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
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
“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
“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.