By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
Houston Lighting & Power is preparing to go to trial this summer in pursuit of a massive claim that the Light Company, along with its partners in the South Texas Project nuclear plant, filed five years ago against the Westinghouse Electric Corporation.
The suit was lodged in Matagorda County, which, in addition to being the location of the STP, for years has been deemed a "plaintiffs' paradise" by tort reformers because of the large awards made by juries there. HL&P and its partners are seeking $1.2 billion in actual damages from Westinghouse for what they contend were faulty steam generators installed at the Bay City nuclear plant. In addition, a lawyer for the STP partners has suggested the plaintiffs could end up asking for punitive damages of up to eight times the actual damages they claim to be entitled to.
That would be a nice chunk of change, to be sure, rounding out somewhere in the neighborhood of $10 billion. But under changes to state tort law that HL&P vigorously supported with money and the considerable effort of its $600,000-a-year general counsel, it will be more difficult for other corporations or individuals to file a similar lawsuit or to collect the kind of punitive damages which the Light Company and its partners may be seeking.
The hypocrisy was not lost on David Berg, one of Westinghouse's lawyers, who in a deposition for the suit taken last November tried to get HL&P chairman Don Jordan to own up to the bald contradiction of the utility grabbing for all the billions it can while working to limit others' ability to do so in the future. Berg asked Jordan whether he thought it would be "wise" to cap what a jury can award in punitive damages at twice a plaintiff's economic damages, a proposal pushed by Texans for Lawsuit Reform and other "tort reform" groups that has since been passed by the Legislature and signed into law by Governor George Bush.
That would be a "rational" approach and good for Texas, Jordan replied, adding, "That is not the law today, however."
Later in the deposition, Jordan explained that his opposition to large punitive damage awards was based on his belief "that the economy of Texas is damaged by a law that provides huge, huge punitive damage levels to lawsuits, as we've seen take place in this state."
Asked by Berg if he saw the irony in his personal position and his company's possible quest for what could only be described as huge, huge punitive damages in the Westinghouse suit, Jordan replied, "No, I don't see any irony in it at all."
During the deposition, lawyer Daryl Bristow advised Jordan not to answer most of Berg's questions about punitive damages -- a refusal the lawyers are still fighting over, with Bristow claiming Westinghouse's "true motive is harassment" in perusing that line of query.
But HL&P itself has been pretty clear about where it stands. According to general counsel Hugh Rice Kelly, between April and December 1994 the utility gave at least $100,000 to the educational arm of Texans for Lawsuit Reform, the business-oriented group headed by Houston property developer Richard Weekly that has been in the forefront of lobbying for changes to state tort law. The money is more than double the total of what HL&P gave in 1993 and 1994 to all other groups advocating tightening up lawsuit rules. And its contributions to Texans for Lawsuit Reform went beyond money: Kelly acknowledges he wrote early drafts of what became the group's 11-point program on his home computer and printed them at work. Although they've been revised and amended somewhat, many of the major planks of Texans for Lawsuit Reform's platform have been become law or are awaiting Bush's signature.
Part of HL&P and its STP partners' claim against Westinghouse is being brought under the Texas Deceptive Trade Practices Act, which was intended to protect consumers wronged in business transactions. A revision of the DTPA was near the top of the Texans for Lawsuit Reform's legislative agenda, with the group arguing that the law was being abused by "large commercial business 'consumers'" filing suits under the act. And under legislators' rewrite of the law, future lawsuits brought under the DTPA could arise only from transactions of $500,000 or less -- meaning a multimillion-dollar purchase of steam generators by one large corporation from another wouldn't apply.
At the top of Texans for Lawsuit Reform's platform was its call for a change in the law governing the award of punitive damages, which are imposed beyond compensation for economic damages as punishment to deter future misbehavior. A measure already signed into law by Bush will limit punitive damages to twice economic damages, plus up to $750,000 in non-economic damages, as well as establish a higher standard of proof to win the damages.
Kelly equably defends HL&P's big-bucks claim in the Westinghouse suit. "We have any claim and right that is fair and permitted under present law," he says. "We have a lot of things fair under current law I have used to HL&P's advantage." That includes the state's Deceptive Trade Practices Act. Kelly says that while he doesn't believe that big corporations should be able to initiate legal actions under the law, HL&P previously sued a railroad car manufacturer under the DTPA and "got a huge settlement."
And, like his boss, Jordan, the lawyer shrugs off any contradiction in HL&P's public position and its pursuit of billions in damages, punitive and otherwise, in Matagorda County.
"My job," he says, "is to do the best I can for my company under current law.