Vol. 15 No.2 (February 2005), pp.151-154

SHAKEDOWN: HOW CORPORATIONS, GOVERNMENT, AND TRIAL LAWYERS ABUSE THE JUDICIAL PROCESS, by Robert A. Levy.  Washington: Cato Institute, 2004.  335pp.  Hardcover $22.95.  ISBN: 1-930865-61-9.

Reviewed by Scott E. Graves, Department of Political Science, Georgia State University. Email: polseg@langate.gsu.edu.

The topic addressed by Robert Levy’s SHAKEDOWN, high-stakes litigation primarily conducted by government, could hardly be more timely.  With tort reform legislation moving in state houses and Congress and the costs of large-scale class actions and damage awards taking center stage in discussions of national economic performance, a book addressing tobacco and firearm litigation and antitrust enforcement should be welcomed.  Unfortunately, Levy’s book is more a polemical work than a scholarly one and will not be useful as a course text without additional readings to provide some balance and to flesh out the issues that Levy neglects. Scholars of law and judicial process will find problems with its lack of theoretical focus, dated contents and contentious orientation.

Part 1 is devoted to state-sponsored tort litigation, and the first chapter introduces the general framework for considering state tort actions as “litigation tyranny.” Essentially, Levy argues that government actors have attacked unpopular commercial interests through courts under more favorable conditions than other plaintiffs enjoy, but in the process of documenting what he considers egregious violations of the rule of law misses far more interesting questions.  Very early in Chapter 1 he raises the question (in the context of Medicaid recovery suits against cigarette manufacturers) of why states chose to litigate instead of raising taxes.  His answer, that taxes are unpopular, is entirely unconvincing. State legislators, who refuse to pass regulations, and most state attorneys general who pursue these cases are elected, but their different institutional capacities, constituency influences and electoral incentives, might explain why regulatory outcomes have been pursued through the seemingly less efficient means of litigation.  Scholars like Robert Kagan (2001) and Thomas Burke (2004) have produced enlightening work on the causes of litigiousness and “litigious public policies,” but Levy does not address them. 

Several chapters of the first part reproduce, largely unchanged, articles previously published in various journals and by the Cato Institute as policy papers between 1997 and the present analyzing state and local government litigation against tobacco, firearms and other defendants.  Some chapters address newer developments, but the decision not to update the analysis in Chapters 2 and 3 is questionable given the rate of activity in tobacco and firearms litigation.  In some cases, failing to update undermines the point being made, as when Levy offers the refusal of juries to award damages to plaintiffs in smoking cases as evidence of their lack of merit (p.49). [*152]

Furthermore, Levy’s accounts of these litigations substitute dubious characterizations and evidence framed as advocacy for scholarship.  Chapter 2 focuses primarily on Medicaid recovery litigation in Florida, which created the most problematic legislative framework for their case, but does not address the alternative stages and theories of liability used in other states, such as violations of specific state consumer protection statutes and regulations, deception and fraud, unjust enrichment, antitrust and (most recently) second-hand smoke victims.  He also ignores the significant progress plaintiffs made in discovery proceedings, especially in Minnesota, that contributed to settlements in four states prior to the Master Settlement Agreement (MSA).

Seemingly unnecessary digressions and debatable arguments throughout Part 1 make it clear that it is the outcomes being pursued, rather than merely the illegitimate use of judicial process, that upsets the author.  In Chapter 3, Levy interrupts a narrative tracking the development of municipal lawsuits against gun manufacturers in order to launch a general attack on gun control from a constitutional and policy perspective. In the process, he seriously mischaracterizes the positions of constitutional scholars such as Akhil Amar and Lawrence Tribe in an effort to suggest a constitutional dimension to litigation against gun manufacturers (p.61). His discussion of gun control as policy cites several controversial studies taking pro-gun positions without any attention to contrary evidence (pp.75-81).  Chapter 4 updates the legal situations of tobacco and gun litigation, supplemented with a grab bag of short comments on other tort abuses spurred on by rapacious trial lawyers.

Chapter 5 deals with the comparatively useful and interesting question of how tort reform can be accomplished while maintaining a strong commitment to federalism.  Levy and his coauthor for this chapter, Michael I. Krauss of George Mason University, recognize and attempt to reconcile the difficulty of placing limits on state governments while honoring principles of limited federal government.  Like other parts of the book, however, their analysis of relevant law is more theoretical than real.  They reject federal legislation to limit suits and damages against fast food restaurants, gun manufacturers and doctors as outside Congress’ Commerce Clause power, but if that were true it would seem that the September 11th victims’ compensation fund would also be unconstitutional.  Turning to the Supreme Court, the authors examine recent punitive damages jurisprudence (particularly STATE FARM v. CAMPBELL), offering qualified and seemingly reluctant support for the Court’s substantive limits on state jury awards.  They are not clear, though, why Due Process authorizes the Supreme Court to intervene in state tort law to protect the rights of defendants through the 14th Amendment, but not Congress under Section 5.

The second part of the book deals with antitrust actions against Microsoft to make a case for the repeal of antitrust laws.  As with the previous material, a good deal of it is recycled from previous articles and in considerable need of updating.  In several instances, predictions about the fleeting nature of market power in information technology and [*153] Microsoft’s vulnerability to changes in underlying technology have proven to be false (pp.186-8, 217-221).  Levy’s major point is that the antitrust actions against Microsoft are efforts by market competitors (“losers” as Levy calls them, while maintaining that they may still become winners due to aforementioned changes in the IT market) and the government to cripple a successful commercial entity. It is never clear from Levy’s analysis, however, what incentive the government has to attack Microsoft.

Many arguments mounted to undermine the case against Microsoft are conclusory or self-contradictory.  Levy focuses on the illegal tying claim while ignoring other claims against Microsoft, particularly predation against Netscape and Sun Microsystems, as well as exclusive dealing with vendors and internet service providers.  Levy argues that Microsoft’s market dominance in PC operating systems was tenuous due to the possibility that internet browsers (p.187-8) and application service providers (p.220) might make operating systems obsolete, but that only proves the incentives Microsoft had to destroy the threats posed by Netscape and Sun in the highly connected personal computer market.  Dismissing network effects as a basis for antitrust enforcement, Levy argues that flexible programming languages like Java eliminate the fear of lock in through Microsoft’s domination of operating systems, conveniently ignoring Microsoft’s successful predation, a charge affirmed by the appeals court.   

The concluding chapter is composed primarily of articles published within the last four years covering the Microsoft settlement and prospects for the continuation of nettlesome enforcement actions by states and the European Union.  The meat of the chapter, however, is the summation: a brief recap of the reasons antitrust laws should be repealed.  Apart from the claim that competition policy violates private property rights, most are practical in nature.  Antitrust enforcement is bound to fail, Levy argues, due to their lack of clarity and static view of the economy, the failure of lawyers to understand economics, and the likelihood that the laws will more likely create rather than solve the problems against which they are directed.  Ironically, despite Levy’s claim that a fundamental failure of antitrust is the lack of economic insight of its proponents, his analysis of the Microsoft case and other hypothetical scenarios does not acknowledge the role of formal theory, transaction cost economics and contestable market theory in modern analysis, relying instead on brief and stylized price theory-based approaches.  Much of the work in post-Chicago school economics predicts the possibility of predatory behavior, like starving competitors of revenue, which formed the basis of the Justice Department’s case against Microsoft. 

SHAKEDOWN will have those with libertarian sympathies nodding frequently, but academic readers will undoubtedly note the lack of engagement with contemporary scholarly literature or inconvenient journalism.  Because the book is threaded together from many articles written over most of a decade, it tends to be repetitive and subsequent material supplants, rather than builds upon, previous chapters.  Instructors may find [*154] excerpts useful in the classroom, but only with other balancing material to demonstrate the breadth of positions on contemporary tort reform and judicial policy.

REFERENCES:

Burke, Thomas F. 2002. LAWYERS, LAWSUITS, AND LEGAL RIGHTS: THE BATTLE OVER LITIGATION IN AMERICAN SOCIETY Berkeley: University of California Press.

Kagan, Robert. 2001. ADVERSARIAL LEGALISM: THE AMERICAN WAY OF LAW Cambridge, MA: Harvard University Press.

CASE REFERENCES:

STATE FARM MUTUAL AUTOMOBILE INS. CO. v. CAMPBELL, 538 US 408 (2003).

*************************************************************

© Copyright 2005 by the author, Scott E. Graves.