the economic damages inflicted (whichever is greater);
• Deceptive Trade: Eliminating the triple damage awards used to punish deceptive business practices for cases involving sales exceeding $500,000 or involving either personal injuries or deaths;
• Joint & Several Liability: Raising the threshold for defendants to be held liable for harming a plaintiff from 11 percent responsibility to 51 percent responsibility; and
• Venue: Limiting where Texas lawsuits can be filed and who can file them and retroactively dismissing all lawsuits filed by out-of-state asbestos victims.

Aborted judicial candidates

The business tort lobby’s greatest victory in Texas since Bush moved to the White House has been putting a $250,000 cap on non-economic, medical malpractice damages, which juries award to compensate victims for pain, suffering, disfigurement or impairment. The U.S. Congress now is considering a similar cap for federal courts after President Bush made this a key issue in his reelection campaign.

When the Texas Legislature moved to cap these damages in 2003, lawmakers were concerned that the caps might not withstand a state constitutional challenge — even before a highly sympathetic state Supreme Court. To preempt this problem, the legislature presented voters with a constitutional amendment that authorizes the legislature to cap jury awards. This ballot initiative triggered a battle of titans. The main business PAC promoting the amendment spent $7 million, while the PAC that trial lawyers sponsored to defeat the initiative spent $7.5 million.

In an interesting twist, the trial-lawyer group, Save Texas Courts, recruited Deborah Hankinson as its spokesperson. Like current Attorney General Alberto Gonzales, Hankinson was one of four justices whom then-Governor George W. Bush tapped to fill uncompleted terms on the Texas Supreme Court. While Bush’s appointees to Texas’ high court were pro-business Republicans, three of the four were social moderates — especially compared to the court’s hardliners, Nathan Hecht and Rove client Priscilla Owen. Indeed, Bush’s Texas judicial appointments seemed to reflect a Rovian strategy to prepare for a presidential run in which Bush could not afford to spurn those swing voters who regard abortion as a constitutional right.

After taking the White House with the support of social conservatives and many moderates, President Bush suddenly began picking hard-line judicial nominees, including two Rove clients: Alabama Attorney General Bill Pryor and Texas Justice Owen. The U.S. Senate battle over Bush’s judicial nominees continues to be one of Washington’s bitterest partisan battles. Democrats continue to block Owen’s confirmation for the New Orleans-based 5th U.S. Circuit Court of Appeals.

After President Bush nominated Justice Owen for the federal bench, Justice Hankinson opted not to run for reelection in 2002. Instead, this Bush-appointed Republican justice opened a law practice and served as a spokesperson for the trial-lawyer group opposing caps on jury damages.

It is possible that Hankinson took this job solely because she believes that such caps violate the separation of powers doctrine. Yet the President’s promotion of Owen over Hankinson must have made Hankinson’s job all the sweeter.

In this role, Hankinson faced off against Rossanna Salazar, Rove’s old Clements administration colleague who resurfaced as a leading spokesperson for the constitutional amendment on jury-award caps.

The Rove camp, as usual, enjoyed the last laugh. In September 2003, Texas voters approved the constitutional amendment on jury caps, with 51 percent of the vote.

Multinational Monitor contributing editor Andrew Wheat is research director for the Austin-based Texans for Public Justice, a public interest group focused on political corruption and corporate abuses in Texas.