Mike Helenthal Jun. 6, 2016, 12:35pm


HOUSTON – That so many fraudulent claims were identified in a Texas lawsuit stemming from the 2010 BP Deep Horizon oil spill is an indicator the mass torts system is working as intended, Richard Alderman, director of the University of Houston Consumer Law Center, recently told the SE Texas Record. 

The retired law professor declined to discuss specifics of the case, in which Texas attorney Mikal Watts and others will face a federal indictment in July for fabricating most of the names on a 40,000-person list of seafood workers allegedly affected by the spill.

He did say, however, that the court goes to great lengths to ensure that anyone making a claim of damages not only deserves it, but isn’t a dog – as one claimant was discovered to be in the Watts case.

“It’s really not that difficult to validate someone making a claim,” Alderman said. “There is a court-appointed committee that gathers the information and goes through each one. If there’s a claim of damage, it’s as easy as asking for their tax returns and other documents to prove it.”

He said technological advances allowing more-efficient information sharing has made the mass tort process more reliable.

“Technology is almost always helpful,” he said. “It definitely helped the process. At some point, all the bad claims will be caught.”

Alderman said mass torts are increasingly being used as the vehicle for multiple plaintiff suits, as laws restricting class-action filings have been adopted around the country. He said there has been a decline in class action filings, and that most of them end up in arbitration, not court.

He said the Consumer Financial Protection Bureau currently is considering rules that would void the practice of companies making consumer class-action restrictions contractual.

“Especially in response to large disaster claims, the mass tort procedure is the most efficient way to deal with it,” he said. “There are benefits to having a lot of clients, and you try to find a way to consolidate them. Otherwise you’d end up with thousands of individual lawsuits, which is expensive and a strain on the court’s resources.”

Past being an efficient legal vehicle, mass torts with a potential big payoff are also increasingly being looked at as financial investments by outside parties.

In a related case, two Texas plaintiffs’ attorneys, Robert Hilliard of Hilliard Munoz Gonzales and John Cracken of the Cracken Law Firm, are being tried for fraud and conspiracy for funding Watts’ discredited mass tort case.

A Houston judged issued a stay in that case on May 23 after the two attorneys asked for a change of venue.

Alderman said a national example of outside funding is the recent lawsuit of former professional wrestler Hulk Hogan, whose successful privacy suit against the Gawker website was bankrolled by a private backer.

He said funding legal action, especially for large-scale cases, is expensive, and that it’s not unusual for legal firms to take on investors or team up with other firms to share costs and resources.

He said doing so doesn’t necessarily suggest a bad outcome or that a scam is being perpetrated.

“The vast majority of lawyers are very ethical and their clients are very pleased,” he said.

In fact, he said, groups of claimants with scant resources but legitimate damages might never have their cases heard if not for some solidifying benefactor.

“Litigation has become very expensive and a lot of people can’t afford to make an investment with the possibility of a loss, even if they have a good claim,” he said.

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Organizations in this Story

University of Houston
4800 Calhoun Road
Houston, TX 77004

Consumer Financial Protection Bureau
1700 G St NW
Washington, DC 20552

Hilliard Munoz and Gonzales
719 S. Shoreline Blvd.
Corpus Christi, TX 78401

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