[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
UNSUITABLE LITIGATION:
OVERSIGHT OF THIRD-PARTY LITIGATION
FUNDING
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
OVERSIGHT AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 13, 2023
__________
Serial No. 118-60
__________
Printed for the use of the Committee on Oversight and Accountability
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
53-369 PDF WASHINGTON : 2023
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Jamie Raskin, Maryland, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Gary Palmer, Alabama Gerald E. Connolly, Virginia
Clay Higgins, Louisiana Raja Krishnamoorthi, Illinois
Pete Sessions, Texas Ro Khanna, California
Andy Biggs, Arizona Kweisi Mfume, Maryland
Nancy Mace, South Carolina Alexandria Ocasio-Cortez, New York
Jake LaTurner, Kansas Katie Porter, California
Pat Fallon, Texas Cori Bush, Missouri
Byron Donalds, Florida Jimmy Gomez, California
Kelly Armstrong, North Dakota Shontel Brown, Ohio
Scott Perry, Pennsylvania Melanie Stansbury, New Mexico
William Timmons, South Carolina Robert Garcia, California
Tim Burchett, Tennessee Maxwell Frost, Florida
Marjorie Taylor Greene, Georgia Summer Lee, Pennsylvania
Lisa McClain, Michigan Greg Casar, Texas
Lauren Boebert, Colorado Jasmine Crockett, Texas
Russell Fry, South Carolina Dan Goldman, New York
Anna Paulina Luna, Florida Jared Moskowitz, Florida
Chuck Edwards, North Carolina Vacancy
Nick Langworthy, New York
Eric Burlison, Missouri
Mark Marin, Staff Director
Jessica Donlon, Deputy Staff Director and General Counsel
Ryan Giachetti, Counsel
Jeanne Kuehl, Senior Professional Staff Member
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Julie Tagen, Minority Staff Director
Contact Number: 202-225-5051
------
C O N T E N T S
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Page
Hearing held on September 13, 2023............................... 1
WITNESSES
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Ms. Maya Steinitz, Professor, Boston University School of Law
Oral Statement............................................... 6
Mr. Erik Milito, President, National Ocean Industries Association
Oral Statement............................................... 7
Ms. Julie Lucas, Executive Director, MiningMinnesota
Oral Statement............................................... 9
Ms. Aviva Wein, Assistant General Counsel, Johnson & Johnson
Oral Statement............................................... 10
Ms. Kathleen Clark (Minority Witness), Professor of Law,
Washington University in St. Louis
Oral Statement............................................... 12
Opening statements and the prepared statements for the witnesses
are available in the U.S. House of Representatives Repository
at: docs.house.gov.
INDEX OF DOCUMENTS
----------
* Statement for the Record; submitted by Rep. Connolly.
* Article, Law 360, ``A 'Boogeyman' National Security Threat in
Litigation Funding''; submitted by Rep. Comer.
* Article, US Law Week, ``Breaching a Litigation Funding
Agreement - the Sysco/Burford Story''; submitted by Rep. Comer.
* Article, The Hill, ``Don't Fear Foreign Investment in
Lawsuits''; submitted by Rep. Comer.
* Article, Bloomberg Law, ``Litigation Finance Doesn't Pose a
Security Risk: Legal Insight''; submitted by Rep. Comer.
* Letter, April 12, 2023, to Grassley and Issa from State of
Aba Office of Attorney General; submitted by Rep. Comer.
* Letter, March 1, 2023, to McCarthy and Issa from Underwood
Ranches, LP; submitted by Rep. Comer.
* Statement for the Record, American Property Casualty
Insurance Association (APCIA); submitted by Rep. Comer.
CONTINUED INDEX OF DOCUMENTS
----------
* Statement for the Record, PhRMA; submitted by Rep. Comer.
* Statement for the Record, R Street, submitted by Rep. Comer.
* Statement for the Record, Unified Patents; submitted by Rep.
Comer.
* Statement for the Record, Advanced Medical Technology
Association (AdvaMed); submitted by Rep. Mace.
* Statement for the Record, American Tort Reform Association
(ATRA); submitted by Rep. Mace.
* Statement for the Record, International Legal Finance
Association (ILFA); submitted by Rep. Mace.
* Statement for the Record, U.S. Chamber of Commerce/Institute
for Legal Reform; submitted by Rep. Mace.
* Article, AP News, ``China Grants 18 Trademarks in 2 Months to
Trump, Daughter''; submitted by Rep. Raskin.
* Article, Daily Beast, ``FBI Whistleblowers Admit Taking Money
From Ex-Trump Official''; submitted by Rep. Goldman.
* Questions for the Record: to Ms. Julie Lucas; submitted by
Rep. Comer.
* Questions for the Record: to Ms. Julie Lucas; submitted by
Rep. Gosar.
* Questions for the Record: to Ms. Julie Lucas; submitted by
Rep. Foxx.
* Questions for the Record: to Mr. Milito; submitted by Rep.
Gosar.
* Questions for the Record: to Ms. Steinitz; submitted by Rep.
Comer.
* Questions for the Record: to Ms. Steinitz; submitted by Rep.
Gosar.
* Questions for the Record: to Ms. Wein; submitted by Rep.
Comer.
* Questions for the Record: to Ms. Wein; submitted by Rep.
Gosar.
The documents listed are available at: docs.house.gov.
UNSUITABLE LITIGATION:
OVERSIGHT OF THIRD-PARTY LITIGATION
FUNDING
----------
September 13, 2023
House of Representatives,
Committee on Oversight and Accountability
Washington, D.C.
The Committee met, pursuant to notice, at 10:35 a.m., in
room 2154, Rayburn House Office Building, Hon. James Comer
[Chairman of the Committee] presiding.
Present: Representatives Comer, Jordan, Gosar, Foxx,
Grothman, Palmer, Higgins, Sessions, Biggs, Mace, LaTurner,
Donalds, Armstrong, Perry, Timmons, Burchett, Greene, McClain,
Boebert, Fry, Edwards, Burlison, Raskin, Norton, Connolly,
Krishnamoorthi, Khanna, Ocasio-Cortez, Porter, Brown,
Stansbury, Garcia, Frost, Lee, Crockett, Goldman, and
Moskowitz.
Chairman Comer. The Committee on Oversight and
Accountability will come to order, and I want to welcome
everyone.
Without objection, the Chair may declare a recess at any
time.
I recognize myself for an opening statement.
Today, we examine a growing concern in our Nation's legal
system. Millions of lawsuits are filed each year. These suits
range from simple disputes between neighbors to complex, multi-
district litigation spanning the entire country. Many of these
lawsuits have significant merit, requiring serious analysis by
courts, but some are frivolous as well. With the millions of
cases being brought each year, our courts have become
overburdened, creating delays, and making it difficult and
expensive for many litigants to prosecute their cases. The
complexity and expense of some of these cases makes litigation
funding important. In fact, for some, litigation funding is
necessary to enable them to pursue justice through the legal
system, but there are some concerning trends in how litigation
is funded.
The spread of untraceable and undisclosed funding of
lawsuits across the country is raising significant ethical and
legal questions. For example, many lawsuits are funded by
progressive activists or private equity seeking to hijack
America's legal system to implement their policy desires or
make a quick buck. Lawsuits that impact the mining of critical
minerals, development of new medications, energy production,
and our national security, these lawsuits raise concerns about
attorneys' ethical duties, whether the proper parties are at
the negotiating table, and whether litigants are being hurt by
limitations on the funding they receive. They raise concerns
about whether attorneys are acting in the best interests of
their clients or those who they are receiving funding from.
They raise concerns about whether the funders should be
included at the negotiating table during settlement talks. They
raise concerns that some litigation financers are not acting in
the best interests of the litigants.
We know that activist groups use this funding to push
policies that they could not enact through the legislative
process. Some left-wing groups funnels millions to law firms to
sue companies across the country on questionable legal grounds.
They are trying to use the courts to put these companies out of
business or limit their ability to bring new products to
market. These activist groups will find plaintiffs and pour
millions into claims against energy, mining, and manufacturing
companies to the detriment of consumers, innovation, national
security, the workforce, and even to plaintiffs themselves, all
in the name of political activism.
These groups know that their tactics and goals are too
extreme for the American people to support, so rather than use
the electoral process, they are implementing their agenda
through litigation against both the public and private sectors.
Other groups are entering into funding agreements with
plaintiffs' attorneys where they pay to support litigation in
exchange for a significant portion of the money awarded should
the plaintiffs win. In some cases, these outside groups can
effectively override a settlement agreement if they do not like
the payoff amount.
In fact, a recent study by the Institute for Legal Reform
found that for every dollar paid in damages through tort
litigation, a meager $0.53 actually found its way into the
rightful pockets of the claimants. When American companies are
under threat of frivolous litigation, those companies must set
aside hundreds of millions of dollars to fight against claims
from these groups, and the American people are then affected
when companies are forced to offset the cost of litigation by
raising prices. The mass torts litigation sector raked in an
astonishing $443 billion in 2020 alone, the equivalent of 2.1
percent of the entire GDP of the United States.
Today, we are going to hear from American industry to see
how unnecessary litigation can freeze essential sectors of the
economy and hurt consumers. We also will hear how activist
groups use sue-and-settle tactics to encourage government
agencies to regulate well beyond the laws Congress passed for
them to administer. These suits cost taxpayers unknown sums in
attorney fees, settlement payouts, and economic impacts to the
affected industries.
Now let me be clear: agencies should not be conducting
rulemaking via litigation, and activist groups should not be
legislating via litigation. Today is a first step to
identifying how pervasive third-party litigation funding is and
how deep the abuses go. I look forward to hearing the testimony
of our witnesses and to discussing how we can ensure fairness
in our legal system. With that, I now yield to Ranking Member
Raskin.
Mr. Raskin. Thank you, Mr. Chairman, and thanks to our
witnesses for being here today, especially Professor Clark, who
flew all the way from St. Louis on short notice.
Mr. Chairman, I spent my recess traveling across America. I
was in 10 states, including your beautiful Kentucky, and one
thing I found is that all over America, people are in an uproar
over the money that billionaires are spending to influence
justices on the U.S. Supreme Court. Americans see that personal
gifts to justices from right-wing billionaires sugar daddies,
like Harlan Crow, and Federalist Society dark money
expenditures are fundamentally perverting judicial ethics and
undermining justice and the rule of law.
Now apparently, responding to the national outcry over this
ethics crisis on the Court, our colleagues have called a
hearing today about the influence that wealth exerts on the
justice system, but they have gone off on a surprising and
bizarre tangent. The problem, they say, is not the way the
public is harmed when billionaires bankroll the private lives
of ethically challenged Supreme Court Justices. The real
problem is that giant corporations are harmed when Americans,
injured by toxic torts or environmental crimes, receive
contributions from donors to help them bring personal injury or
class action lawsuits. In other words, while Supreme Court
Justices are jetting all over the world on fancy private family
vacations paid for by right-wing billionaires, or collecting
hefty cash gifts from those billionaires for their personal
museums and family members' private school tuition payments,
the GOP says the real problem in our legal system is that too
many victims of corporate wrongdoing are finding access to the
courts in the first place.
Now, we say justice is blind because the Greek statue for
justice wears a blindfold. In solving cases, Justices are
supposed to be blind to wealth and poverty, personal
friendship, and political affiliation. A poor person who has
never met a judge must be treated the same by the courts as
Harlan Crow, the real estate tycoon chum of Justice and Mrs.
Clarence Thomas, who had a case before the Supreme Court and
who has given the Thomases lavish personal gifts, like week-
long luxury travel on his super-yacht and private jets, and
generous money payments for family tuition over a period of 20
years ever since Thomas joined the Court. A collector of not-
so-fine art created by dictators who actually owns and displays
two paintings done by Adolf Hitler, Mr. Crow donated $105,000
to the Yale Law School in 2018 for another painting he desires,
writing a check to the ``Justice Thomas Portrait Fund.''
But Justice Thomas is not unique. He is just emblematic of
the collapse of legal ethics across the street. Justice Alito
took a long fishing trip with a hedge fund magnate who has had
business before the Supreme Court 10 times in the last 15
years. Neither justice recused themself in the relevant cases
or made any relevant timely disclosures.
Justice is supposed to be blind to the blandishments of
money and class power. It is only supposed to see the facts and
the law, but in the Roberts Court, judicial vision is clouded
everywhere by dollar signs and luxury power trips. The facts
and the law are barely visible when it comes to the rights of
workers trying to organize a union, or poor women seeking
abortions, or consumers injured by adhesion contracts and
corporate rip-offs. Justice is a rich man's game in this Court
of billionaires. The Bill of Rights has mostly been left in the
dust. On the Roberts Court, justice is indeed blind but only to
ethics itself. It is deaf to the pleas of women and working
people, and it is dumb in its refusal to see how it has
destroyed its own legitimacy in the eyes of the public. It is
certainly not mute, however, as Justices Alito and Thomas
vociferously defend their jet-setting lifestyles in shockingly
intemperate terms.
If we are going to return to equal justice under law, as it
is written over the entrance to the Supreme Court, if we are to
make justice blind to the wealth and the identity of the
parties in the courtroom, then our Justices must be held to the
highest ethical standards. And yet, amazingly, the Justices are
not even subject to the basic code of conduct for United States
Judges that all other Federal Judges are subject to. The nine
Justices are, in fact, not bound by any ethical standards at
all, much less the comprehensive ethics code that applies to
all the other Judges. Their decisions can affect or destroy the
rights of all Americans, but the Justices refuse to abide by
any written ethical code. They decide on their own if their
work is impaired by a real or apparent conflict of interest, a
terrible system which cuts against the key principle of justice
that Madison articulated in the Federalist Papers: ``No man is
allowed to be a judge in his own cause in his own case.''
The highest court in our land now has the lowest ethical
standards. This is the crisis we should be discussing today,
but our colleagues have instead called a hearing to assert that
it is just too easy to haul corporations into court when they
violate other Americans' rights. The third-party litigation
funding under attack today is the only way that a lot of
victims of corporate misconduct can even get into court. Do our
colleagues really want to make it illegal now to receive
contributions to vindicate your rights?
I could understand if they were saying that all the present
Federal Rules of Civil Procedure against frivolous, vexatious,
and groundless litigation were not working. I could understand
if they were arguing that Rule 11 sanctions against baseless
lawsuits needed to be expanded or fortified, but that is not
what they are saying. They are not citing any kind of increase
in frivolous or meritless litigation, nor are they arguing that
current sanctions do not work, those sanctions are working just
fine. No, they are looking for ways to reduce the prosecution
of merit-worthy and successful lawsuits against actual
corporate wrongdoers, and by pulling the rug out from
underneath actual tort victims, they hope to keep plaintiffs
from even getting into court.
The GOP wants to dramatically reduce accountability and
liability for corporations that flood our country with opioids
to make obscene profits, corporations that poison our
communities with asbestos or lead and other dangerous
carcinogens, and corporations that inflict lung disease, mass
oil spills and other lethal injuries on American. Our
colleagues seem confused. No one has a right to bribe judges or
load them up with fancy gifts, but people do have every First
Amendment, due process, and Equal Protection Right to raise
money to make their case in court. The courts are not just
there for rich people who can write themselves a big check.
This is the same reason people have a right to give and receive
campaign contributions for public offices, not just for the
independently wealthy.
Victims bringing these lawsuits, especially those who are
low-income or unable to work because they are sick or injured,
often cannot afford to bring the lawsuits at all without
financial help from other citizens. If their lawsuits have no
merit, they should be thrown out, but if they have merit, then
we should all be grateful that they are working to make society
safer by stopping the wrongdoers before they commit more wrongs
against society.
Many landmark cases establishing the basic rights of
Americans have been funded by contributions from outside
groups: Brown v. Board of Education, Loving v. Virginia, U.S.
v. Windsor. The corporate interests represented on the panel
today who are attacking this basic right are here for an
obvious reason: they do not like paying damages when their
victims prove their rights have been violated in court. Johnson
& Johnson has had to pay billions of dollars for its central
role in the opioid epidemic and billions more to tens of
thousands of people who developed cancer because of the
country's dangerous talcum powder. Mining and offshore drilling
companies have had to pay billions of dollars for poisoning
communities' land and water and causing irreparable harm to
human health. Perhaps one of the biggest environmental cases in
the history of United States, oil company, BP, agreed to pay
$20 billion for damages caused by the Deepwater Horizon oil
spill in the Gulf of Mexico.
One can only regard with amazement the fact that our
colleagues are in such a hurry to promote the grievances of
these big tortfeasors and wrongdoers, that they do not even
pause to consider that there are hundreds of millions of
dollars in right-wing, third-party litigation financing
regularly bankrolling anti-choice, anti-LGBTQ, anti-gun safety
lawsuits, among many others. Well-funded right-wing networks
like the Pacific Legal Foundation, the Koch Network, the
Judicial Crisis Network, have poured hundreds of millions into
remaking America through the courts on issues ranging from
attacking public school curricula, to opposing compulsory union
dues, to repealing the Consumer Financial Protection Bureau.
The Alliance Defending Freedom and other right-wing groups
brought the Dobbs case and are working to completely eliminate
access to abortion for all Americans that is their right. Our
colleagues do not complain about that. In fact, they do not
even mention it. Are they willing to sacrifice the rights of
their third-party litigation financiers on the right, or are
they just not serious about this whole thing and simply looking
for another catchy way to distract everyone from Donald Trump's
91 different criminal charges in four indictments across the
land?
Everyone knows that a fish rots from the head down, and
everyone knows what stinks to the high heavens in the judicial
system today is, alas, the Supreme Court itself. Let us focus
on where the corruption of justice is actually taking place
today. Thank you, Mr. Chairman, and I yield back.
Chairman Comer. The gentleman yields back. And I want to
remind everyone, we are not asking Congress to stop third-party
litigation. We are here today to learn from expert witnesses
about possible abuses in our court system. With that, I am
pleased to welcome our witnesses for today, and I apologize if
I mispronounce these names--I am notoriously bad about that--
Maya Steinitz, Erik Milito, Julie Lucas, Aviva Wein, and
Kathleen Clark.
Our first witness is Maya Steinitz, who is a professor at
Boston University School of Law. Our next witness is Erik
Milito, who is president of the National Ocean Industries
Association. Then we had Julie Lucas, Executive Director at
MiningMinnesota. Next is Aviva Wein, Assistant General Counsel
at Johnson & Johnson, and our last witness today is Kathleen
Clark, a Professor at the Washington University of St. Louis
School of Law. We look forward to hearing what each of you have
to say about today's important subject.
Pursuant to Committee Rule 9(g), the witnesses will please
stand and raise their right hands.
Do you solemnly swear or affirm that the testimony that you
are about to give is the truth, the whole truth, and nothing
but the truth, so help you God?
[A chorus of ayes.]
Chairman Comer. Let the record show that the witnesses all
answered in the affirmative. We appreciate all of you being
here today and look forward to your testimony.
Now, let me remind the witnesses that we have read your
written statements, and they will appear in full in the hearing
record. Please limit your oral statements to 5 minutes. As a
reminder, please press the button on the microphone in front of
you so that it is on, and Members can hear you. When you begin
to speak, the light in front of you will turn green. After 4
minutes, it will turn yellow. When the red light comes on, your
5 minutes has expired, and we would ask that you please wrap
up.
I recognize Ms. Steinitz to please begin her opening
statement.
STATEMENT OF MAYA STEINITZ
PROFESSOR OF LAW
BOSTON UNIVERSITY SCHOOL OF LAW
Ms. Steinitz. Thank you. Chairman Comer, Ranking Member
Raskin, and Members of the Committee, thank you for inviting me
to testify today. My name is Maya Steinitz, and I am a
Professor of Law at Boston University Law School. I appreciate
the opportunity to share with you some of what I have learned
over nearly 15 years of studying and writing about the
phenomenon of third-party litigation finance.
Third-party litigation funding is a utility. It can be
well-used or abused depending on the context. It can be
beneficial to individuals, to small and large businesses, and
to the public. It can also be harmful to individuals, to small
and large businesses, and to the public. In terms of impact
litigation brought to advance an ideological position or policy
goal, third-party funding can and, to my understanding, has
been used to assist plaintiffs pursuing both liberal and
conservative causes. Like the rest of the finance industry,
whether the good that litigation funding can serve ultimately
outweighs the bad will depend largely on whether and how well
it is regulated.
Third-party funding is transforming the trajectory of
individual cases, for example, by determining which cases are
brought, how long they last, and how much they settle for. For
this reason, it can also affect the work of the judicial branch
at both the state and Federal level. It is also affecting the
practice of law. It could help increase efficiency and lower
the cost of legal services available to Americans, but it can
also introduce conflicts of interest between lawyers and
clients that did not use to exist, especially when lawyers and
funders have ongoing relationships that may have started before
a given client's case commenced or may continue thereafter.
Therefore, the systemic effects of litigation funding
implicate democracy at large, affecting as it does all of civil
justice, an entire branch of government and the structure and
core tenants of the legal profession and of the attorney-client
relationship which is a central and, therefore, protected
relationship in a free society. Third-party funding's proper
regulation, neither overregulation, nor under regulation, and
regulation of the right kind should, therefore, be a matter of
broad concern cutting across usual political divisions.
Litigation finance can help increase access to justice that
parties cannot afford to bring their disputes to court, such as
individuals, startup companies, and small businesses.
The ability to acquire financing can level the playing
field between such under-resourced players and significantly
better-resourced opponents. Litigation funding can also serve
as a form of corporate finance for small and large businesses,
allowing them to manage balance sheets and to obtain operating
capital during a time when litigation otherwise limits access
to such capital. By shifting the risk of litigation or
assigning claims altogether, a corporate claimant can reduce
the impact of that litigation on normal business activities.
While empirical data about third-party funding is extremely
limited, the downsides of third-party funding are well
understood and increasingly documented. The ways litigation
funding can structurally create conflicts of interest between
lawyers and their clients protracts certain litigation, create
incentives to bundle non-meritorious cases with meritorious
cases when cases are aggregated rather than pursued
individually, affect defendants' due process rights, and, of
course, the risk of predatory financing practices are all well
understood.
While litigation finance is a relatively new industry, it
is part of and its functions overlap with established industry
that we in the U.S. know well how to regulate: the finance and
banking industry, the legal industry, and the insurance
industry. In those industries, there are various ethical
requirements, context-specific disclosure requirements, and
protections against predatory practices. I welcome your
questions.
STATEMENT OF ERIK MILITO
PRESIDENT
NATIONAL OCEAN INDUSTRIES ASSOCIATION
Mr. Milito. Chairman Comer, Ranking Member Raskin, and
Members of the Committee, thank you for the opportunity to
testify. I am Erik Milito, President of the National Ocean
Industries Association, or NOIA. NOIA represents all segments
of the offshore energy industry, including oil and gas, wind,
minerals, and carbon sequestration. For the foreseeable future,
our economy will depend upon affordable and reliable supplies
of oil and gas. The U.S. Gulf of Mexico oil and gas sector
supports more than 350,000 good-paying jobs throughout the
country and produces among the lowest carbon intensity barrels
in the world.
Currently, global oil demand is near record levels at more
than 100 million barrels per day. Various scenarios forecast
global oil consumption through 2050 and beyond. Nearly all of
them predict substantial oil production will be necessary
through at least 2050. The empirical data in our industries'
track record underscore the significance of the U.S. offshore
region, particularly the Gulf of Mexico and securing these
vital energy resources.
However, our industry faces considerable obstacles stemming
from excessive litigation and sue-and-settle agreements.
Opponents of American energy projects have managed to bypass
Congress and their public regulatory process through what has
become regulation through litigation. While litigation is an
important tool for holding Federal agencies accountable to
their statutory responsibilities, its misuse to disrupt energy
development ultimately harms the American consumer more than
anyone else, and simply shifts production to foreign suppliers.
Litigation abuse imposes a real barrier to America's energy
production potential at a time when it is needed more than
ever, with inflation driving up the cost of everything for
Americans, including gasoline at the pump.
One of the most recent sue-and-settle examples between
activists and the Administration involves the Rice's whale. The
Rice's whale is a species already protected under both the
Endangered Species Act and the Marine Mammal Protection Act.
However, activist groups sued the National Marine Fisheries
Service, or NMFS, over whale protections, resulting in a
stipulated stay agreement which proceeded without public or
congressional input. The agreement locks away millions of prime
Gulf of Mexico acres from oil and gas development and imposes
unwarranted vessel restrictions based upon insufficient
scientific support and a failure to consider the economic and
national security impacts.
Most significantly, the government itself is contradicting
its own findings, that expansion of the protected area for the
whale is, in fact, not justified. In a proposed rulemaking from
January of this year, NMFS determined that expansion of the
protected area for the whale is not warranted stating,
``Therefore, while we expect that some individual Rice's whales
occur outside the core habitat area, and/or that whales from
the eastern Gulf of Mexico occasionally travel outside the
area, the currently available data support NMFS determination
that the area currently considered core habitat is an adequate
representation.''
Expanding the Rice's whale critical habitat to include
areas where there is only negligible or no presence of the
whale is contrary to the science and dilutes conservation
resources that should be going toward protecting actual habitat
areas. According to NMFS, only a single Rice's whale has been
observed in this expanded area. An additional survey effort was
conducted for the expanded area after the 2017 sighting, and no
additional sightings were recorded. The additional mitigation
measures include narrower transit windows that will naturally
increase vessel traffic in daylight, carrying added risks.
Vessels will idle, potentially for hours, waiting for daylight
or better visibility. There will be unavoidable and, yet again,
unnecessary increases in emissions, undermining the Gulf's
status as one of the lowest carbon emission basins in the
world.
The Federal Government is also considering expanding
mitigation measures to encompass all Gulf maritime vessel
traffic, including cargo vessels, cruise lines, and fishing
boats. This will initiate a chain reaction of delays. As
vessels finally reach port past the bottlenecks created by
transit windows, new bottlenecks will emerge as everyone rushes
to unload goods on trains and tracks simultaneously, delaying
the distribution of critical goods throughout the Nation.
Wildlife protection is a universal goal of every Gulf Coast
resident, the industry, and the workers of our industry, yet
the Administration's approach lacks transparency and excludes
the voices of broad-based stakeholders and experts. Thank you,
and I look forward to your questions.
STATEMENT OF JULIE LUCAS
EXECUTIVE DIRECTOR
MININGMINNESOTA
Ms. Lucas. Chair Comer, Ranking Member Raskin, and Members
of the Committee, my name is Julie Lucas. I am here today from
the land of 10,000 Lakes, Lake Superior, the Boundary Waters
Canoe Area Wilderness, and the headwaters of the Mighty
Mississippi. In Northern Minnesota, home first and still to the
Ojibwe people, we are defined by our clean, plentiful water,
and we hold immense pride in that identity. Our identity has
also been shaped by the land beneath our feet and the abundant
minerals found within it.
I am the Executive Director of MiningMinnesota, a coalition
of industry leaders who advocate for safe, responsible, and
well-regulated mining in our state. I am here today to share
our region's hope for the development of a mineral resource
essential to building a clean energy economy, a resource
containing copper, nickel, cobalt, platinum, palladium, and
gold. Much as the Nation has depended on Minnesota for iron
ore, our country could turn to Minnesota-sourced minerals to
build the batteries, windmills, solar panels, and other
products needed to achieve carbon-free energy goals. These
resources would be under development today if not for extended,
repeated litigation, and continued appeals focused on delaying
this progress.
We currently have three proposed critical minerals projects
in Minnesota. These projects are all in different phases of
development and include NewRange Copper Nickel near the
communities of Aurora and Hoyt Lakes, Twin Metals Minnesota in
Ely and Babbit, and Talon Metals in Tamarack. These are small,
rural communities with only Ely topping 3,000 people. The near
constant act of litigation or threat of other legal challenges
does more than impact a project. It negatively impacts our
communities.
The first impact is a loss of funding for local communities
and local schools. Minnesota law requires non-iron mining
companies to pay an additional tax as soon as projects are
permitted and able to begin construction. With those millions
of dollars in taxes going directly to support local communities
and schools, litigation delays those investments. The second
impact is on students statewide. School trust lands are
publicly managed lands, established within Minnesota State
Constitution with the sole goal of generating revenue for
public schools throughout the entire state through different
means, including mineral development. The third impact is
uncertainty, uncertainty about our future. As lawyers battle
over how a process-focused decision was or was not made or
attempt to use the courts to make new policy, people in our
communities are forced to make and consider other decisions.
Should a town build additional housing for new workers? Should
childcare opportunities be expanded? Will a recent graduate
have to leave their beloved community behind to seek employment
hundreds of miles away?
As neighbors to propose projects, we value stringent
environmental review and permitting processes. We recognize the
importance of a litigation process as originally envisioned to
ensure regulators and regulated entities are held accountable
to protecting and minimizing the effects on our air, water, and
our land. However, the litigation process that was developed to
protect communities like ours is being abused today. Too often,
it is solely used to delay projects and drain the funding of
companies with the hope investors will give up and leave
Minnesota. These actions are not designed to make a project
stronger. They are actions by groups who will never support or
accept that not only do we need Minnesota's minerals, but that
there are proven and effective ways to realize the potential of
this resource.
As time and money is increasingly invested into litigation
and legal support teams, our communities are held in limbo. Too
often we watch in frustration as our Nation looks overseas for
minerals we could provide. The environmental review and
permitting processes allow for extensive community engagement
and multiple checkpoints along the way. Trust must be restored
in our regulatory process. If there are known flaws to be
challenged on a legal basis, they are known prior to or
immediately following issuance of permits. The timeline for
filing lawsuits could be shortened significantly while still
meeting the intent and spirit of the laws as originally
designed. Too often they are strategically filed at the last
moment and nearly 5 years after a decision to maximize delay.
If our Nation is going to drive the unprecedented demand
for these minerals, we must be responsible for our own
consumption and we cannot be afraid to say yes: Yes, to a low-
carbon future, yes to protection of natural resources, yes to
high labor standards, yes to our communities, and yes to
accessing these minerals domestically. Thank you, and I look
forward to your questions.
STATEMENT OF AVIVA WEIN
ASSISTANT GENERAL COUNSEL
JOHNSON & JOHNSON
Ms. Wein. Chairman Comer, Ranking Member Raskin, and
Members of the Committee, my name is Aviva Wein, and I am an
Assistant General Counsel at Johnson & Johnson, and I lead our
Litigation Policy and Risk Mitigation Group. I applaud your
Committee's efforts to shine light on the growing threat to our
civil justice system and the U.S. economy. Outside money and
influence over mass tort litigation are compromising the
ability of both plaintiffs and defendants to achieve justice,
and Federal courts are struggling to manage the barrage of
cases fairly and efficiently. These concerns threaten the
integrity of the civil justice system and are among the most
significant challenges facing companies that manufacture
critical lifesaving and life enhancing medicines and medical
devices.
I appreciate your inviting me here to testify today. My
views are informed by my work, first at a law firm and then for
the past approximately 11 years handling product litigation for
Johnson & Johnson.
There may have been a time when tort litigation was about
individuals seeking out a lawyer to vindicate his or her rights
and to recover for wrongfully caused harms. That is how civil
justice is supposed to work. Today's mass tort system, however,
works in reverse. Lawyers develop a tort theory, recruit
investors, use that money to advertise for plaintiffs, work
with paid experts to publish junk science, and amass thousands
of claims without proper vetting. All of this has one intended
result: profit to the lawyers and the investors. That is not
how the civil justice system should work. It turns mass tort
litigation into a money play, driven, funded, and distorted by
lawyers and investors regardless of the merits of the claims
they assert.
What makes this litigation possible is the involvement of
hedge funds and other litigation funders. Spending by
litigation funders in the United States has been estimated at
$2.3 billion to $5 billion per year, and 70 percent of this
capital is reportedly invested in what they call portfolio or
mass tort litigation. Yet typically, litigation financing is
largely unregulated, and such investments are hidden from
courts and the parties, even when lawyers need investors'
approval to settle cases.
So how does this outside money distort justice? First, it
funds sophisticated media campaigns, urging people to call or
click for a chance at a jackpot. All day, every day, we are
bombarded on television, our tablets, our phones with ads,
urging us to sue. It has been estimated that nearly a billion
dollars is spent per year on advertising on TV ads, soliciting
people to file lawsuits. Second, these ads generate massive
numbers of insufficiently vetted claims. People call or click,
fill-out forms, and claims are filed with little, if any,
vetting. Often the claims are collected by lead generators and
sold to law firms who file them.
The lawyers have never met or spoken to these clients. They
just get a name and file a claim without knowing the basics.
Did they use the product? Did they suffer the alleged injury?
As a result, according to the Federal Advisory Committee on
Civil Rules, 20 to 30 percent of mass tort claims are wholly
unsupportable. In some litigations, this may be as high as 40
to 50 percent. Let us pause there. Forty to 50 percent of all
mass tort claims should never have been filed, they are
meritless.
Third, judges are increasingly recognizing that the
scientific basis for entire mass torts may be largely a figment
of this business model. The Wall Street Journal reported that
the lab behind studies alleging Zantac and other products
contain dangerous levels of cancer-causing chemicals had ties
to plaintiff lawyers. 50,000 claims were generated, but then
were dismissed after it was uncovered the lab's testing methods
actually generated the alleged cancer causing chemical, but the
damage was already done. Zantac was recalled from the market.
Finally, aside from the obvious impact on U.S. businesses,
large and small, this mass tort business model driven by this
outside funding has other significant consequences. The MDL
system which Congress enacted to address mass torts is
overwhelmed and breaking down. Today, upward of 70 percent of
all civil actions in our Federal Courts nationwide are mass
tort lawsuits. Facing thousands of cases, MDL judges tend to
prioritize settlement rather than rigorously reviewing the
plaintiffs' theories or winnowing claims.
Further, ads that mislead about healthcare decisions have
harmed people. The American Medical Association and AARP have
cautioned that fear-mongering and lawsuit ads is dangerous and
frightening. Sadly, these components of a modern-day mass tort
system have little to do with vindicating rights or
compensating consumers. Plaintiffs have become mere pawns in a
game. The primary beneficiaries are plaintiffs' counsel and
their investors. The losers are the courts, American
businesses, consumers, and the people seeking redress.
Again, I very much appreciate the opportunity to provide my
experiences and perspectives, and I look forward to the
questions.
STATEMENT OF KATHLEEN CLARK
PROFESSOR OF LAW
WASHINGTON UNIVERSITY OF ST. LOUIS SCHOOL OF LAW
Ms. Clark. Chairman Comer, Ranking Member Raskin, Members
of the Committee, thank you for inviting me to testify today. I
am here to talk about ethics. As a law professor and a lawyer,
most of my work over the last 30 years has focused on legal and
government ethics. I have taught courses on these subjects and
written articles about them. I have conducted ethics trainings
and provided ethics advice to government officials and
agencies.
This hearing is about third-party litigation funding, a
practice that currently affects a small but growing portion of
court cases. As a matter of legal ethics, third-party
litigation funding does pose ethical risk such as conflicts of
interest. At the same time, this funding mechanism can benefit
clients, particularly those who would not otherwise be able to
access our courts. While ethics issues do arise in this
context, in my professional opinion, these issues are nowhere
near the top of the list of significant ethics concerns facing
our courts. Instead, I would place at the top of that list the
ethics crisis currently facing the U.S. Supreme Court.
According to media reports, certain Supreme Court Justices
have repeatedly accepted lavish gifts from wealthy patrons,
refused to recuse from cases affecting those patrons, and then
failed to disclose those gifts and other transactions as
required by the Ethics and Government Act. The Court's refusal
to address these revelations and its failure to incorporate
basic and widely accepted ethical safeguards indicate that the
Supreme Court has a very significant ethics problem. Let me
provide just a few examples.
Supreme Court Justice Clarence Thomas accepted extravagant
gifts from Harlan Crow, including an Indonesian vacation,
apparently valued at hundreds of thousands of dollars, and
accepted private school tuition valued at tens of thousands of
dollars for Thomas' grandnephew, for whom Thomas, as legal
guardian, was responsible. In addition, Justice Thomas allowed
Harlan Crow to purchase several properties that Thomas co-
owned, including the home where Thomas' mother lives. Even more
troubling, Thomas failed to disclose these gifts and the
property transaction as he was legally required to do by the
Ethics in Government Act. In fact, Justice Thomas has filed
inaccurate financial disclosures more than a dozen times,
correcting his disclosures only after journalists or non-
government organizations have publicized his inaccuracies. And
Justice Thomas is not alone. Justice Alito also has accepted
private jet flights, for example, from billionaire financier
Paul Singer, and then failed to disclose those flights, as
required by law, and then Alito failed to recuse from a Supreme
Court case involving Singer.
These are not just missteps of individual Justices.
Instead, this pattern of behavior reflects institutional
failure at the Supreme Court, which has refused to adopt
measures that could prevent ethical missteps and hold
accountable those who violate ethics standards. The Court does
not even have the same ethics standards that apply to lower
court judges. Rather than vilifying individual Justices, I want
to focus on the need for an institutional response, the need
for robust ethics standards and accountability mechanisms to
apply at the Supreme Court. Our Nation deserves a Court that is
worthy of the public's trust, and Congress has the
constitutional authority to help make that happen.
Thank you for considering my testimony. I look forward to
your questions.
Chairman Comer. Thank you. Now we will begin the question
phase. The Chair recognizes Mr. Palmer from Alabama for 5
minutes.
Mr. Palmer. I thank the Chairman and thank the witnesses
for being here. Just listening to testimony raises some serious
concerns. I really appreciate testimony of Ms. Wein about this
massive advertising campaign by plaintiff attorneys and how it
has impacted science. I think it is leading to some major
problems for the national economy but also for our national
security because it is denying us access to certain key
materials.
But also, I would like to address the testimony of Ms.
Lucas about how these lawsuits are impacting the states'
ability to self-govern. Our Constitution reserves most of the
powers for government to the states, and is it your experience
in Minnesota that you have got outside groups and, in some
cases, Federal agencies basically usurping the authority of the
state and overturning state laws in regard to the management of
your own resources?
Ms. Lucas. Thank you for the question. In Minnesota, some
of our environmental regulations, the state has the
authorization for them, but in some cases, we do still have
Federal agencies that will have the oversight and issue the
permits, for example, our wetland permits under the 404 Clean
Water. And so, we have not had that happen as far as the way
you described it, but we have had the challenge of getting our
Federal permits through after we already do have our state
permits.
Mr. Palmer. You also have a situation where the Federal
Government has shut down our Nation's largest reserves of
cobalt. Is that true?
Ms. Lucas. The Twin Metals project is the one you are
referencing. I am not sure that that is the largest cobalt, but
I will get back to you on that one.
Mr. Palmer. It is.
Ms. Lucas. It is a significant resource.
Mr. Palmer. I believe it is the largest U.S. reserves of
cobalt, which is absolutely critical to the Democrat agenda for
completely restructuring our power grid and going to all
renewables, which will be an economic and national security
disaster because it makes us 100 percent reliant on China.
I want to address a couple of other things, and it is in
the context of sue-and-settle. I ran a think tank for almost 24
years, and one of the issues that we addressed was how state
legislatures could protect themselves from consent decrees from
sue-and-settle. Otherwise, I think a lot on the left call it
institutional reform litigation. And the thing is, is that if
any of you are elected to a state office--Attorney General,
Governor, Mayor, local office like Mayor, County Commission--
and you wanted to know how much you were spending on consent
decrees, unless you know the case number, there is no Federal
data base that would provide you that information.
One of the things that, and I will say this in a bipartisan
way, that this Congress has passed is the Settlement Agreement
Information Data base so that we have a clear picture of all of
these settlement agreements and what they are costing us. Do
you think that would be of any help to any of you, and any of
you can respond to this, in regard to addressing this issue of
institutional litigation, otherwise known as consent decrees?
Mr. Milito. Thank you, Congressman. I would say that
oftentimes it is too late if you are just looking at the
research and the data to see, you know, what the trend is for
sue-and-settled type agreements or settlements. I think our
concern is that you have subject matter that is under
litigation, and the settlement ultimately expands way beyond
that, unknowingly, to the public and a regulated community that
has to end up abiding by it. It is good to have the information
data to follow those trends, and there is probably some good
think tanks out there to do that work so that they can then
engage with----
Mr. Palmer. Well, there really is not, because unless you
know the case number, there is no way to know how many of these
consent decrees are out there. And consent decree is not only
an expense, it is also a form of legislating through a special
master or through a control group, which, again, I think, in my
opinion, is a threat to representative government because
nobody elected these people to do this. They circumvent the
legislative process. So, I think it is extremely important that
we have some ability to know what we are dealing with in terms
of the settlement agreements, and I think clarity on the part
of the Federal Government would be a huge help. Thank you, Mr.
Chairman. I yield back.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Ms. Norton from D.C.
Ms. Norton. Thank you, Mr. Chairman. I am glad that my
Republican friends have called this hearing to discuss the
money and resources in the judicial system, but as usual, they
come down on the side of corporations and billionaires, not
people.
My question is for Professor Clark. What my colleagues seem
to take issue with is access to the courts that is sometimes
made possible by third-party litigation funding. Republicans
have a problem with ordinary Americans being able to afford
lawsuits after they are injured or their loved ones killed by
major corporations. Professor Steinitz said it best, and I am
quoting, ``Litigation funding will reduce systemic inequalities
in our legal system by altering the bargaining position of
individual class and sovereign plaintiffs and corporate
defendants.''
Third-party litigation funding levels the playing field. It
is as simple as that. It gives plaintiffs, in other words, the
people who have been harmed, the opportunity to have their case
heard and obtain justice. Fundamentally, a lack of money should
not prevent any individual American from seeking justice when
they have been harmed. Likewise, on the complete opposite side
of the spectrum, money should not be the determining factor in
receiving the attention of and fairness from the Supreme Court.
The notion that you need to be wealthy in order to access
justice is completely at odds with the idea that justice is
blind, which is central to the American legal system.
Sadly, the reality is that some of the wealthiest people in
our country have apparently brought an audience with some of
our Supreme Court justices. Justices Thomas and Alito have
accepted extravagant gifts and have benefited from favors and
donations worth millions of dollars. They have attended lavish
vacations thrown on private jets and received expensive gifts
from billionaires, all while failing to disclose any of it to
the American people. This in part is enabled by the Supreme
Court refusal to abide by a binding code of ethics. Professor
Clark, how does the lack of a judicial code of ethics invite
money and influence into the Supreme Court?
Ms. Clark. Thank you, Member Norton. As you indicated and
as I testified, the Supreme Court is not bound by the same code
of conduct that applies to other Federal judges. And the lack
of accountability mechanisms for, you know, violating or
effective accountability mechanisms for, say, violating recusal
rules or disclosure obligations, I believe has invited, has
made almost inevitable the kind of activities that we have seen
in recent news reports. And that is why, as I testified, I
think it is important to focus not just on the individual
Justices and what they have done wrong, but the need for an
institutional response because, frankly, the problem is larger
than just one or two Justices. It is the lack of effective
ethics standards and enforcement mechanisms for the Court.
Ms. Norton. The revelations that members of the highest
court in the land may be compromised by immense wealth is
fundamentally at odds with the principle that justice is blind.
Without any immediate course correction by the U.S. Supreme
Court, including by abiding by a binding code of ethics, the
impartiality and neutrality of our justice system is at risk.
Money should not be a barrier to accessing the judicial system,
and wealth should not be what buys you an audience with the
Judges sitting on the Nation's highest court. I yield back.
Chairman Comer. The Chair now recognizes the gentleman from
Arizona, Mr. Biggs, for 5 minutes.
Mr. Biggs. Thanks, Mr. Chairman. It is always fun to hear
an attempt to create new narrative from some of our colleagues
in the left. I just got a kick out of your attack on the U.S.
Supreme Court, but, you know, the goddess of the left, Ruth
Bader Ginsburg, 2018, multiple trips, in fact, even with one of
the individuals that the Ranking Member named as a tourist
guest trying to derail this hearing because this problem is
real. It is real. The problem is this. Let us talk to you, Mr.
Milito, first. I would like you to give us, if you will, a
timeline from when an offshore energy project, whether it is
fossil fuel or renewable, is proposed to when energy is
actually produced. How long does it take?
Mr. Milito. It can range anywhere from 5 to 10 years,
depending upon the location and the complexity of the project.
Right now, the wind projects have taken about 7 to 10 years,
but deepwater oil and gas projects about 7 to 10.
Mr. Biggs. Yes, and in fact the U.K. just had an offshore
wind farm sale for licenses that went with no bidders. Let us
talk about the litigation, though. What does litigation do to
the timeline?
Mr. Milito. It extends it dramatically and sometimes makes
it impossible to move forward and construct the projects and
sanction the projects.
Mr. Biggs. Are you familiar with sue-and-settle practices?
Mr. Milito. Yes, we are.
Mr. Biggs. How do those work?
Mr. Milito. Well, an activist group files a lawsuit under
one of the existing statutes, normally NEPA or Endangered
Species Act along with Administrative Procedure Act, and then
after the case is filed, negotiations begin, and government,
through Department of Justice, settles the case and creates new
requirements or restrictions based upon that settlement.
Mr. Biggs. And so, you are stuck absolutely having to adapt
or change the previously understood regulatory path because of
the sue-and-settle litigation?
Mr. Milito. Yes. And the case we are talking about today
with the Rice's whale, there is actually a process under
Endangered Species Act to determine what the critical habitat
is, and they circumvented that completely, decided what that
was to resettlement, which is going to take off the table
millions of acres of potential oil and gas production for quite
a while.
Mr. Biggs. Ms. Steinitz, the groups engaged in sue-and-
settle arrangements with government ever received taxpayer
funding through monetary payouts?
Ms. Steinitz. I do not know, sir.
Mr. Biggs. OK. Do you know, Mr. Milito?
Mr. Milito. I do not know. We have not tracked the funding.
Mr. Biggs. Ms. Lucas?
Ms. Lucas. No, sir. I am not aware of.
Mr. Biggs. Ms. Wein?
Ms. Wein. It is not something I am aware of.
Mr. Biggs. OK. So, when we read that in 1 year the Sierra
Club proudly proclaims that it has brought 200 lawsuits
against--to stop, including renewable fuel projects, what does
that mean for the folks who really want to get into renewable
energy? What is that, Mr. Milito? What do they do?
Mr. Milito. Well, at its core, these are job-destroying
actions. We support more than 350,000 jobs along the Gulf Coast
and throughout the country: 94,000 in Louisiana; 20,000 in
Mississippi; 28,000, Alabama; 147,000 in Texas. These are high-
paying jobs, and when you are taking action to restrict the
production of oil and gas in the U.S., it is a regressive
action because it is pushing the price of a commodity up, and
it hurts disproportionately those who can least afford that. It
is an inflationary action that really hurts everyone and
American consumers.
Mr. Biggs. What is the remedy, Ms. Steinitz?
Ms. Steinitz. The remedy is not necessarily to preclude
plaintiffs from being able to access funding, but it is to
allow judges to regulate and defendants to have, under certain
circumstances, visibility into how litigation funding may
affect the course of a given litigation.
Mr. Biggs. Are any of you familiar with the company,
Tribeca? It is a mass tort litigation funding company. Just go
to their website. It is very interesting. They list the number
of cases that they have funded for mass tort litigation. Ms.
Wein, are you familiar with Tribeca or other third-party
litigation funders?
Ms. Wein. Congressman, yes, I am.
Mr. Biggs. Please tell us what the impact is.
Ms. Wein. The impact of litigation funding on mass tort
litigation is essentially turning mass tort litigation into an
investment vehicle. It has taken the civil justice system and
turned it into a market that third-party litigation funders can
use to see a huge return on investment. In fact, third-party
litigation funders in the GAO report said that they saw a
return on investment of 91 to 93 percent. So, what it has done
is enable third-party litigation funders to turn the civil
justice system into an investment vehicle where they are able
to manipulate the market conditions.
Mr. Biggs. Thank you. I yield back.
Chairman Comer. The gentleman yields back. The Chair now
recognizes Mr. Connolly from Virginia for 5 minutes.
Mr. Connolly. Thank you, Mr. Chairman. Here is another
hearing where my Republican friends say look over here, but do
not look over there. Professor Clark, you are a professor at
Washington University in St. Louis. Is that correct? So, you
got a lot of book learning about this stuff. I am going to try
to take advantage of that. The Constitution of the United
States created a Supreme Court. Is that correct?
Ms. Clark. That is correct.
Mr. Connolly. But who established the Supreme Court? The
Congress of the United States by statute.
Ms. Clark. Right.
Mr. Connolly. And in that statute, we determined, in the
first Congress, written by pretty much James Madison, how many
Members there would be, and that could fluctuate.
Ms. Clark. Correct.
Mr. Connolly. What their jurisdiction would be, and that
could fluctuate.
Ms. Clark. Correct.
Mr. Connolly. And we made them circuit court riders at that
time, which they hated, but we made them do it. That one
suggests, under the Constitution, we had wide latitude to set
parameters for the Supreme Court. Would you agree with that?
Ms. Clark. I agree with that.
Mr. Connolly. Including ethics.
Ms. Clark. Absolutely.
Mr. Connolly. So, Mr. Alito, in making an extraordinary
statement that Congress has no jurisdiction with respect to the
Supreme Court and ethics, would seem to fly in the face of the
Constitution itself, and precedent going back to the very first
Congress, fair?
Ms. Clark. I agree.
Mr. Connolly. By the way, Mr. Alito--just a digression--he
cited the fact among other things in Dobbs, that there was no
right to an abortion contained in the Constitution, therefore,
there is no right to an abortion in the United States, correct?
Ms. Clark. That is my understanding.
Mr. Connolly. Inter alia, but that was a key argument. By
the way, I am not a constitutional scholar, but is there any
provision in the Constitution expressly granting a Supreme
Court the right to review and rule on the constitutionality of
legislation passed by Congress?
Ms. Clark. No.
Mr. Connolly. No.
Ms. Clark. That came into existence with----
Mr. Connolly. No, that came in 1804 when Chief Justice
Marshall made it up. And the first time it was ever used, by
the way, an invidious moment of our history, was Dred Scott in
1857.
Ms. Clark. Are you sure you are not a constitutional
scholar, sir?
Mr. Connolly. I play one sometimes. So, the highest court
of the land is?
Ms. Clark. U.S. Supreme Court.
Mr. Connolly. OK. And, we need to be concerned, do we not,
given the fact that there are lifetime appointments, about any
outside or undue influence, real or even perceived, for the
sake of the perception of real justice in America among the
people that Supreme Court serves. Would that be a fair
statement?
Ms. Clark. Yes, sir.
Mr. Connolly. Do you know who Ginni Thomas is?
Ms. Clark. I do.
Mr. Connolly. Who is she?
Ms. Clark. I believe that Ginni Thomas is the spouse of
Justice Clarence Thomas.
Mr. Connolly. So, according to news reports, the longtime
Vice President of the Federalist Society, Leonard Leo, used the
firm belonging to Kellyanne Conway, former adviser to President
Trump, to conceal tens of thousands of dollars of secret
payments to that same Ginni Thomas from his nonprofit called
the Judicial Education Project. Furthermore, Leo was found to
have explicitly requested that the paperwork ``have no mention
of Ginni Thomas, of course.'' Now, Leonard Leo is not just
anybody. Every single Trump judicial nomination and subsequent
appointment was, in fact, vetted by and recommended by that
same Federalist Society, of which Mr. Leo was the longtime vice
president and still is. Should we be concerned about that----
Ms. Clark. Yes, I think that we----
Mr. Connolly [continuing]. From an ethics point of view?
Ms. Clark. Absolutely. I think we do need to be concerned
about this ecosystem that Leonard Leo has created, including
the connections to billionaires, but also these payments to
Ginni Thomas.
Mr. Connolly. Why? I mean, that is just the spouse of a
member of the Supreme Court. Why should we be concerned about
that?
Ms. Clark. Well, one of the sort of motivating factors of
the disclosure obligations and the recusal obligations, as you
alluded to, is to ensure not just the reality of impartiality
on the part of justices and judges, but the perception of
impartiality. We cannot look inside a judge or a justice's
mind, but we can look at the circumstances.
Mr. Connolly. And presumably, there is some reason why Mr.
Leo would want to conceal payments. I mean, if it is all above
board, why don't I just pay her?
Ms. Clark. You would have to ask Leonard Leo about that.
Mr. Connolly. But an inference could be drawn.
Ms. Clark. It is curious that he wanted to ensure that that
be secret.
Mr. Connolly. Yes. You know, we have a lot of
investigations floating around here in the first week back
after the August break. I think one of those investigations
ought to be about Clarence Thomas and the serious ethical
breaches he and his spouse have engaged in. I yield back.
Chairman Comer. The Chair now recognizes Mr. Grothman from
Wisconsin for 5 minutes.
Mr. Grothman. Sure. First question, I guess I will go with
Mr. Milito, but I guess anyone else can jump in. Obviously, we
have heard a lot of stories today about third-party groups
funding lawsuits and lawsuits that probably if you went through
all the litigation, you may win. Have any of you had any
experience as an attorney in which the plaintiffs in a lawsuit
wound up, in your opinion, paying a price for filing a suit
that probably was not meritorious? Is there a cost, in other
words, for filing a marginal lawsuit that, as a practical
matter, is imposed?
Mr. Milito. There can be, but I have not, in my
experience--I am not able to provide any examples of that with
the cases that we have been involved with.
Mr. Grothman. That is kind of what I am talking about here.
There is none that you are aware of. Can you think of, in your
mind, cases in which there should have been a price paid for
filing them, but as a practical matter under our system, it is
not? You do not have to give me the name of the case. You
just----
Mr. Milito. Well, I think what we are faced with is a
legislative system whereby under each of these statutes, there
is a right to bring suit, and I am not here to say that we
should not be able to sue Federal agencies to hold them
accountable. We should. We should be able to do that. What our
problem is that through the settlements, the parties,
plaintiffs and Department of Justice, agreed to settlements
that go well beyond the subject matter and create requirements
and restrictions that really serve to shut down economic
activity in the country. And I think what in the end we need is
congressional work to make sure we are kind of putting
boundaries around that so that we are not discouraging
investment in the U.S. and pushing that investment to other
parts of the world where they do things in a much worse way.
Mr. Grothman. That is what I was going to talk about here.
We have heard a little bit about how the system works in
America. We all know that we would be better off if things were
produced in America or grown in America, mined in America. Is
there any other country around the world that has anything like
this as far as kind of the ability to file lawsuits and have
the government kind of in cahoots with the plaintiffs, perhaps
changing the rules and putting us at disadvantages compared to
other countries?
Mr. Milito. I am not aware. I am not sure if our academic
experts----
Mr. Grothman. Any of the others have examples? Can you
think of any? Can you think of no examples? In other countries,
they would be just stunned by what our businesses have to put
up with.
Mr. Milito. Well, it is a good point, though, because we do
have a strong legal and regulatory system that provides
oversight and enforcement of our industries, of our activities
to make sure we have clean water, clean air, and that we are
straining and constraining emissions, and we are taking those
types of actions. Other countries do not have what we have, and
so when we ship investments to those countries, it is going to
activities that are much less regulated and generally have
higher environmental impacts----
Mr. Grothman. You deal with oceans. As a practical matter
then, is one of the products of this type of lawsuit that we
are shifting, mining or whatever, to countries with a lot lower
standards than ours?
Ms. Lucas. Yes, sir. I think this is why we see the U.S.
going overseas to get minerals that we have in Minnesota. I
think that is one of the critical reasons, and it is one of the
reasons I am proud to be here today to let folks know we do not
have to go and make deals with countries that we should not be
making deals with.
Mr. Grothman. Yes. And can you tell me, as far as the
environmental steps you have to go through in Minnesota
compared to the environmental steps you have to go through in
other countries of the world, could you give a comment as to
the difference?
Ms. Lucas. I am incredibly proud of the standards we have
in Minnesota and the standards that we have in the U.S. We have
rigorous standards. We care deeply about water in Minnesota. It
is our brand, it is our thing, and we make it tough for mining
companies, and we hold them accountable. And our regulators
work really hard to find a way where we can manage to protect
those resources and bring mineral resources into being for
everything.
Mr. Grothman. And a lot of times, if those minerals are not
mined in Minnesota, are they mined in countries in which the
protections are not there, and, therefore, worldwide we are
hurting the environment by pushing economic activity outside
the United States?
Ms. Lucas. That is correct, sir.
Mr. Grothman. Any other comments?
[No response.]
Mr. Grothman. Thank you.
Chairman Comer. The time has expired. The Chair now
recognizes Mr. Krishnamoorthi from Illinois for 5 minutes.
Mr. Krishnamoorthi. Thank you, Mr. Chair. On December 10,
2019, this Committee held a hearing to examine and investigate
widespread complaints from patients, physicians, scientists,
and others that talc found in many consumer products, including
in Johnson & Johnson talc-based baby powder, contained
carcinogens such as asbestos and other materials. This followed
a Reuters 2018 investigation, saying that internal documents
examined by Reuters show that the company, namely Johnson &
Johnson's baby powder, was ``sometimes tainted with
carcinogenic asbestos, and that J&J kept that information from
regulators and the public.'' As part of this Committee's
investigation, the Committee uncovered that there were indeed
carcinogens and talc, that there was merit to Reuters
allegations, and that FDA testing was inadequate to determine
its presence. Johnson & Johnson was invited to testify at this
hearing, but declined to do so.
According to a May 2020 Reuters article, more than 19,000
lawsuits had been filed by that point in time, and according to
recent statements by J&J, the company ``continues to believe
that these claims are specious and lacks scientific merit.''
And that is your , Ms. Wein, right?
Ms. Wein. Congressman, thank you for the question.
Mr. Krishnamoorthi. I cannot hear you.
Ms. Wein. Apologies. Congressman, thank you for the
question.
Mr. Krishnamoorthi. That these claims lack scientific merit
and are specious, correct?
Ms. Wein. That is correct. Talc does not cause cancer.
Mr. Krishnamoorthi. Correct. Well, that is your position.
Interestingly, in May 2020, J&J announced that it would stop
selling talc-based baby powder in U.S. and Canada, correct? And
it does not' sell talc-based baby powder in U.S. or Canada,
correct?
Ms. Wein. Congressman, talc----
Mr. Krishnamoorthi. It is just a simple question, ma'am.
Ms. Wein. Talc was discontinued due to lack of consumer
demand. That was a result of the widespread advertising funded
by third-party litigation funders to spread the narrative that
talc contains asbestos----
Mr. Krishnamoorthi. And all these lawsuits, the 19,000
lawsuits, are specious and lacks scientific merit, correct?
Ms. Wein. Congressman, talc does not contain asbestos and
does not cause----
Mr. Krishnamoorthi. And that is your position. I
understand, and that is why you stopped selling baby powder.
Now, let us see. In a recent interesting release, can you
please put up the announcement that was publicized in the New
York Times?
[Chart]
Mr. Krishnamoorthi. ``Johnson & Johnson Reaches Deal For
$8.9 Billion Talc Settlement in April of This Year,'' and you
have not' disputed this piece of news, correct?
Ms. Wein. Congressman, that was a proposed settlement
proposal.
Mr. Krishnamoorthi. So, you are withdrawing from the
settlement?
Ms. Wein. Congressman, the settlement was never agreed to
by any of the parties. It was proposed in the context of a
bankruptcy filing.
Mr. Krishnamoorthi. So, is this proposed settlement
something that you are walking away from?
Ms. Wein. Congressman, pursuant to the bankruptcy judge's
urging, we continue to engage in settlement discussions.
However----
Mr. Krishnamoorthi. Did you walk away from this settlement
offer or not?
Ms. Wein. Congressman----
Mr. Krishnamoorthi. Eight-point-nine billion dollars has
been put on the table.
Ms. Wein. Congressman----
Mr. Krishnamoorthi. Do you dispute the accuracy of this
headline? ``Yes'' or ``no.'' It is very simple.
Ms. Wein. Congressman, we put a proposal forth in the
context of a litigation matter for the settlement, which over--
--
Mr. Krishnamoorthi. Sixty thousand claimants have now
agreed to that. Now, have you put forward the proposal or not?
Ms. Wein. Congressman, the proposal was put forth in the
context of the bankruptcy.
Mr. Krishnamoorthi. And you have not withdrawn from it, and
60,000 claimants have agreed to this so far, according to your
press release dated April 4, 2023, correct?
Ms. Wein. Congressman----
Mr. Krishnamoorthi. This is your statement.
Ms. Wein. Yes, Congressman----
Mr. Krishnamoorthi. Yes. So, the answer is a proposal for
$8.9 billion settling over 60,000 claimants' allegations has
been put forward. Now it is your position, of course, that the
claims of the 19,000 lawsuits and more are specious and lack
scientific merit, but your claims that somehow your product,
Johnson & Johnson's baby powder, is somehow life-enhancing and
that these claims are specious and lack merit are themselves
specious. And you should think very carefully about casting all
of these lawsuits as being somehow wholly lacking merit in
themselves. Thank you so much. I yield back.
Chairman Comer. The Chair recognizes Ms. Foxx, or Dr. Foxx,
from North Carolina for 5 minutes.
Ms. Foxx. Thank you, Mr. Chairman, and I want to thank our
witnesses for being here today.
Mr. Milito, in Congress, we constantly have to guard our
legislative powers to make sure the courts and executive
branches do not usurp those powers through excessive
regulations and rulemakings and activist litigation. One
popular approach for third-party groups to achieve goals they
cannot otherwise enact democratically through the legislative
process is to use sue-and-settle tactics. The Trump
Administration sought to end sue-and-settle practices, but the
Biden Administration permitted its use once more. Mr. Milito,
can you describe the effects that sue-and-settle arrangements
have had on America's ability to provide domestic energy
sources and create jobs?
Mr. Milito. Yes. The end result is an inability to move
forward with investment in U.S. energy projects, and the
outcome of that is a shift in investment and production to
other parts of the world. We were on track in the U.S. Gulf of
Mexico to, you know, get up to 2.2, 2.4 million barrels of oil
a day, and that would have a tremendous impact on global
markets in terms of putting downward pressure on prices to help
consumers, on track to increase from 370,000 jobs to perhaps
420,000 or 430,000.
And at the same time, you know, the recent research out of
Mackenzie, Wood Mackenzie, Rystad, and most recently ICF
International, shows that when you produce oil out of the Gulf
of Mexico, you are getting significantly lower carbon emissions
from that production. If you do it in other parts of the world,
it is much higher. So overall, the benefits of doing this in
the U.S. Gulf of Mexico are better than anywhere else in the
world.
I mean, the money that comes in, we generate billions of
dollars for the Land and Water Conservation Fund, for urban
parks and recreation, for national parks, that comes in because
of offshore oil and gas development. But when you have the
lawsuits and the twisting of the statutes, the Outer
Continental Shelf Lands Act, the leasing pauses, you are
diminishing all those benefits, and you are preventing us from
moving forward with this valuable activity. And I would say
that it is counterproductive to the end game that a lot of the
activist groups are trying to achieve when we are all trying to
move forward together to reduce emissions.
Ms. Foxx. Right. I hear you saying there is no stakeholder
input and comments taken into account in those sue-and-
settlement agreements. Is that correct?
Mr. Milito. For the most part, that is correct. You really
cannot get into how the negotiations go, but I can just say
that being an intervener in a lawsuit when a plaintiff files a
case to kind of shut down energy production against the Federal
Government, industry often intervenes. That does not
necessarily give those industry parties who represent the
workers of this country the opportunity to prevent the
settlement from moving forward. The public and Congress
generally know it all.
Ms. Foxx. Thank you. Ms. Lucas, in your testimony you state
that too often we watch in frustration as our Nation looks
overseas for minerals we could provide. With this week's news
that a deposit of lithium was found along the Nevada-Oregon
border that could be among the largest deposits of its kind in
the world, what advice do you have for the communities near
these newly discovered deposits? And how can we make sure the
U.S. is able to reap the benefits of those metals, rather than
allowing overseas competitors to supply our economic needs?
Ms. Lucas. Thank you for that question. When the U.S. has
the minerals, we have the opportunity to do things differently
than we did in the past. We have the opportunity to engage in
stakeholders, to bring environmental voices to the room where
decisions are made on how we permit. We have the chance to have
really complicated discussions about where minerals come out of
the ground and how they come out of the ground. I am excited
about that opportunity out West. I ask that people who care
about the environment get involved in these discussions on how
we do it differently, not should we, how do we, because the
universe did not put these minerals everywhere. They are
limited spaces. We have to be very thoughtful on how we utilize
those minerals. Thank you.
Ms. Foxx. I happen to think that the Lord has provided us
in this country just the kinds of things we need. We have to be
able to use them.
You also stated in your testimony that trust must be
restored in our regulatory process, and I completely agree. In
fact, I have introduced in this Committee, passed H.R. 3230,
the Unfunded Mandates Accountability and Transparency Act, or
UMATA, as we call it, that aims to restore trust in our
regulatory process. What suggestions do you have for Congress
to continue working to restore trust in the regulatory process?
Ms. Lucas. I think I touched on them already, and I would
love to put that in writing for you after this hearing.
Ms. Foxx. Thank you very much. I appreciate it.
Ms. Foxx. Thank you, Mr. Chairman. I yield back.
Chairman Comer. The gentlelady yields back. The Chair
recognizes Mr. Khanna from California for 5 minutes.
Mr. Khanna. Thank you, Mr. Chairman. Ms. Wein, what drug
does Imbruvica, what does it treat?
Ms. Wein. Congressman, I recognize Imbruvica is one of the
products that we do market. I am not exactly sure what it
treats.
Mr. Khanna. It is OK. I am not trying to trick you. It
treats leukemia. Do you know what the price that Johnson &
Johnson has set for it?
Ms. Wein. I do not have that on my fingertips.
Mr. Khanna. It is $484 per capsule per tablet, which works
out to about $14,000 per month, which works out to about
$160,000 per year for leukemia patients. Now, do you know, or I
can tell you, how much money gross revenue that Johnson &
Johnson has made from this drug over the last 10 years?
Ms. Wein. Congressman, it is not something that I am an
expert at, not something I am here to testify to today.
Mr. Khanna. Twenty-two billion dollars. Do you know the
gross profits of Johnson & Johnson in 2023?
Ms. Wein. I could not tell you that.
Mr. Khanna. Sixty-five billion dollars. So just to recap,
you have got a pill for leukemia patients. You sell it at $484
per capsule. That is $160,000 a year. You make $22 billion over
that over the last 10 years, and you are making $65 billion in
profit. Now, we have passed as a Congress, and the President
has signed a bill saying, you know what? Let Medicare negotiate
to try to bring that price down, and you and your department,
because you are Assistant General Counsel, have filed a lawsuit
saying that that negotiation would be an unjust taking. Let me
ask you this. Do you believe when the Veterans Administration
negotiates for drug prices with you that that is a violation of
the Takings Clause?
Ms. Wein. Congressman, I appreciate the question. The bases
for our litigation against HHS with respect to the Inflation
Reduction Act are fully disclosed in our complaint. I am not an
expert in this area.
Mr. Khanna. You are here. You are the Assistant General
Counsel for a company that is accusing the U.S. Government of
taking your property because we are negotiating, and you cannot
answer a simple question. Just a ``yes'' or ``no.'' Does the
Veterans Affairs negotiation with Johnson & Johnson constitute
a taking?
Ms. Wein. Congressman, we believe that the IRA constraint--
--
Mr. Khanna. I am not asking about that the IRA. I am asking
you about do you believe the Veterans Affairs, when they
negotiate, does that constitute a taking?
Ms. Wein. Congressman, again, that is not a litigation that
I have great familiarity with.
Mr. Khanna. OK. So, I will just say you do not want to
answer that question. Do you believe when Medicaid negotiates
and gets a rebate for anything over the price of inflation, do
you believe that that constitutes a taking?
Ms. Wein. Congressman, again, it is not an area that I
specialize in.
Mr. Khanna. I guess I do not understand how being the
Assistant General Counsel, you can come before the U.S.
Congress when you are suing the U.S. Government saying that we
are taking your property, and that is a very serious charge.
``Taking'' means, like, if I came, with the government, with a
force, took your property, and you do not know whether it is a
taking when the Veterans Administration negotiates, you do not
know whether it is a taking whether Medicaid negotiates. I
assumed you would say it is not a taking because obviously it
is not a taking. These administrations have been negotiating
for years, and yet you are arguing that Medicare, when they
negotiate, it is a taking. Medicaid. Do you know how many
percent of the American population is on Medicare?
Ms. Wein. Congressman, no.
Mr. Khanna. It is 18 percent about. Do you know how many
are on Medicaid?
Ms. Wein. Congressman, no.
Mr. Khanna. About 18 percent, so, it is not like Medicare
has a bigger market. Medicaid negotiates with 18 percent. Do
you know about how many of our people are veterans? It is about
6 percent. So, you have already a larger population when you
combine Medicaid and Veteran Affairs negotiating with your
company so that you do not make $65 billion in profits every
year and so leukemia patients do not pay $160,000.
You have filed a lawsuit. I think it is shameful what you
and the pharmaceutical companies have done in suing the U.S.
Government to protect those profits, and you are totally
unprepared to answer a single question about what the Takings
Clause is and a justification for that lawsuit. I mean, I
really believe hopefully someone in the company and these other
pharmaceutical companies can provide the American people with
an explanation why you consider Medicare negotiating those
drugs to lower those profits, those obscene profits, a taking,
when you do not consider that for the Veterans Affairs
Administration or Medicaid. Mr. Chairman, I hope someone will
answer my questions on that, and I yield back my time.
Chairman Comer. The Chair now recognizes Mr. Armstrong from
North Dakota for 5 minutes.
Mr. Armstrong. Thank you, Mr. Chairman. I find the subject
of this hearing fascinating. As an old street lawyer, I do not
always ask for influence and advice from law school professors,
but this is a pretty interesting conversation. And I probably
have a little different take than a lot of my friends on my
side of the aisle in that, one, I think we should be very
careful about distinguishing between marginal cases and bad
faith cases. I think we should be very careful about dealing
with excessive judgments versus unreasonable judgments.
And I think we talk a lot about capping judgments in tort
reform and plaintiff's fees, but we never actually talk about
the other side of the aisle and the cozy relationship between
insurance companies and insurance defense firms. And I have
been a part of cases that should have settled for policy limits
on the second day they were litigated, and, quite frankly, my
clients should have never had to hire a lawyer, but instead, we
go through the litigation process solely for the purpose of
billable hours and all the other asides.
So, I think we have to have a global conversation about
what this looks like, but a fundamental bedrock of our judicial
system is that a client has a right to engage with a lawyer in
a manner of his or her choosing. Now, we do put some
restrictions on that. We do not allow for contingency fees in
family law cases in North Dakota.
I was in the middle of a fight about our state bar
association trying to take away flat fee or transactional
billing for criminal lawyers. As somebody who did that work, I
adamantly opposed that in that the client hires you at the
beginning of the case, you settle on an agreement, the case
goes where it goes. They do not not go to trial because they
cannot afford not to go to trial, and there are a lot of
different ways in which you function in those things.
But the second part of that bedrock is that a client has
autonomy over the course of their litigation. And I do not care
if it is an environmental justice firm dealing in a sue-and-
settle pipeline case or if it is an investment banking firm
trying to weigh in on a settlement because the return does not
exist in the same manner, or a mom who is paying the bill for
18-year-old kid who got a driving under the influence and is an
aviation major student in Grand Forks, North Dakota. That
client hires me, his mother pays the bill, that client and I
have the relationship.
So, my question when we are doing all of this and in this
theoretical place is, what is the role of Congress and what is
the role of the attorney who is taking that case because
functionally, to me, it eventually it comes down to that.
Anybody who is licensed to practice law in any jurisdiction in
this country has to take an ethics exam, and you can be a
criminal defense lawyer--prosecutors have a little different
version; we should talk about that some time, too--but civil
plaintiff's lawyer, civil defense lawyer, and you are
representing a client. Who is paying your bills are irrelevant,
and if it is not irrelevant, you should not be representing
your client. I mean, it is that simple. And when we get
ourselves involved in this in a congressional manner, I am
worried we do more harm than good. And I am just interested in,
and I am going to just go down the road because I did something
very dangerous when you do congressional hearings: I
disregarded all of my staff's questioning, and I sat here, and
I thought about this. And I am interested in why aren't we just
focusing on the fundamental nature of this problem, which is a
lawyer who is licensed to practice law and takes a client, has
a duty to represent that client. They do not have a duty to
represent an NGO. They do not have a duty to represent an
investment firm. They do not have the duty to represent the
mother of that client. They have a duty to represent that
client. And wouldn't we be better served by doing something and
having a more robust version of what that looks like through
the American Bar Association and every state bar association in
this country than having congressional involvement in something
that quite frankly we will do poorly. Ms. Steinitz?
Ms. Steinitz. Thank you. Yes, I agree with you completely
that a fundamental feature of our civil justice system is that
the plaintiffs' control their case because the cases are about
their legal rights. The issue is what happens when we are
entering into a situation where there are third parties who
obtained the right to control directly or indirectly that
litigation, and that is done through an industry that is
entirely unregulated, unlike lawyers who are regulated. Legal
ethics do not apply.
Mr. Armstrong. Well, except they still apply to the lawyer
in that case. That is my point. I mean, I think you----
Ms. Steinitz. Yes.
Mr. Armstrong [continuing]. Can invest in whatever you want
to invest in. But I mean, I have had a lot of uncomfortable
conversations with people who have paid my bills versus people
who I was representing, and mostly it was, I cannot talk to
you, you are not my client. What my client and I talked about
for an hour and a half is completely unavailable to you, and I
do not care what my clients signed. Mr. Milito?
Mr. Milito. No, I agree. We do need to continue to have the
ability to bring cases in the Federal system over Federal
agency action. Industry does it, environmental groups does it,
citizens do it. So, our focus here is not on the attorney-
client relationship and the ethics around that. It is about the
expansion of the litigation and judicial activism that occurs,
that takes it well beyond what is in the underlying statute to
really stifle investment in U.S. project and really create
these inflationary pressures and job destruction results that
we all want to avoid. The idea here is to look at something
like the debt ceiling bill where they took action focused on
NEPA to make sure, OK, let us put some definition around it so
we understand that there are bounds to these laws.
Mr. Armstrong. If we want to do statutory definition to the
standing and litigation reform, I am all in. I just worry about
when we interfere with the attorney-client relationship in a
way that we are trying to solve a problem, we are creating a
whole another one. I am sorry. I yield back.
Chairman Comer. Thank you. The Chair now recognizes Ms.
Brown from Ohio for 5 minutes.
Ms. Brown. Thank you, Mr. Chairman. Once again, my
colleagues on the other side of the aisle are carrying the
weight for giant corporations and special interests, putting
their needs over those of the American people. There are many
pressing issues facing our Nation, from the epidemic of gun
violence to protecting a woman's right to make her own
healthcare decisions, and yet, this Committee, under Republican
leadership, continues to spend its time working on behalf of
the wealthiest, well-connected, and most powerful.
At the direction of these large corporations, my Republican
colleagues are pushing to outlaw, undo, and overturn rules that
benefit low-income Americans who are seeking justice. Right
now, all across the country there are right-wing coalitions
attempting to advance a conservative legal agenda, undermine
judicial ethics and standards, and take this country back in
time when people who look like me were not afforded the same
rights and privileges of my Caucasian counterparts. That is
what led most recently to the Supreme Court banning affirmative
action in college admissions, and not to mention the Republican
effort to implement a nationwide ban on mifepristone, the
abortion medications.
Republicans want to cut funding for the judiciary and
Federal defender services because they believe it is more
important to game the system to their advantage rather than to
ensure the system is fair for everyone. How far will they go?
What is next? See, they have used the courts to rip up the
constitutional protection for a woman's right to make her own
healthcare decision. They have used the courts to throw out all
kinds of commonsense gun violence prevention measures, doing
the bidding of the gun lobby. They have used the courts to
attack a fundamental tenets of our democracy, the Voting Rights
Act, and the ability of the people to choose their
representatives rather than the other way around.
So, Ms. Clark, you actually touched on something that I
would like you to elaborate a little bit more on, which is how
the court system is used and abused by large corporations and
powerful special interests in ways the average person does not
have access to.
Ms. Clark. Congresswoman Brown, as I mentioned in my
testimony, the revelations over the last 6 months from
journalists indicate that some members of the Supreme Court
have accepted repeatedly rather lavish gifts from very wealthy
patrons. And this practice of, one might say fraternizing with
this group, including, at least in a few cases, people who have
matters before the Court or whose interests could be affected
by Court decisions, this phenomenon absolutely undermines
public trust in the Supreme Court. So, I would just say that is
why I think it is important for there to be an institutional
response rather than simply vilifying the Justices who have
engaged in this behavior.
Ms. Brown. Thank you so much. Well, I want to end by
echoing Ranking Member Raskin and a call for a hearing on
judicial ethics and conflicts of interests posed by Justices
Clarence Thomas and Samuel Alito receiving gifts from GOP mega
donors who have business before the highest court. I would
think these significant issues of actual proven conflicts of
interest would be of the utmost concern of my Republican
colleagues given the time, attention, and resources this
Committee has dedicated to futile, fabricated, and reckless
rumors about the President, which I will happily remind
everyone, have been a dead end every single time. And with
that, Mr. Chairman, I yield back.
Chairman Comer. You can yield back, but that statement was
completely false. We are not going to strike it from the record
because it is your opinion. You can have an opinion, but bank
records do not lie. You should go to the Treasury Department
and read, like we have, the 150 bank violations from this
family, and I am excited about this Committee's newfound----
Ms. Brown. Four indictments.
Chairman Comer. You can go. You want to go, Ms. Crockett?
Ms. Brown. Ninety-one counts.
Chairman Comer. That what?
Ms. Brown. Four indictments, 91 counts.
Chairman Comer. We are very excited about your newfound
desire and concern about influence peddling. And to answer your
request, we are going to have plenty of opportunities to talk
about influence peddling, and you are more than welcome to
bring up the Supreme Court. You are more than welcome to bring
up the previous Administration----
Mr. Raskin. Point of order, Mr. Chairman, but where exactly
are we in the order of things? Whose time is being used right
now?
Chairman Comer. Well, we are now yielding to me. It is my
time to ask questions. Ms. Wein, I think it is important, the
purpose of this hearing. Can you briefly summarize how third-
party litigation funding works because I do not think everyone
understands that.
Ms. Wein. Congressman, based on my experience, what is
happening is that law firms will contract with third-party
litigation funders, get a significant amount of cash from them,
use that money to generate huge media and advertising campaigns
alleging that a product is defective. They then collect those
cases, sell those cases, funnel those cases into a multi-
district litigation and wait around for settlement.
What is very interesting about this, Congressman, is that
there is no transparency, no disclosure and no, to Congressman
Armstrong's point, no ethics obligations between the funder and
the ultimate claimant, which is what is so troubling.
Chairman Comer. How long has this been going on, and I
assume this is a very fast-growing industry because of the rate
of return that you mentioned in your opening statement.
Ms. Wein. Yes, Congressman. Globally, it is estimated that
the litigation funding is about $39 billion, within the U.S.,
about $13 billion of assets under management.
Chairman Comer. I would say that the overwhelming majority
of investors, if not a hundred percent, are institutional
investors, in other words, high-net-worth investors.
Ms. Wein. Hedge funds, private equity, and just pure
litigation funders, again, with no transparency, no disclosure.
Defendants do not know who is negotiating at the table.
Defendants do not know who has control over the litigation,
neither in many cases do the actual claimants because there is
no disclosure requirement.
Chairman Comer. This is the purpose of the hearing. We are
certainly learning about this industry. This is something that
has an impact on consumers. It has an impact on the entire
judicial system. As we know, we are bogged down and behind in
these cases. How much do frivolous lawsuits, would you say,
cost the average consumer for prescription drugs? Do you have
any idea?
Ms. Wein. Congressman, that is a very hard number to give
you. I do not have that at my fingertips, but what I can tell
you is that over the last 10 years, with the introduction of
third-party litigation funding into the pharmaceutical and
medical device mass tort litigation sphere, we have seen an
exponential increase in the number of claims. And also, as I
mentioned in my opening statement, about 20 percent to 30
percent to 50 percent of those claims are entirely meritless
and do not belong there.
Chairman Comer. And I would assume that a big company like
yours, if you have to pay out a lawsuit or a frivolous claim,
that you just pass that on to consumers because one of the
biggest issues in America right now, and the polling shows
that, is inflation. The cost of healthcare is certainly a big
part of inflation, and we are going to have a hearing next week
on the pharmacy benefit managers, an area where I think the
majority of this Committee actually agrees on, which is great
that we actually agree on an issue. So, I think this is
something that we need to continue to study and evaluate and
try to determine through probing what this costs and the impact
on the overall judicial system.
Ms. Lucas, we are concerned also about energy policy in
America, and there is a push by this Administration, and, quite
frankly, there are a lot of consumers that want to have
electric vehicles, for example. To be able to be successful in
converting to electric vehicles, we are going to have to have
rare earth minerals. And your state has an abundance of
reserves, but it is my understanding that because of lawsuits,
it has become very difficult to get permits and to mine. Can
you briefly kind of give us a summary of what is going on in
your state?
Ms. Lucas. Yes. So, we are primarily copper, nickel,
platinum, palladium, gold, cobalt.
Chairman Comer. Which are very important for batteries.
Ms. Lucas. Which are very important for batteries. Our one
project was permitted, or I will say our front-running project
was permitted in 2018 and 2019, and they are still tied up in
litigation.
Chairman Comer. So, where are we getting those rare earth
minerals for the batteries that Ford and Toyota are in the
process of building massive plants? One in my home state, we
are very happy to have that investment, but where are they
getting the rare earth minerals?
Ms. Lucas. Not from my state.
Chairman Comer. They get them from China, from Africa.
Ms. Lucas. China, Africa.
Chairman Comer. And that is a problem, and as we move
forward and talk about energy policy and the push for electric
vehicles, I am fine if the market wants that. I am a free
market guy, but I am concerned about the capacity of our grid.
I am concerned about our reliance on China because China has
been purchasing many of these rare earth mineral mines in
Africa, and it is a concern. So, this is something that we need
to communicate further about to see what we can do to assist in
helping utilize our own resources, our own rare earth mineral
mining and all of the capacity and potential we have in the
United States.
My time has expired. The Chair now recognizes Ms. Stansbury
from New Mexico for 5 minutes.
Ms. Stansbury. Thank you, Mr. Chairman, and I am grateful
that the Oversight is having a hearing today on judicial
activism and dark money influences, especially when we are
seeing one of the most corrupt dark money influence courts ever
in American history. Of course, I am disappointed to see that
the Chair and the GOP Majority, as usual, has been propping up
these dark money actors and calling industry witnesses to
testify at this hearing today.
It is, as the Ranking Member said, truly a moral and, I
believe, constitutional crisis in our legal system as we are
seeing a Supreme Court and Justices who are taking lavish
vacations and kickbacks from wealthy donors, hearing cases that
are funded directly and indirectly by right-wing donors and
organizations, and in the process, systematically gutting the
American judicial system and undermining our fundamental
rights, rights like the right to control our own bodies, to be
safe in our communities, and rights to live free and healthy
lives in our communities. So, as they say, let us follow the
money.
First, let us start with abortion and reproductive rights.
As we know, last year, the Supreme Court handed down the Dobbs
decision, which upended 50 years of settled law, protecting our
right to control our own bodies, and who funded this
litigation? Organizations like the Alliance Defending Freedom,
bankrolled by organizations like Leonard Leo and Harlan Crow.
Yes, that Harlan Crow, who we know has been wining and dining
Supreme Court justices for years.
Second, let us talk about the right of our tribal nations
to be sovereign and to protect their communities. Last year,
the Supreme Court handed down the Castro-Huerta decision,
gutting Federal recognition of tribal sovereignty in criminal
jurisdiction and overturning over 100 years of settled law, and
agreed to hear a case involving the Indian Child Welfare Act
and the right of tribal communities to control who can adopt
children from their own communities. Who funded these efforts
against the Child Welfare Act? It was organizations like the
Goldwater Institute, funded by the Koch brothers and the Mercer
family, which, as you all know, has direct ties to
organizations and folks like Betsy DeVos, who tried to gut our
education system in the Trump Administration, and the Pacific
Legal Foundation that is funded by companies like ExxonMobil.
Can you imagine dark money organizations suing to take
indigenous children out of their communities? I mean, it does
not get much darker than that, does it? Really.
Finally, let us talk about our right to clean water, you
know, that basic right to live. Months ago, the Supreme Court
gutted the Clean Water Act when they handed down the Sackett
decision. Guess what? This case was funded in part by groups
like the Searle Foundation Trust and Donors Capital Fund, which
poured money into that case from organizations and donors also
tied to Leo Mercer, and the Koch families, and organizations
which have been actively undermining climate action for years.
And at the end of the day, it resulted in a decision that the
Court handed down that essentially said that our rivers and
streams and wetlands should not be protected, including over 90
percent in the state of New Mexico, which I represent, going
even further than Donald Trump went in gutting the Clean Water
Act.
So, if the Majority wants to talk about dark money and
activist courts, I am so here for it. And let us talk about the
ways that it is actually undermining our fundamental rights,
our Constitution, and our judicial system right now in this
country because I have to say that I have never in my lifetime
seen a more activist Court and a Court that is more influenced
by dark money than what we are seeing in this country right
now, and I believe that it is one of the most significant
threats to our democracy.
So let us talk about it. That is what we should be talking
about today, not a bunch of industry folks sitting in front of
us talking about frivolous lawsuits. And that is why we need to
be reforming the courts, enforcing judicial ethics and removing
judges who violate their oath because literally, our democracy
and our rights as a country depend on it. And I yield back.
Mr. Higgins. [Presiding] The gentlewoman yields. The
gentleman from Florida, Mr. Donalds, is recognized for 5
minutes for question.
Mr. Donalds. Thank you, Mr. Chairman. I think it is
important to first note out for the record that the use of
``dark money'', especially since 2020, has actually been
dominated by my colleagues on the other side of the aisle. The
New York Times has reported on this, The Hill has reported on
this, that most dark money, whether you want to talk about the
Court, or politics, or whatever the case might be, actually
comes from the political left and the Democrat Party. It has
not been written about in the pages of the New York Post. That
comes actually from publications that typically lean left in
the United States.
Real quick, Mr. Chairman, I want to actually kind of change
speeds a little bit in some of what we have been discussing and
do talk about some potentials that may exist, affecting our
judicial system. This is really for all the witnesses. Are you
aware of any specific examples or instances of the Chinese
Government paying American law firms to sue for certain causes
that would actually embolden the CCP's policy here in the
United States? Anybody?
Ms. Wein. Congressman, thank you for the question. I am
not. However, the reason for that primarily is because we do
not have access to third-party litigation funding agreements.
We do not know in many cases who is funding these litigations,
and that is why transparency, disclosure, regulation around
this industry is so very important.
Mr. Donalds. OK. Thank you for that. Quick follow-up on
that one. Do you guys believe that third-party litigation has
the potential to discourage and hamper American innovation?
Mr. Milito. Absolutely. I would look at the Gulf of Mexico
as one of the most premier innovative energy hubs in the world.
We are ready to deploy carbon capture and storage, ready to
invest in hydrogen, offshore wind, oil and gas. We can do it
all, but every one of those forms of energy, whether it is oil
and gas, wind, carbon capture and storage, is subject to
litigation, and that threatens the ability of the U.S. to be
the leader when it comes to deploying and advancing new
technologies, and it sends that overseas. Our companies are
doing it, they are ready to do it, and they want to keep doing
it, but the court system holds it up.
Mr. Donalds. All right. Let us build off that a little bit
because one of the main topics when you are talking about some
of the renewable energy sources, it also delves into critical
minerals, and rare earth minerals are part of that. We know
that China basically controls the green tech supply chain. No
matter how we want to talk about it here in the United States,
those are the facts. Do you believe that China is a vital
linchpin in the solar and wind supply chain in the United
States?
Ms. Lucas. Yes. Thank you for that question. Right now, the
vast majority of our renewable energy technologies come from
China, and we have very limited manufacturing capability in the
U.S. I am proud to say our state has one and soon to be a
second solar panel manufacturer, but a lot of their materials
are still coming from China. And I hope we can be honest about
that and think about how we change that situation.
Mr. Donalds. If we took China out of the supply chain
equation, can the United States currently build an offshore
wind farm? Mr. Miloto?
Mr. Milito. We are moving in a direction of being able to
do more and more of that in the U.S. We are building
manufacturing plants. We are----
Mr. Donalds. Well, hold on, real quick, real quick, because
one of the things in Congress we hear a lot is, and it is not
just here in hearings. We hear in meetings all the time, ``we
are positioning ourselves, ``we are on our way to do that.''
Today, if China was removed from the supply chain equation,
could we today build an offshore wind farm?
Mr. Milito. I do not know, to be honest.
Mr. Donalds. I would actually probably say that if you do
not know, then the answer is there is no way it is going to
happen. In your personal opinion, do you think prices of the
electricity generated from offshore wind would go up or down if
the United States had the capability of domestically mining
important minerals and the ability to manufacture critical
components? So, if we basically did it all internally here in
the United States, do you think the cost per kilowatt hour
would go up or down?
Mr. Milito. The movement of the sector continues to drive
costs down because of efficiency and cost effectiveness over
time, and the scale is driving toward greater and greater
efficiency, so doing it in the U.S. should not slow that down.
Mr. Donalds. OK. All right. Listen, I think that is all I
need right now. I think one of the things we should be
concerned about, and, Ms. Wein, I think you said it initially,
is that one of the issues we are clearly seeing with third-
party litigation is that there are ``dark pools'' that are
funding all kind of lawsuits on all kind of sides of the aisle.
And I do think that there are some levels of transparency that
we need to find around this because we should not be using the
civil litigation system to create policy that, frankly, belongs
here in the halls of Congress and in state capitals across the
country. With that, I yield back.
Mr. Higgins. The gentleman yields. The gentleman from
Florida, Mr. Frost, is recognized for 5 minutes for question.
Mr. Frost. Thank you, Mr. Chairman. In my district in
Central Florida, I have met with countless families, children,
and seniors whose lives have been devastated by the opioid
addiction and epidemic. In 2019, a driver in a community that
is in my district called Bithlo, pulled into a stranger's
driveway, abandoned the car, and in the car left two overdosed
women in the back. When they found the car and they found the
women, they were barely breathing.
I will say recently, thanks to the tireless work of folks
like Project Opioid, Transformation Village, leaders like Tim
McKinney and other local organizations in Central Florida,
things are trending in a better direction, but it is still
dire. And Republicans are showing us today exactly what they
actually care about. Today, they have had the chance to hold
big corporations accountable for the damage they have done to
our communities, but instead of looking into that, have invited
big corporations here to air their grievances about how
everyday Americans are bullying them. This was supposed to be
the Oversight Committee, and so far, the only oversight we have
done is into the municipality of Washington D.C., into the
President--nothing coming out of that--seeing Hunter Biden's
dick pic. I mean, this is the stuff we have been doing here.
And recently, more than 100,000 people have died from
opioid overdoses in 2022, and pharmaceutical companies that
push prescription opioids were partly responsible. In the
lawsuits that followed, Johnson & Johnson were forced to pay $5
billion in a settlement. Following that very public settlement,
for some reason, Johnson & Johnson decided it would be a good
idea to send their assistant general counsel to Congress to
complain about these and other lawsuits that Johnson and
Johnson have been a part of.
Johnson & Johnson have a market cap of over $400 billion.
The 2021 lawsuits and the countless Americans who were impacted
by the opioid epidemic only set Johnson & Johnson back a cool
$5 billion, yet today, my Republican colleagues turn a blind
eye to the opioid crisis. They would rather use the gavel to
amplify corporate demands that seek to deny Americans access to
the resources needed to hold corporations and companies like
Johnson & Johnson accountable. Of the $26 billion that four
major drug companies agreed to pay for their role in the opioid
epidemic, about $2 billion went toward lawyer fees. Now in this
community in my district of Bithlo, the per capita income is
roughly $30,000 dollars a year.
Ms. Steinitz, I have some pretty straightforward questions
for you. If someone in Bithlo in my district had a family
member that was mismarketed opioids and suffered life-changing
addiction or even worse, death, how would they normally seek
redress from the pharmaceutical companies that were partly
responsible for the mismarketing?
Ms. Steinitz. Through lawsuits.
Mr. Frost. Through lawsuits. If they got into this lawsuit,
could they represent themself?
Ms. Steinitz. They would need counsel.
Mr. Frost. But they have the right to also represent
themself, right?
Ms. Steinitz. Yes, they have the right to represent
themself.
Mr. Frost. Against an army of pharmaceutical lawyers, how
would that go if someone was representing themself if they did
not have the means necessary to accrue tens of thousands,
hundreds of thousands of dollars in lawyers' fees?
Ms. Steinitz. Pro se litigants who represent themselves are
rarely successful.
Mr. Frost. Rarely successful. Many of these lawsuits are
complicated and last for years, right? I mean, you know, how do
you think one of my constituents in Bithlo making $30 grand a
year would be able to afford tens of thousands, hundred
thousand dollars in lawyers fees? Do you think that might be
possible for them or no?
Ms. Steinitz. I do think that plaintiffs should be able to
access financing, whether it is through the contingency fee or
through third-party funding litigation. I do have a concern
that sometimes these people are the ones who are preyed on the
most.
Mr. Frost. And, Ms. Steinitz, last question. In civil
cases, if someone who needs to file a lawsuit cannot afford an
attorney, is there a constitutional right that one be provided
to them?
Ms. Steinitz. In civil cases? No.
Mr. Frost. In civil cases, no, there is not. By holding
this hearing, Republicans on this Committee have shown that
they care more about putting profits over people, that they
care more about perpetrating a myth that people in communities
around the country who have been exposed to toxic chemicals,
sold contaminated baby powder, and flooded with opioids in
their communities are demanding too much by demanding justice.
These folks are not the villains. The American people are not
the villains. They are people in our communities fighting back
against wealthy corporations, and they are the real heroes.
And to Johnson & Johnson, I want to say loud and clear, you
paid $5 billion for your role in the opioid epidemic and
acknowledge no wrongdoing. No. 1, there was wrongdoing. No. 2,
it should have been a hell of a lot easier to take Johnson &
Johnson to task, and I think they should have had to pay a lot
more money. Shame on Republicans for holding this hearing to
vilify the people who are helping poor and working-class
Americans level the playing field and stand up for themselves.
Thank you, Mr. Chairman. I yield back.
Mr. Higgins. The gentleman yields. The gentlewoman from
Michigan, Mrs. McClain, is recognized for 5 minutes for
questioning.
Mrs. McClain. Thank you, Mr. Chairman, and I first just
want to share my excitement that my colleagues on the other
side of the aisle are so concerned about ethics. I am extremely
excited to hear about that since this Committee has uncovered
that the Biden family has received over $20 million from
foreign nationals and they cannot say one thing they did to
earn that money. So, I am looking forward to this ethics talk.
But, I would prefer to talk about something that maybe we can
agree upon and move, and get some clarity around.
I think we all can agree that the lack of transparency in
third-party litigation funding is concerning, whether it is
dark money on either side, right? That is never a positive. The
lack of monetary reporting requirements in third-party
litigation funding opens the door for foreign entities. This is
my concern, for foreign entities to influence the U.S. court
proceedings for their own political and perhaps monetary gain.
Foreign adversaries could access, I believe, privileged
information, including sensitive government information,
patents, or confidential business information via the
litigation process because of the lack thereof of transparency.
So, my question, Professor Steinitz, is, are there loopholes in
the current legal system by which a foreign adversary, such as
China, could gain access to highly confidential information via
the discovery process?
Ms. Steinitz. The discovery process does allow litigants to
seek the information of their adversaries, and so that is a
possibility.
Mrs. McClain. OK, so yes. So, we should all be concerned
that there are loopholes that our foreign adversaries could
gain access to critical information that may end up hurting us.
Could this impact U.S. companies' intellectual property or even
our national security with this information that they could
obtain?
Ms. Steinitz. It could happen in any individual case. I do
not know that we have a systemic problem with that and there
are no reported cases of that sort, but it is a scenario that
could come to pass.
Mrs. McClain. OK. Do you believe that updating reporting
requirements disclosing lawsuit funding sources could be a
potential remedy for this situation?
Ms. Steinitz. Yes, clarifying under what conditions third-
party funding should be disclosed would be helpful.
Mrs. McClain. Let me ask my question in a different way.
What would the harm be in updating the reporting requirements
for disclosing lawsuit funding? What would the harm in that be?
Ms. Steinitz. The harm could be if there is over-
disclosure. So, for example, requiring plaintiffs to disclose
how much finance is available for them to pursue their claim is
oftentimes not relevant and can be misused in a given
litigation context.
Mrs. McClain. Thank you. In 2022, 14 State Attorney
Generals sent a letter to Merrick Garland that stated,
``Foreign countries, such as China and Russia, could use third-
party litigation funding to fuel targeted lawsuits designed to
weaken U.S. national defense companies in the business of
protecting our national security interest. Likewise, costly
litigation aimed at sabotaging major energy sectors that are
vital to our economy poses a direct threat to our economic
security interest and global independence.'' Mr. Milito, can
you explain how costly litigation is already impacting our
economic security and weakening our energy independence?
Mr. Milito. Yes. The U.S. has risen from being energy
scarce back in 2009, producing, like, 5 million barrels a day
to close to 13 million barrels a day, and that has shaken the
world markets. Geopolitically, we are in a much more powerful
position today than we have ever been in when it comes to
energy, and we could see Ukraine, Russia, how Russia uses it.
We know China wants to dominate energy, and Iran, Iraq, you
name it. You know, they use energy as a tool. So, when we see
efforts through the court system to constrain U.S. energy
production, we are providing, you know, a shift in those
benefits and a shift in that geopolitical control to our
enemies. And it hurts us from a national security standpoint
because energy security is national security, and these are
long-term needs that we have. And when we fail to replenish our
oil and gas potential through leasing and other activities, we
are really hurting us for near term, midterm, and long term.
Mrs. McClain. I believe the lack of transparency in third-
party litigation is not only a threat to our legal system, but
clearly a potential threat to our national security. And I am
out of time, so I yield back. Thank you.
Mr. Higgins. The gentlewoman yields. The gentleman from
California, Mr. Garcia, is recognized for 5 minutes for
question.
Mr. Garcia. Thank you very much, Mr. Chairman. I want to
thank all of our witnesses for being here today, and it is
apparent that we are here today because our Republican
colleagues are worried that it is too easy for the American
people to bring legitimate claims against big corporations that
poison and pollute our communities. And as they put it in their
press release when they announced this hearing today, they are
concerned that ``financiers are hijacking America's
courtrooms.''
Now, I think my colleagues, of course, might be projecting.
Big corporations, as we all know, are doing just fine.
Meanwhile, Republicans are willfully ignoring the fact that
wealthy conservative donors are lavishing gifts on the
conservative Justices of the Supreme Court. So, if they want to
talk about money in the Court, let us talk about Justice
Clarence Thomas and the many allegations of ethical lapses and
conflicts of interest that came to light just a few months ago.
So, we are going to keep this simple.
[Slide]
Mr. Garcia. Now first, I have a photo here. We see Justice
Thomas with his very generous friend, Harlan Crow, who we have
heard a lot about. We know that Crow is a conservative
billionaire who has poured enormous amounts of money into
Republican causes, funded right-wing advocacy organizations,
including those, of course, run by Justice Thomas's wife, Ginni
Thomas, who has had, of course, cases before the Court. Now,
some of these gifts that have been given to Crow by Thomas--let
us list those.
Justice Thomas regularly stays at Harlan Crow's private
Lakeside Resort in New York, which I hear is very lovely. In
2017, Justice Thomas stayed at the resort with fellow guests
from Verizon, the American Enterprise Institute, and
PricewaterhouseCoopers, to name a few. In 2019, Justice Thomas
flew on Harlan Crow's private jets and enjoyed 9 days of island
hopping in Indonesia on Crow's 160-foot yacht, which I have
never seen a yacht that large. I am sure it is very lovely. It
came with servants and private chefs. If Justice Thomas had
actually chartered that yacht himself, it would cost him half a
million dollars.
Now, Justice Thomas also accepted a $19,000 Bible from
Harlan Crow, of course that once belonged to Frederick
Douglass, apparently it must be the same Bible that the Justice
is using to take away rights from women and gay people. Now,
Harlan Crow's foundation also made an over $100,000 donation to
Yale Law School for Justice Thomas' portrait fund. Now, Harlan
Crow purchased Justice Thomas' family home and a property where
Thomas' mother has lived rent free, and Thomas Crow also paid
the boarding school tuition of Thomas' grandnephew, Harlan
Crow, valued at over $100,000. So, the list, of course, goes on
and on and on, and if this is not corruption, I mean, I do not
know what is.
Now, Professor Clark, I want to thank you for your
testimony today. How was Justice Thomas able to accept these
lavish gifts, and how is it possible that a sitting Supreme
Court justice can take so much without scrutiny?
Ms. Clark. Congressman Garcia, Supreme Court Justice Thomas
has engaged in his practice of receiving these lavish gifts, as
you outlined, and even more disturbing, in my view, is the fact
that he failed to disclose those gifts or many of them. And he
has gotten away with failing to disclose until these gifts and
other inaccuracies were discovered by journalists or other non-
government organizations. So, there is a lack of----
Mr. Garcia. And we are to assume that that Justice Thomas
is trying to keep these things hidden from the public. I mean,
he did not disclose his gifts. Is that your assessment?
Ms. Clark. Yes, it is true that he did not disclose these
gifts.
Mr. Garcia. And so, what he chose not to disclose was
traveling on lavish large yachts, was being treated to the best
food, was traveling in Indonesia, was getting a $20,000 Bibles,
was gifts to his favorite charities, and he chose to not
disclose any of these information to the public. Is that
correct?
Ms. Clark. Congressman Garcia, I believe that the Bible may
have been included on one of his financial----
Mr. Garcia. Good for him. That is good for him.
Ms. Clark. I think that everything else you mentioned, he
did not disclose until a call to account.
Mr. Garcia. Absolutely. And, of course, we know the issue,
of course, is not just the gift themselves, but it is actually
the disclosure process. Another issue is that some of these
gifts have had connections to cases that have been in front of
the Justice, himself, and so these are--and with other
businesses was tied to Mr. Crow. Now, Republicans claimed to be
concerned with outside money influencing the legal system but
only when it hurts their corporate backers. When right-wing
billionaires create conflicts of interest for the highest court
in our country, they are completely silent. So, I look forward
to the many hearings that we have on Clarence Thomas and the
justices and their illegal gifts that they are receiving and
not disclosing.
Now, this is what happens when we combine big money donors
with weak judicial ethics rules. We must do more to bolster the
integrity of the Supreme Court. I want to thank Ms. Clark for
your work in these efforts. Like all of us on our side of the
aisle, we want to put the American people before corporations
and put the Constitution above conflicts of interest. Thank
you, and I yield back.
Mr. Higgins. The gentleman yields. I recognize myself for 5
minutes for questioning.
Mr. Milito, I am going to be questioning you, but first Ms.
Wein, may I suggest to you, ma'am, I would likely not be
welcome on one of your boards, but let me just say I think that
this should be solid advice regarding veterans and our elders:
just give them the drugs that they need. I am talking about
maybe 75 million Americans. Most of them do not use a lot of
medicine, and most of that medicine is not super expensive.
Just going to go on record saying this is common opinion of a
regular American. Across the country, Big Pharma has challenges
with reputation, hearings like this, and unending lawsuits,
billions of dollars. Billion is a thousand million. You know,
Americans cannot get their heads wrapped around that. And
meanwhile, you got veterans, you got our elders, struggling to
get drugs. Just give them what they need. You will find it to
be a win.
Mr. Milito, you are familiar with the Rice's whale
situation?
Mr. Milito. Yes, sir, I am.
Mr. Higgins. I am going to be questioning you on that.
America suffers from a toxic legal climate for industry and
insured businesses. This is well-known, and litigation has a
particular specialty of the modern era is weaponization of the
executive branch against American citizens when you have
Federal departments and agencies like the EPA, DOL, NOAA,
working with activist organizations and recruiting and, in many
cases, training plaintiffs and those plaintiffs file lawsuits
and they sit back and wait for their settlements. There is
quite a ruckus going out to the transportation industry, our
airports, our maritime ports, oil and gas industry, agriculture
industry, community banks and credit unions, trucking, rail, it
is a growing racket, and it is disturbing.
So, today's hearing is entitled, ``Unsuitable Litigation:
Oversight of Third-Party Litigation Funding,'' and we are going
to dive into something called Rice's whales regulation through
litigation, as you refer to it, Mr. Milito. So, by background,
early this year, a coalition of environmental protection groups
filed a petition with the National Oceanic and Atmospheric
Administration, NOAA, to establish a year-round 10-knot--that
is about 11-and-a-half miles per hour--vessel speed restriction
zone and other vessel-related mitigation measures in the Rice's
whale core habitat area, which is a large swath of the Gulf of
Mexico. So, for Americans watching, you are talking about
whales that were essentially determined to use that area as a
habitat a few years ago by NOAA. This is the major corridor for
commerce in the Gulf of Mexico. You are talking about keeping
vessels at under 10 knots, and talking about them not operating
at all at night. It would be like a deathblow to American
industry. You think inflation is bad now. If these rules go
into effect, it is going to be exponentially worse.
So, Mr. Milito, you stated that the agreement does two
things: it removes millions of acres from the upcoming offshore
lease and sale in Gulf of Mexico for oil and gas, and places
new unwanted restriction on oil and gas activities in that
region, and targets things like vessel speed. Explain to
America, please, why this example of regulation through
litigation is bad for every American.
Mr. Milito. Right now, it is preventing our industry from
being able to produce the energy that our country relies on for
a high quality of life. It impacts jobs for everyone along the
Gulf Coast and in states throughout the country that support
that region, and it eliminates the ability for the government
to get billions of dollars in funding for Land and Water
Conservation Fund, urban parks and recreation, for coastal
restoration, national parks, it has a huge impact on that. That
is just a short term.
In the long term, you are looking at an entire barrier put
across the entire Gulf of Mexico, from the Texas and Mexico
border all the way around to the Florida Keys where vessels are
going to be impacted in a way that that whole region is going
to have its commerce disrupted and that will ripple through the
U.S. economy.
Mr. Higgins. Thank you, sir, for that clarification. Ms.
Wein, did you like to respond to my suggestion for your board?
Ms. Wein. Congressman, thank you for the suggestion.
Johnson & Johnson leads accessible and affordable healthcare as
evidenced by the fact their net prices have declined for the
past 6 years. I urge you to look at our 2022 transparency
report that is available on our website, but I thank you for
the comment.
Mr. Higgins. Yes, ma'am, and thank you, and I urge you and
your company to look at American veterans and elders through a
special light. They are treasures for us. Let us take care of
them. I yield. I yield, and I move to Ms. Lee from Pennsylvania
is recognized for 5 minutes.
Ms. Lee. Thank you, Mr. Chairman. While I am thrilled with
any and all opportunities to talk about judicial ethics, I also
find it very telling that my Republican colleagues only want to
discuss that when corporate CEOs are the so called victims, not
when dark money funded and fueled the overturning of Roe, or
the rollback of LGBTQI+ protections, or the reverse of student
loan relief and the end of race-conscious college admissions,
not when it was revealed that two of our most right-wing
Supreme Court Justices, Alito and Thomas, had been bought and
paid for by billionaires like Harlan Crow, who among other
things I will get to shortly, footed the bill for Justice
Thomas' flights and private jets and lavish vacations, and not
when the same dark money mega donors pushed radical, often
unqualified judges onto the Federal bench, further eroding the
legitimacy of our court system.
We all know that wealthy right-wing donors have
increasingly formed covert operations using money and
relationships with powerful people in Washington to support
strategic litigation for Republican cultural war causes, such
as ending the acknowledgment of systemic racism in college
admissions. One of these operations is Donors Trust, funded by
a largely anonymous group of Republican mega donors, though it
has been linked to major right-wing funders, such as the Koch
brothers and Leonard Leo. Professor Clark, why do you think
dark money organizations, such as Donors Trust, want to hide
where their money is coming from, and do you think that is
ethical?
Ms. Clark. Congresswoman Lee, I believe that the record is
rife with examples of wealthy trusts and institutions and
foundations attempting to exercise influence and also
attempting to hide their exercise of influence because the
degree to which the public knows about it, there can be a
backlash against it.
Ms. Lee. So, throwing a stone and hiding your hand.
Ms. Clark. There is, I believe, a long record of that.
Ms. Lee. Thank you. According to their 2019 IRS filings,
Students for Fair Admissions, the organization behind the end
of affirmative action, received 65 percent of their funding
from just three mega donors, including Donors Trust. Professor
Clark, what are the ethical concerns of dark money groups, and
do you think the affirmative action and student debt cases, for
instance, ruled on this summer would have made it as far or
been as successful without these donors?
Ms. Clark. Congresswoman Lee, I believe that dark money and
hidden financial influences on our political system and on our
judicial system can undermine the ability of people at large to
exercise their rights, participate. And so, while this is not a
matter of legal ethics as such, I think that scrutiny of how
hidden large expenditures influence our political system and
judicial system is important.
Ms. Lee. Thank you. In the last decade, billionaire hedge
fund manager, Paul Singer, has contributed over $80 million to
Republican political groups. Specifically, Singer gifted
millions to the Manhattan Institute, a conservative think tank
where he has served as chairman since 2008. The institute
regularly files friend of the court amicus briefs with the
Supreme Court, at least 15 this term, including one asking the
Court to block student loan relief. Singer also gifted a luxury
fishing trip to Alaska on a private jet to Supreme Court
Justice Alito, who went on to decide the case blocking student
loan relief for 40 million Americans, including me.
So, to sum all this up, back in 2009, as the Supreme Court
prepared to decide Citizens United, one Nazi-obsessed vacation
funding billionaire named Harlan Crow began funding Federalist
Society leader, Leonard Leo's, scheme with Justice Thomas' wife
to exploit the anticipated outcome of her husband's rulings.
Their goal was to build a right-wing money machine allowing
billionaires to fund changes to the judiciary and overturn
years of judicial rulings they disagreed with, from abortion to
environmental protections to LGBTQIA+ rights.
One of these Leo-and Koch-backed dark money operations,
Donors Trust, then became the deep pockets, funding the end of
affirmative action decided by the Court in July. And another
billionaire hedge fund tycoon who flew another Supreme Court
Justice Alito to another luxury vacation by another private jet
as he gave to another conservative think tank working to block
Biden's student loan forgiveness plan, got his way to the cases
before the Supreme Court that same day in July, blocking debt
relief for 40 million Americans.
To conclude, I want to say, like so many Black Americans,
the one-two punch of student loan forgiveness and burden of
action designed to cement this country's already existing
racial wealth gap left me feeling deflated, and they punch down
on so much talent, so much brilliance by shutting Black
students out, it leaves us feeling like we are running out of
options. Like, we are powerless against those with endless
money and power to rig our legal systems to benefit themselves.
And yet, my Republican colleagues seem far more concerned with
protecting Johnson & Johnson's ability to shield themselves
against liability from their carcinogenic talcum powder that
caused Black and Brown women to develop ovarian cancer than
protecting the American people against the capture of our
courts by dark money networks and the business of selling out
our freedoms in exchange for control of our judiciary.
Ms. Mace. [Presiding]. The gentlelady's time is up.
Ms. Lee. Thank you, but someone went 23 seconds over the
last----
Ms. Mace. You sound great. I know you sound great. You
sound great.
Ms. Lee. Ms. Mace, but the last here went 23 seconds over.
Ms. Mace. Forty-five seconds over time. You are fantastic.
We are over. We are done here. We are moving on.
Ms. Lee. Just used 15 of those seconds for me. I just want
to make sure that we are fair.
Ms. Mace. OK. I would like to recognize my fellow
Congressman from South Carolina, Representative Timmons.
Mr. Timmons. Thank you, Madam Chair. Professor Steinitz,
litigation funders are waging litigation campaigns, even when
there is, at least occasionally, no basis for liability. How
are they able to make money if there is no factual basis for
the lawsuit, and can you give us some examples of this?
Ms. Steinitz. Well, in funding individual cases, there is
generally no money to be made from funding non-meritorious
cases or cases without a factual basis. But when cases are
aggregated, either through the mass or class tort system or
through portfolios, it is possible to increase profitability
just by increasing the size of the pool, and it can be hard to
figure out for defendants, how many of these cases are
meritorious and which are not, and so that increases the
leverage.
Mr. Timmons. And that increases the potential liability
and, therefore, increases the incentive to settle for some
amount, regardless of the facts of the case?
Ms. Steinitz. It increases leverage against defendants,
yes.
Mr. Timmons. So, the English law system has loser pays. A
number of states have either adopted in part or in whole loser
pay systems. Would it be reasonable for Congress to consider
some sort of a loser pays model if certain thresholds are met?
Ms. Steinitz. I think that loser pay would be an overkill,
quite frankly.
Mr. Timmons. I am not saying across the board. So, you
would just be opposed to any kind of a loser pays model at the
Federal level entirely?
Ms. Steinitz. I would have to think more closely about
whether there is a way to tailor it to mass actions where there
is, you know, there has been a finding----
Mr. Timmons. OK.
Ms. Steinitz [continuing]. That funding has----
Mr. Timmons. Does anybody else want to comment on loser
pays as it relates to this or----
Ms. Wein. Congressman, I think one thing that we have to
keep in mind is in mass torts, we are not talking about class
actions, right, or one decision affects the thousands of
potentially similarly situated individuals. In mass tort
litigations in the United States today, we are talking about
tens, if not hundreds, of thousands of claims amassed by lawyer
advertising backed by litigation funding, the majority of which
are meritless, even if you accept the premise that there is the
probable claim.
Mr. Timmons. OK. Thank you for that. Could you give an
estimate of the legal costs Johnson & Johnson typically
incurred when defending against a mass tort claim, Ms. Wein?
Ms. Wein. Congressman, it is a difficult question to
answer, particularly because each claim is different in size
and mass. However, we do publicly disclose that. I mean, we
publicly disclose our litigation expenses in our public
filings. The one thing that is very interesting about
disclosure is that, in the litigation, defendants are required
to disclose their insurance coverage under Rule 26. Plaintiff
lawyers are not required to disclose their third-party
litigation funding, so equity parody in that space is what we
are talking about here. We are talking about transparency. We
are talking about disclosure. We are talking about regulating
the ethical and fiduciary obligation between the funder and
ultimately the claimant.
Mr. Timmons. What other avenues would you suggest Congress
go down to curb the incentive structure for filing these
claims?
Ms. Wein. Congressman, I think there are a couple of areas
to explore. The disclosure transparency, ethical obligations,
and third-party litigation funding is one. The second I would
recommend is some regulation around attorney advertising. There
is data that shows that the attorney advertising that occurs,
particularly with respect to medicines and medical devices
harms patients, gets between the patient and doctor
relationship and actually can cause immediate harm to patients
when they see these advertisements and get scared.
There was a New York Times article in 2018 that I would
refer you to that talked about how plaintiff lawyers were
contacting patients, and encouraging them to get revision
surgeries of their medical devices regardless of whether they
needed them or not to create that mass. Another example I would
point you to is in an anticoagulant litigation, where reports
were submitted to FDA and the drug sponsor, demonstrating that
patients went off their anticoagulant medication because they
saw lawyer ads on television. They went off that medication,
and the immediate result of going off an anticoagulant is
stroke or, unfortunately, death.
Mr. Timmons. So, my understanding is the attorney fees
structure on these cases are fairly aggressive. Is attorneys'
fees structures an area that you would consider because, I
mean, that is ultimately why they are pursuing these efforts
because they can make enormous amounts of money if successful?
Ms. Wein. Congressman, it is something that I think needs
to be explored. If you think about the way mass torts are
structured, ultimately what happens is a few cases are tried,
but the thousands and thousands of cases that are not' tried
but are parked in that litigation
Mr. Timmons. I do not want to get in trouble. Time is up.
Thank you.
Ms. Wein. Understood.
Mr. Timmons. I yield back.
Ms. Mace. Thank you, Mr. Timmons. All right. I would like
to recognize Congresswoman Crockett next for 5 minutes.
Ms. Crockett. Thank you so much. I think my colleagues have
made it clear that we have a corrupt Supreme Court, so I am
going to spare you on that part. I do want to make sure that
people understand how confused I have been in this hearing. No.
1, it sounds like my colleagues from across the aisle are
somehow believing in climate change now, so I am excited to
hear this because I thought it was a farce and a hoax, but we
are talking about renewables and we care, so that is really
good that we got that going.
Interestingly enough, I had the privilege or maybe not so
much, when I started my legal career, my first job was to
actually defend a large pharmaceutical company. I hated
practicing law. I decided I needed to do something else. And
so, most people only know me for doing civil rights or criminal
defense or the things that really matter to individual people
versus doing the bidding of large corporations. And so, I want
to walk through this just a little bit and lawyer out a little
bit because I am going to tell you from the onset, one of my
issues with this whole concept is, No. 1, we have a little
thing called attorney-client privilege.
And, in my opinion, we are starting to get dangerously
close to piercing that privilege, that relationship between the
attorney and their client when you start saying, well, how are
you funding this and things like that, because let us say I am
using my own money. Fine. Let us say I am using a third party.
Why is it that the opposition has the right to know what my
strategy is, or why it is, or who is helping me to do what.
That is No. 1.
No. 2, if we are complaining about frivolous lawsuits, we
have a thing called sanctions. For the lawyers here, has anyone
heard of sanctions? Please raise your hand.
[Hands raised.]
Ms. Crockett. OK. Thank you. Have we heard of a thing
called a 12(b)(6) motion? This is for anyone that practices on
the Federal level, but it is a motion to dismiss. Unless you
want to have a problem with your bar card, most defendants file
a 12(b)(6) motion to dismiss for failure to state a claim very
early on if there is a problem with litigation. Is that true or
not? Can I get a raised hand?
[Hand raised.]
Ms. Crockett. OK. All right. Ms. Clark agrees with me. So,
part of my issue was that we have certain mechanisms in place
already, and the only thing that we have talked about, or
seemingly one of the things that has been an overarching theme
today, has been about the client advertisement, talking about
the commercials, but the cost of actually prosecuting a case is
more than a commercial. In fact, the commercial is not
necessarily required from my experience. I have only been out
of practice for a little less than a year now, but has anyone
ever been involved in a lawsuit, same as Wein, where maybe an
expert report was required?
Ms. Wein. Congresswoman, in most of the cases----
Ms. Crockett. Especially mass tort. Uh-huh.
Ms. Wein [continuing]. Expert reports are required.
Ms. Crockett. OK.
Ms. Wein. The position in all mass tort cases today,
millions, if not hundreds of millions of dollars are spent on
advertising.
Ms. Crockett. I hear you because you have made that clear,
but the reality is that people use third-party financing for
things other than just advertising, and let me be clear: it is
not just going to affect Johnson & Johnson, who last time I
checked is doing OK on their profits. But as I switch over and
talk about my life as a civil rights lawyer, a lot of times you
have a family who has someone who has potentially been killed
by law enforcement. And a lot of times, we do not necessarily
have the money to front for all the experts that are required
just for you to have your day in court.
And so, this has been couched as something frivolous.
But if we want to be honest about it, it is my
understanding that there was an $18.8 million verdict that was
just handed down by a jury to a man in California against your
corporation as it relates to talcum powder. That was just in
July, I believe, of this year. And so, this idea that the
third-party financing or seeing something on TV, somehow then
validates the claim, they still have to go through court, they
still have to have expert reports, they still have to have
attorneys, they still have to make sure that they take
depositions, they still have to go through the entire discovery
process. And a lot of times, at least in my experience, when it
comes to defense, you end up with so much paperwork that you
may end up needing a doc review team to go through all of the
paperwork that is thrown on a simple plaintiff that may not
have a large law firm that is behind them.
And so, what we are doing is saying if you have money, then
you can access justice in this country, but if you do not have
money, oh well, because we want to make sure that we know where
your money is coming from, and that is just not fair. And the
one thing that justice is supposed to be that, unfortunately,
we still are trying to get to in this country, justice is
supposed to be blind, and, unfortunately, I believe that this
is the wrong venue. This is also the wrong body because we do
have bar associations. We do have courts and judges that have
the ability to issue sanctions. They have the ability to
dismiss cases. And if we have some issues with the
qualifications of judges, which I do, we know who we need to
talk to about that as well. With that, I will yield.
Ms. Mace. Thank you. I will now yield 5 minutes to
Congressman Fry.
Mr. Fry. Thank you, Madam Chair. Yes, aware, prior to
Congress, I kind of have, I would say, an experience on both
ends of this, right, both as a practicing lawyer and as a
member of the General Assembly. From a practicing standpoint, I
often saw times where a client or a prospective client might
actually have a really great case in whatever they are doing,
but they do not have the financial means in which to challenge
or to get to a trial. You always quote a fee based on what you
think it might cost to get to a trial because once you are in,
it is oftentimes hard to get out as a lawyer if your client is
not paying.
On the flip side, in the statehouse, I saw times, in Ms.
Mace's district as an example, where the state of South
Carolina paid an environmental group $5 million not to
challenge the dredging of the Port of Charleston. It was kind
of a pre-suit agreement, and we have seen this a lot. We have
seen where third parties, at least on the state policy side,
where environmental groups will come in and challenge a permit
for a road construction project or construction of a shopping
mall, whatever the issue is, and in at least in South Carolina
at that time, there were so many cases devoid of actual facts
so that if they were tried that day, if everything was on the
table, they would have not succeeded on the merits, but it is
always the threat of litigation, the threat of the delays in a
project that really concern me.
And so, when we talk about third-party funding, you know, I
am kind of struck. Where do we find that balance? Where we get
rid of the B.S. that is out there and get to the merits of a
case, but also preserving, quite frankly, a David versus
Goliath type of mentality where you might have a great case and
it needs to be litigated in the courts. And you probably will
prevail on the merits, but the financial costs--I mean,
sometimes trials or courts turn into a war of attrition, who
has the most resources in which to succeed on the case.
And so, to me, Ms. Steinitz, your testimony, you state that
litigation funding is a utility, and it can be used or abused,
depending on the context. Do you believe that there is a line
that can be drawn around third-party funding, and if so, where
might that be?
Ms. Steinitz. Well, there are a bundle of issues with
respect to litigation funding. So, one issue is disclosure, and
that has to be context-specific, and it may be best to empower
but also leave it to judges to tailor it to the specific
context. There are issues with plaintiffs losing control, and
that requires imposing ethical obligations on funders so that
we have a realignment such that clients have the----
Ms. Mace. Can you speak into the microphone, please? We
cannot hear you.
Ms. Steinitz. Yes, then I cannot see the Congressman, but
yes. So, that we have a realignment that we had before third-
party funding entered into the space, so that whoever is on the
plaintiff side, lawyer and funding, has ethical obligations
toward the party that they are funding, so that is another
issue. So, there are multiple issues that would need to be
addressed.
Mr. Fry. On the ethical thing, just curious. Do you think
that those exist right now on the defense side? So, on the
defense side, oftentimes you see maybe the insurance company
come in. Do you think that their standards are very different
than the plaintiffs' world?
Ms. Steinitz. Yes, their standards are very different. The
insurance industry is heavily regulated, including through
ethics and in certain circumstances fiduciary duties, and there
is nothing equivalent to that on the plaintiff side.
Mr. Fry. You have proposed for both legislators and courts
that there needs to be kind of flexible, discretionary
balancing test. Can you expand on that, what you mean by that?
Ms. Steinitz. Yes, with respect to disclosure because
disclosure can be a valuable tool to sort of understanding
whether there is problems in terms of who is providing the
funding or under what terms in some instances, but in other
instances, disclosure can be used just for tactical reasons, in
order to make it more difficult for plaintiffs to pursue their
case and figure out how much funding they have to just spend
that money down. And so, it is very hard, and, in fact,
impossible to just draw a clear line that would be applicable
and fair in all cases. So, it is best to let judges and empower
judges to balance the various private and public interests of
all of the litigants and the court system with respect to the
type of case that is before them.
Mr. Fry. Thank you, Ms. Wein--is it Wein or Wein?
Ms. Wein. It is Wein, Congressman.
Mr. Fry. Wein. Thank you. I want to ask you a question. Can
you elaborate on the types of control that third parties often
exert over the direction of a case?
Ms. Wein. Congressman, it is hard to tell you the answer to
that question because we do not generally have access to the
contracts that set forth those control provisions. But what I
would say, in the interest of time, I direct you to the Cisco
v. Burford case, which gives us some insight, the IMF Bentham
best practices guide, the White Lily case, the Bolling case,
those give us some insight into the control that can be
exerted.
Mr. Fry. Thank you, Madam Chair, and with that, I yield my
time.
Ms. Mace. Thank you. I would now like to yield 5 minutes to
my friend across the aisle, Mr. Moskowitz.
Mr. Moskowitz. Thank you, Madam Chair. I appreciate it, and
it is a pleasure to be here at this lovely filler hearing. It
has not gone, I do not think, exactly as my colleagues thought
it would go.
You know, sometimes when I sit here, I often think to
myself, who is in the room when these things get planned out
and let us decide who we are going to call. Like, I do not
know, let me find some sympathetic people to bring to this
hearing today. Let me find a giant bankrupt corporation. Let me
find an oil guy to talk about the Gulf of Mexico 12 times and
how our national parks are getting better because of the Gulf
of Mexico, not really during the BP oil spill, but we will not
go into that.
I mean, we talk about judicial activism. I mean, I just I
often think to myself, like, was it not judicial activism when
we had a judge meet with U.S. Senators, and say privately that
Roe v. Wade was precedent on precedent, and then go in front of
the Senate, under oath, and say the same thing, and then in
their very first time, right, take back a law that had been
there for 50 years. That is not judicial activism.
And by the way, it would be an anomaly except that did not
happen once. It happened twice. Two judges, appointed by Donald
Trump that went and met with Senators and said Roe v. Wade was
precedent on precedent, and then went in front of the Senate
under oath and said the same thing and then get on the Court,
and in their very first couple of years, what do they do? They
get rid of a law that had been there for 50 years.
And so, listen, I am more than happy to listen to the cries
of judicial activism, but we can no longer sit here and just
pick when we like it and when we do not because it fits the
politics of our time or the narrative that we are interested
in. We sit here and we hear about transparency. We want
judicial transparency. I mean, it is almost like when this
hearing was decided, maybe it was so long ago now that it was
not in the news. I mean, boy, judicial transparency is really
timely.
So, yes, thank you for bringing that forward about
transparency in the legal system. I am not sure that the
American people are wondering about third-party litigation
funding, but they are definitely worried about transparency
with the highest court in the land where there is no remedy
when you have ethical violations other than impeaching a judge
and the Senate.
And so, listen, we should do a whole hearing on judicial
transparency because I think it is timely. I think the American
people want to hear about it. You know, it is just fascinating
to me as we continue to sit in these hearings in Oversight. I
mean, we have had 9 months of hearings on a very specific
topic. Those have gone so well. We are going to rebrand those
hearings and hit the video game reset button, start all over
again, right? I mean, it is just interesting. We sit here, we
hear our colleagues bring up certain things like, oh, the Biden
family took money from a foreign entity, right? And it is just
like, well, really? I mean, do they really not know that Jared
Kushner took $2 billion from the Saudis? I mean, by the way,
they go on Twitter and blame the Saudis for 9/11. But, then
Jared Kushner, who, by the way, was not a wealth expert before
he worked in the White House, nor was he a Middle East expert
before he worked there, gets $2 billion from the Saudis, and
they do not have any questions.
And I just think that the American people recognize that
they have no credibility. It is why the stuff they have been
selling in this Committee for 9 months has not translated,
which is why we have got to start all over again. You do not
have any credibility when you only want to look at one side of
the coin, right?
And so, listen, I appreciate the time, Madam Chairwoman,
but I just feel like I am not going to beat up on you guys
anymore. I think that it has been quite obvious the way this
hearing has gone, and so I want to thank all the witnesses for
coming today. It is probably not what you bargained for, what
they told you this would be like, but I appreciate you all for
coming, and I yield back.
Ms. Mace. Thank you. I appreciate that, and I will now
recognize myself for 5 minutes. It has been an interesting
hearing. You know, it has been a race of how many times can you
say the word ``Donald Trump.'' It is just Trump this, Trump
that, Harlan Crow this, Harlan Crow that, Justice Thomas, and
then then we just heard the Kushner. You know, if the left
wanted to investigate Jared Kushner, they had the White House,
the House, and the Senate, they had every ability to do that in
the last Congress, and they chose not to, so I have very little
patience for that.
And you know, how many times is the left going to talk
about dark money? Well, let me tell you, Joe Biden is the
definition of dark money. How much money did his family get
paid off, and how are his bills paid? And we are not starting
over with an impeachment inquiry, and impeachment inquiry
actually expands our subpoena power and will allow us to
hopefully get more access to more bank records to prove out the
SARS report, which we are not allowed to share. That is the
elephant in the room. Joe Biden got bribed, and it was to the
tune of millions and millions of dollars, and the left wants to
normalize the bullshit of bribery. Like, I just cannot get over
the fact that we are going to normalize this, and we are
calling Joe Biden's bribery, ``a specific topic.'' No, it is
bribery. It is money laundering, it is prostitution rings, and
I am not a conspiracy theorist for putting these theories out
there.
Our investigation, there is evidence and it is not, you
know, hard evidence is what they are saying now. They are
moving the goalposts from, oh, we just need evidence. Now, oh,
you need hard evidence. You do not have it. There are texts,
there are emails, there are phone calls. There are lies that
Joe Biden has told. Every single time the President has been
asked about these bribery allegations, that guy has lied to the
American people. He has lied to the mainstream media, and the
mainstream media and the left just want to sweep this under the
rug and pretend it has not happened, and it has, and this
Committee will continue its investigation.
We will have the impeachment inquiry, and we will
ultimately get to the bottom of it because the American people
deserve the truth and nothing but the truth, and you should not
trust our words of Congress up here. Trust the evidence that
has come out. Look at it for yourself. Look at the fact that
there were over 50 intel officers that wrote a letter, put it
on paper, and lied to the American people to tell you the
laptop was fake. The laptop was real, and, like, I am just
tired of the bullshit. I know the American people are tired of
the bullshit. It is time to tell the American people the truth,
no matter your political affiliation or party. It does not
matter.
And so, I wish that we could be nonpartisan in the way that
we do this. I wish that we could call out both sides. I am
someone who has called out my party. I have voted to hold my
own party in contempt before Congress. I have dealt with the
fallout from that because I am calling the balls and strikes,
and it would be really great if both sides of the aisle could
do the same thing as well.
So, with that, I will try to get back on topic here and ask
a few questions of our witnesses today, and I will try to pull
them up. I want to talk about EVs just a little bit. In
Charleston, South Carolina, low country in South Carolina, we
rely on fossil fuels for vehicles. We also rely on electric
vehicles. I have both. And my first question I would like to
ask Ms. Lucas is that EVs require 6 times more critical
minerals than their internal combustion engine counterparts.
Due to skyrocketing global demand for these resources, the
prices of components necessary to produce an EV battery rose
200 percent in 2022. So, if domestic mining projects are halted
due to ongoing litigation, which is happening, you know, how
will this impact the prices of vehicles for consumers looking
to purchase an EV, in your opinion?
Ms. Lucas. Every mile that those minerals have to travel is
extra cost. Every mile that those minerals have to travel is
extra CO2 into the atmosphere, so the cost is not' just about
what we as consumers pay.
Ms. Mace. Uh-huh.
Ms. Lucas. The cost is what our conscience pays as to who
is digging those minerals up out of the ground and what
protections are in place. The true cost of our consumerism: it
is not as simple as the cost of the vehicle.
Ms. Mace. And then your critical minerals are used in
infrastructure projects as well as, like, electrical
transmission lines. How could increase mineral prices impact
electricity prices for consumers?
Ms. Lucas. As we look at transitioning our Nation to one
powered more by clean energy, the solar panels and the
windmills are going to be put in places where the energy is not
necessarily being used. So, we are going to have to increase
transmission lines across our country, and copper is the metal
of electrification. It is the one that carries, so we can
expect that those costs will increase as we need to bring in
more of those minerals into the supply chain.
Ms. Mace. All right. Thank you, and one last note of
business. I would like to say thank you to the many groups and
organizations that reached out in anticipation of this hearing
today with letters outlining their stances on the issue. I
would like to enter into the record letters to the Committee
from the American Tort Reform Association, American Property
Casualty Insurance Association, the Advanced Medical Technology
Association, the Institute for Legal Reform, the International
Legal Finance Association, National Association of
Manufacturers, Jerry Theodorou at the R Street Institute.
Without objection, so ordered.
Ms. Mace. All right. OK, I would now like to yield 5
minutes to Ms. Ocasio-Cortez.
Ms. Ocasio-Cortez. Thank you, and I thank you for the
listing of all the special interests involved in addition in
this hearing.
Now, when I first heard that the Republican side was going
to be calling a hearing on third-party influence in our courts,
I was so excited because I thought, finally, we are going to
address the biggest scandal in American democracy that we are
currently having right now, which is the extraordinary
corruption and wholesale purchase of members of the Supreme
Court. And I also find it amusing that we just heard from the
Republican side, oh, why do we want to talk about this? Because
women have lost the right to choose, because indigenous people
have lost rights, because minorities have lost rights, because
working people across the country have lost rights due to this
level of corruption.
And if we are going to talk about third parties, let us
talk about the Federalist Society, which has not only had deep
ties to Justice Clarence Thomas and his wife Ginni, but has
also helped choose judicial nominees for the Republican Party
and directed multimillion dollar media campaigns to confirm
them, including a multimillion dollar media campaign for
Justice Alito, who seems to like using the Wall Street Journal
as his personal press secretary, but I want to dig into a
little bit about the influence here.
In 2008, Leonard Leo, who has ties to the Federalist
Society, also organized a luxury fishing trip to Alaska
inviting a billionaire to join, Paul Singer, and when Paul
Singer accepted, Leo asked if he could fly Justice Alito on his
private jet to Alaska. So, right here is Paul Singer, a
multibillionaire, and a head of a hedge fund, works in hedge
funds, and here is Supreme Court Justice Samuel Alito, a/k/a
one of the justices turning over student loan cancellation and
turning over women's rights to choose over their own body and
more. Now, Professor Clark, are you familiar with 5 U.S. Code
13104?
Ms. Clark. I am so sorry, 5 USC 131----
Ms. Ocasio-Cortez. Zero-four.
Ms. Clark. Is that the new codification of the Ethics in
Government Act?
Ms. Ocasio-Cortez. Yes. It is specifically on, and it
requires reporting and disclosure requirements to government
officials, yes.
Ms. Clark. Yes.
Ms. Ocasio-Cortez. And I am going to draw attention to
13104 (A)(2)A. This section requires disclosure of the identity
of the source, a brief description and a value of all gifts
exceeding minimum value. Professor Clark, are you aware how
much the minimum value of gifts was in 2008?
Ms. Clark. I would guess it would be about $400.
Ms. Ocasio-Cortez. Yes, a little bit under, $335 as the
amount of gifts in gifts that Supreme Court justices are
allowed to receive, which is actually balling compared to
Members of Congress, we only are allowed to receive gifts under
$50. So, the Supreme Court, you can give them free air pods,
you can give them really nice dinners, and they do not have to
report any of that. But so we are clear, any gifts above that
do need to be disclosed, correct?
Ms. Clark. Correct.
Ms. Ocasio-Cortez. Yet, according to ProPublica's
reporting, Justice Alito was flown on a private jet on this
luxury trip, and if he had chartered a similar jet, it would
have cost more than $100,000 each way, a 100 grand. Now,
Professor Clark with the cost of about $100,000 per flight,
would Justice Scalia be required to disclose this trip?
Ms. Clark. I believe you are referring to Justice Alito.
Ms. Ocasio-Cortez. Alito, yes.
Ms. Clark. Under the Ethics in Government Act, disclosure
would be required.
Ms. Ocasio-Cortez. And did he?
Ms. Clark. My understanding is that he did not.
Ms. Ocasio-Cortez. He did not. So, we have a billionaire
who runs a hedge fund with business before the court. In fact,
we saw several cases before the court, and on top of that, he
also had 3 days at a luxury retreat, which would charge over
$1,000 a night, and he did not disclose that either.
Now, in the years since we have actually seen the
billionaire who generously sponsored this trip, Paul Singer did
business before the court at least 10 times in cases where the
legal press and mainstream media often covered his role. So, it
was publicly known that he had business before the court, and
in 2014, in fact, Justice Samuel Alito, along with the Court,
agreed to resolve a vital issue in a decade's long battle
between Singer's hedge fund and the Nation of Argentina. And do
you know if Alito recused himself from this case?
Ms. Clark. I believe he did not.
Ms. Ocasio-Cortez. He did not recuse himself from this
case. And in fact, he used his seat on the Supreme Court, after
all of this, to rule in Singer's favor and following the
decision, Mr. Singer's hedge fund was ultimately paid $2.4
billion because of this ruling, not a bad return on investment
for a fishing trip there. Now, Professor Clark, would a Federal
judge in a lower court be required to recuse himself?
Mr. Fry. [Presiding.] The gentlelady's time has expired.
The gentlelady's time has expired.
Ms. Clark. May I answer the question sir?
Mr. Fry. I think at the discretion of the Chair, yes, you
can answer the question.
Ms. Clark. Thank you, sir. Yes, there is a Federal statute.
I believe it is 28 USC 455 that does require recusal by both
justices and judges under certain circumstances.
Ms. Ocasio-Cortez. Thank you, and I yield back.
Mr. Fry. Thank you. The Chair now recognizes the gentleman
from Tennessee Mr. Burchett for 5 minutes.
Mr. Burchett. Thank you, Mr. Chairman. Professor Steinitz,
did I get that right, ma'am? Is your mic turned on?
Ms. Steinitz. Yes, sir.
Mr. Burchett. OK, thank you. Do not call me sir, ma'am. You
are fine. Got to call these other knuckleheads sir and ma'am.
Just, I am good with Tim. Thank you. Are there Federal laws
that are requiring the disclosure of third-party litigation
financing?
Ms. Steinitz. Currently, there are no laws that directly
require that, no.
Mr. Burchett. Do you know the total number of litigation
investors operate in the U.S.?
Ms. Steinitz. No, the total number is not known.
Mr. Burchett. OK. Do you generally know the rate of return
for these investors?
Ms. Steinitz. No. That is also private information.
Mr. Burchett. OK. Do you know the total amount of funding
in the third-party litigation financing industry?
Ms. Steinitz. There are only estimates.
Mr. Burchett. Just estimates?
Ms. Steinitz. Correct.
Mr. Burchett. Would you share some of those estimates with
us? I am not a lawyer. I know there is a word for it. I have
seen it on television, but I am guessing or something. I am not
guessing, but all right. Well, Professor, let me ask you this.
Have you heard of a company called Burford Capital?
Ms. Steinitz. I have, yes.
Mr. Burchett. Yes, ma'am. Are you aware that in 2018
Burford Capital reached an agreement with a sovereign wealth
fund to provide over $1 billion in capital for Burford's
litigation investments?
Ms. Steinitz. I have seen a press release. Yes.
Mr. Burchett. So, what these folks do, is they just invest
in these things and hoping for a return obviously?
Ms. Steinitz. Correct.
Mr. Burchett. Yes, ma'am. So foreign countries can fund
U.S. litigation.
Ms. Steinitz. They can invest in third-party funders that
invest in litigation in the U.S., yes.
Mr. Burchett. Yes, ma'am. So, would this mean that foreign
adversaries and other bad actors could potentially exploit our
litigation system to advance their home industries?
Ms. Steinitz. Potentially, yes.
Mr. Burchett. Could litigation funded by foreign
adversaries potentially delay technology critical to national
security?
Ms. Steinitz. Potentially, yes.
Mr. Burchett. Could third-party litigation funding
potentially allow foreign adversaries to access privileged
information?
Ms. Steinitz. Potentially, yes.
Mr. Burchett. Without Federal litigation or regulations,
excuse me, is it possible to determine the extent to which non-
U.S. persons or entities are engaged in third-party litigation
funding?
Ms. Steinitz. No, without regulation, there is no way to do
so.
Mr. Burchett. OK. OK, Professor, let me ask you this. Are
you aware in 2018, that the Biden Administration settled a
lawsuit with Sierra Club and other environmental groups that
sued the National Marine Fishery Service?
Ms. Steinitz. I am not familiar with that, no.
Mr. Burchett. OK. Do you know who pays when the government
settles a lawsuit with a plaintiff?
Ms. Steinitz. The taxpayer.
Mr. Burchett. The taxpayers. Yes, ma'am. Thank you. See,
that is what is called a leading question, if you did not know
that. I do know that. In cases where a plaintiff successfully
sues the government, who pays the judgment?
Ms. Steinitz. Successfully sues the government, the
taxpayer ultimately.
Mr. Burchett. Yes, ma'am. So, foreign adversaries and other
bad actors could fund litigation threatening national security,
and then have it paid off by the American taxpayer?
Ms. Steinitz. If they are litigating, or funding litigation
against the U.S. Government, yes.
Mr. Burchett. OK. Ms. Lucas, you are an environmental
scientist, is that correct?
Ms. Lucas. Water resources, sir.
Mr. Burchett. OK. But you would consider yourself a
scientist?
Ms. Lucas. Yes.
Mr. Burchett. All right, good. Do you have concerns that
some of the financiers of these lawsuits, especially those that
claim to litigate in the name of climate justice could actually
be negatively impacting the environment in the long run?
Ms. Lucas. That is one of my concerns that we will not get
up to speed in time to meet our goals of the Paris Agreement.
We will not meet our goals for the U.S., and we will not meet
our goals internally for our state that is set 100 percent
clean energy goal by 2040.
Mr. Burchett. OK.
Ms. Lucas. We need minerals to build those materials.
Mr. Burchett. All right. Ms. Wein, yes, I get that name
right? Wein or Wine?
Ms. Wein. It is Wein.
Mr. Burchett. Wein. Ms. Wein, what would be the long-term
impacts of our economy if this broad network of activists went
unchecked? And its billions of dollars spent annually were not
disclosed?
Ms. Wein. Congressman, I think we are seeing it now, right,
we are seeing the amassing of litigation of unmeritorious
claims resulting in multibillion dollar settlements, money that
could be used to further innovation, funds that could be used
to further science, funds in our case that could be used to
change health for humanity, which is what the thousands of
people employed by Johnson & Johnson try to do every day.
Mr. Burchett. OK. Thank you, ma'am. Thank you, panelists,
Mr. Chairman.
Mr. Fry. Thank you, sir. The Chair now recognizes Ms.
Porter from California for 5 minutes.
Ms. Porter. Thank you very much. Ms. Wein, in your
testimony, you describe some of the hardships of this kind of
litigation onto a company like Johnson & Johnson. Would you say
that these kinds of mass tort claims are expensive to defend?
Ms. Wein. Yes, Congresswoman.
Ms. Porter. And to the tune of maybe even tens of millions
of dollars, $10 million to $20 million a month in expenses?
Ms. Wein. It is hard to say, each one is different.
Ms. Porter. But millions.
Ms. Wein. Yes, Congresswoman.
Ms. Porter. Has it had an effect on Johnson & Johnson's
overarching financial position, its stock price, its bottom
line, its ability to invest in lifesaving R&D, for example?
Ms. Wein. Congresswoman, every expense has an impact, and
so while I cannot quantify it for you right now, it does have
an impact.
Ms. Porter. Johnson & Johnson, in its public security
filings in 2019, disclosed $1.2 billion in loans and notes
payable, normal debt. In 2020, it disclosed $2.6 billion,
almost double, more than double. In 2023, that amount had
jumped to $11.7 billion. So, Johnson & Johnson is taking on
more loans over time, or notes or debt over time. Has any of
that been all driven or related to the expenses, the incredible
hardship that you describe of defending against these claims?
Ms. Wein. Congresswoman, while I could not specifically
answer that question for you, I think it is interesting to note
that we disclose our expenses, we disclose our source of
revenue. The difference between third-party litigation funding
and the defense of these cases is that there are no disclosure
requirements there. There is no transparency there.
Ms. Porter. So, Ms. Wein, Johnson & Johnson discloses the
names and terms and details of its loans?
Ms. Wein. Congresswoman, that is not what I said. I said
that we make our public disclosures as required by the SEC
rules. You----
Ms. Porter. All you disclose is the amount of a debt. You
do not give any details about the names and terms. I mean,
Johnson & Johnson backed LTL in the subsidiary that it created
to the tune of a $61 million funding agreement that J&J, when
it did the Texas two-step and split it into two companies, one
with the assets and one with the liabilities. You entered into
a $61 million funding agreement. Did you disclose the terms of
that?
Ms. Wein. Congresswoman----
Ms. Porter. LTL was in bankruptcy.
Ms. Wein. Correct.
Ms. Porter. LTL's funding was coming from J&J. Did you
disclose the terms of the $61 million funding agreement?
Ms. Wein. Congresswoman, unfortunately, I do not have an
answer to that question for you right now. I am happy to take
it back.
Ms. Porter. Haven't J&J lawyers insisted that the sworn
deposition testimony about that financing agreement be deemed
confidential? Haven't they argued that to Judge Kaplan in New
Jersey and the bankruptcy court that LTL management your
subsidiary's funding and financing for the purpose of defeating
this litigation must be kept confidential, even as you sit here
today, and try to tell us that the plaintiff should have to
disclose all of the details of their financing?
Ms. Wein. Congresswoman, respectfully, I think that we are
talking past each other. I think those are two different
things.
Ms. Porter. Why?
Ms. Wein. Funding agreement related to the structure of
bankruptcy, as I understand it, we are talking about----
Ms. Porter. Excuse me, Ms. Wein. The bankruptcy only exists
and LTL management as a company only exists as a response to
the talc litigation. It did not exist until you tried to defend
against the talc lawsuits. J&J was the third-party funder of
the LTL company that went into bankruptcy to deal with the talc
claims. Your company argued in court that those should be
confidential, and yet you want the other side, the plaintiff
side, to have to disclose all of their funding. I think that is
hypocritical. I think it is the same.
Ms. Wein. Congresswoman, respectfully, I disagree. I do not
think it is the same.
Ms. Porter. Why?
Ms. Wein. Because as I explained previously, one has to do
with the filing of bankruptcy and the funding agreement related
there too. The other has to do with the pursuit of a third-
party litigation funding that is intended----
Ms. Porter. Pursuant to the bankruptcy, J&J was a different
entity than LTL. That was your choice. That was your
structuring choice to split those companies and create two
separate entities, which made J&J a third-party funder of the
LTL litigation.
Ms. Wein. Congresswoman, respectfully, I disagree. It
related to the filing of the bankruptcy plan.
Ms. Porter. OK. I yield back.
Mr. Fry. The gentlelady yields. The Chair now recognizes
the gentlelady from Colorado, Mrs. Boebert, for 5 minutes.
Mrs. Boebert. Thank you, Mr. Chairman, and thank you to our
witnesses who have joined us today. Ms. Clark, in your
testimony, you agree that third-party litigation funding does
pose ethical risks, such as conflicts of interest, correct?
Ms. Clark. Correct.
Mrs. Boebert. Fantastic. Then why did you spend most of the
time off-topic discussing the ``ethics crisis'' currently
facing the Supreme Court?
Ms. Clark. Congresswoman Boebert, I believe that relative
to the ethics challenges in the third-party litigation funding
context, the crisis, the ethics crisis at the Supreme Court----
Mrs. Boebert. Yes, yes.
Ms. Clark [continuing]. Is much more grave and----
Mrs. Boebert. OK. So----
Ms. Clark [continuing]. Significant.
Mrs. Boebert. Thank you, Ms. Clark. What really it sounds
like is an ethical concern to me is the constant wave of
frivolous litigation from environmental extremists that deprive
communities of employment opportunities, improvements to
outdated infrastructure, cheaper products, corporate tax
revenue, and economic certainty. So now, Ms. Clark, are you
familiar with Earth Rights International?
Ms. Clark. I am not.
Mrs. Boebert. ERI is representing Boulder County in a
lawsuit against ExxonMobil and Suncor Energy to ``recover the
costs associated with climate change impacts.'' Now, would you
happen to know who might fund Earth Rights International? Not
knowing of the group maybe you do not' know exactly who funds
this group.
Ms. Clark. Correct.
Mrs. Boebert. Correct. So, ERI is funded by several wealthy
anti-oil and gas funds, including George Soros' Open Society
Foundations, the Rockefeller Family Fund, the Rockefeller
Brothers Fund, and the Tides Foundation. In this lawsuit,
specifically in Boulder County, the Rockefellers have provided
direct funding to the lawyers in this case, another outside
organization, supporting the plaintiffs received a $200,000
grant from the Rockefeller Brothers Fund less than 2 months
before the lawsuit was filed. Ms. Clark, do you find it at all
concerning that these extreme environmental groups are
attempting to circumvent this body by legislating via lawsuit?
Ms. Clark. Any time a third-party has a financial
arrangement to finance legal fees, there is a potential for
conflict of interest and there are rules to address it, but
beyond that, I am not familiar with this particular group.
Mrs. Boebert. So, I would see this as them attempting to
circumvent this very body just via lawsuit and our legislative
process. In this Soros funded lawsuit, ERI is making a baseless
claim that oil companies are responsible for the destructive
wildfires ravaging across my home state without a single
mention of the several wilderness area designations.
Now, a wilderness area designation that prevents us from
actually managing our forests, and it makes it impossible, in
fact, to actively manage that land. These policy decisions are
debated and discussed by experts and congressional committees,
which Democrats and Republicans agree we need to actively
manage our forests. And that is why the founders gave this
authority to Congress, not the Rockefeller families, to sue job
creators, to shut down operations that will only hold up
critical energy development projects for years, especially in
my state. Increased project costs contribute to skyrocketing
gas prices and discourages future development, where my
communities that I represent in Colorado's 3d District are
literally being regulated into poverty because of these
extremist environmentalist groups and their lawsuits that are
circumventing our job here in Congress. Now, Ms. Clark, do you
know how many jobs depend on the survival of the oil and gas
industry?
Ms. Clark. I do not.
Mrs. Boebert. The oil and gas sector supports 69,000 direct
jobs and 271,000 indirect jobs in my home state of Colorado.
These are very good jobs. They are good-paying jobs, and out
West, George Soros and the Rockefeller families are trying to
destroy, in an attempt to legislate through the courts. This is
a huge problem, and if they fail, at least they can go home as
winners with a taxpayer-funded settlement. Do you know how much
money Federal Government agencies spend settling these
ridiculous lawsuits?
Ms. Clark. May I answer?
Mr. Fry. Yes, you can.
Ms. Clark. I do not know.
Mrs. Boebert. So, former Director Ash testified that the
Agency spent approximately 75 percent of its listing program
budget on ``substantive actions required by court orders or
settlement agreements from litigation.'' Seventy-five percent.
Now, that sounds like a very real ethics crisis to me, Ms.
Clark. Mr. Chairman, I yield. Thank you.
Mr. Fry. Thank you. Pursuant to the previous order, the
Chair declares the Committee in recess, subject to the call of
the Chair. We plan to reconvene 10 minutes after votes.
The Committee stands in recess.
[Recess.]
Mr. Grothman. [Presiding.] The Committee will come to
order. Mr. Goldman.
Mr. Goldman. Thank you, Mr. Chairman, and I thank our
witnesses for being here.
Before I dive into some of the issues that we have been
called here to discuss today, I want to respond to my friend
and colleague from South Carolina and some of her allegations
and statements that she made about the so-called impeachment
inquiry. I believe that she stated that Joe Biden got bribes,
committed money laundering, and engaged in a prostitution ring.
She says there are texts, emails, and phone calls, but then she
says that we should trust the evidence itself. And with that, I
agree because the evidence itself shows absolutely no
connection between Joe Biden and any of those allegations.
So, we are now entering into what is so-called an
impeachment inquiry, ostensibly because the Republicans say
they need more information, and that somehow, by the Speaker of
the House unilaterally declaring an investigation, an
impeachment inquiry, that changes this Committee's authority.
It does not. This Committee has been investigating these
allegations for more than 8 months. This Committee of House
Republicans have obtained more than 12,000 documents, pages of
bank records, more than 2,000 suspicious activity reports,
numerous hours of witness testimony, texts, emails, and the
problem they have is not that they cannot get the evidence. The
problem they have is that the evidence does not support their
allegations.
And so, why are we going to spend the next few months on a
bogus and sham impeachment inquiry? Because Donald Trump wants
them to, and Donald Trump has been calling them and urging them
to do it because he was impeached twice. One of those
impeachments of Donald Trump was because he tried to extort the
President of Ukraine to investigate Hunter Biden. The President
of Ukraine refused. Unfortunately, House Republicans do not
have the spine that President Zelenskyy has, and they are now
doing Donald Trump's bidding.
Let me move on to the topic today, and I know that my
colleagues would like to narrowly focus this hearing on their
sudden grave concerns about third-party litigation funding.
That is right. My Republican colleagues are having a hearing to
criticize and restrict the free market from investing in
litigation. Well, how could that possibly be that the party of
free markets would want to restrict the free market? Well, I
know why. Because big corporations and special interests do not
like the fact that independent investors can support litigation
that otherwise would not be able to be brought because of the
expense.
And I also find it ironic that Republicans are criticizing
third-party funding in legal proceedings, when they themselves
have engaged in the same kind of third-party funding.
And I would like to ask unanimous consent to introduce for
the record an article entitled, ``FBI Whistleblowers Admit
Taking Money from Ex-Trump Official.''
Mr. Grothman. We will take that.
Mr. Goldman. Thank you, Mr. Chairman. Now, it is no
surprise that the Republicans are doing the bidding of the same
special interests who have been spending massive amounts of
dark money to control the Supreme Court. But the odd thing is
that we are here talking about the ethical issues of third-
party litigation funding, and not the ethical issues in the
Supreme Court.
In June, I led a letter of 18 former prosecutors and law
enforcement officials, urging the Chief Justice to abide by his
own declaration that he would take care of these ethics
concerns and saying that if he were to do that, appropriately,
and seriously, he would first have to establish an independent
investigative body within the court that can provide
transparency and accountability, and, two, that he would have
to establish a dedicated ethics council to provide advice to
the justices on their ethical issues.
Unfortunately, his response to that letter just simply
thanked me for writing it, and that is not good enough. And so
my time is up, but I would urge my colleagues on the other side
of the aisle who ostensibly are concerned with ethics that they
hold a hearing on the dramatic and absurd ethical lapses of
Supreme Court Justices and make sure that we implement an
ethics code on the Supreme Court, which are the only nine
justices in our entire Federal judiciary who do not have to
abide by our ethics code, and I yield back.
Mr. Grothman. Mr. LaTurner.
Mr. LaTurner. Thank you, Mr. Chairman. Thank you all for
being here. You have got to pan the whole area to find me who
is speaking, I know.
We are gathered today to address a disturbing issue at the
intersection of politics, activism and corporate influence, the
growing trend of liberal activists and private equity firms
using dark money to fund frivolous lawsuits aimed at stifling
industrial activity, political discourse, and civic engagement.
A fundamental tenet of our legal system is that those who have
been harmed can seek a remedy by bringing a claim to be
adjudicated before the courts.
When a remedy is obtained, it is supposed to go to those
who are harmed. Increasingly, that is not the case in today's
legal system, as some courts are being used to pursue social
activism for special interests. Even more concerning is the
fact that wealthy foreign actors with no skin in the game have
begun backing scores of private law firms to sue American
businesses for billions of dollars in damages. These payments
mean the law firms have all their costs subsidized, and yet the
same law firms are hired by state and local governments on a
contingency fee basis.
Ms. Steinitz, how are you today? Did I get it right,
Steinitz?
Ms. Steinitz. You did, yes. Thank you.
Mr. LaTurner. OK. Isn't it true that law firms receiving
funding to cover their expenses and fees from wealth special
interest groups, who also get contingency fee agreements from
local and state governments, have no risk while they stand to
recover tens of millions of dollars, if not more, from
contingency fee arrangements?
Ms. Steinitz. I am not familiar with those arrangements, so
I cannot comment.
Mr. LaTurner. In recent years, a number of investors
including Arabella advisors, George Soros and Leonardo
DiCaprio, as well as foreign funders like Christopher Hone and
Hansjorg Wyss, have funneled tens of millions of dollars into
organizations that fund climate litigation, targeting American
energy producers. Ms. Steinitz again, are you aware that
several nonprofit organizations backed by Soros, DiCaprio, and
Wyss, for which these wealthy individuals likely seek tax
breaks, have also made donations directly to law firms that
bring climate-related lawsuits?
Ms. Steinitz. I am not familiar with that, sorry.
Mr. LaTurner. Not familiar with anything that I am saying
right now?
Ms. Steinitz. No, afraid I am not.
Mr. LaTurner. OK. The Soros-backed new venture fund and the
DiCaprio-backed resources legacy fund have given millions of
dollars to the California law firm Sher Edling, which is
responsible for bringing over a dozen climate litigation cases.
In addition to this special interest funding, Sher Edling is
entering into fee agreements where it stands to make tens of
millions of dollars. And it does not end there, Michael
Bloomberg is funding a program through NYU Law, where they
place attorneys in state attorneys general offices where those
embedded attorneys are working on some of the same climate
litigation, where Sher Edling is also receiving a contingency
fee. Ms. Steinitz, does that arrangement create concerns for
you about the influence of wealthy special interests on
litigation purportedly brought on behalf of taxpayers, and who
really plans to benefit?
Ms. Steinitz. Again, I am not familiar with these
particular arrangements, but the general point that we should
be interested as a public in who influences the various
branches of government, including the judiciary, is a point I
agree with.
Mr. LaTurner. Thank you very much. Mr. Chairman, I yield
back.
Mr. Grothman. Thank you. Mr. Raskin?
Mr. Raskin. Thank you kindly, Mr. Chairman, and I was glad
that my colleague, Mr. Goldman, from New York was able to
answer some of the surprising things that we heard from our
esteemed colleague, Ms. Mace, right before we had our break.
And, you know, it is very clear that there is no evidence that
has turned up over the last 7 months that Joe Biden is guilty
of any criminal wrongdoing, any high crime and misdemeanor,
much less prostitution, bribery, money laundering, or any of
the crimes that were set forth in that laundry list that Ms.
Mace offered at the end, so I do hope she will clarify that.
Let us see. Ms. Wein, you are here as the assistant general
counsel of Johnson & Johnson. Do I have that right?
Ms. Wein. Yes, sir.
Mr. Raskin. And Johnson & Johnson paid $5 billion out in
the opioid litigation, and $4 billion in the talcum powder
litigation. Is that right? Those are numbers roughly, correct?
Ms. Wein. Congressman, as far as I am aware.
Mr. Raskin. OK. So, are you here to complain about
meritorious lawsuits being brought by consumers in cases like
these or frivolous and meritless cases being brought by
consumers?
Ms. Wein. Congressman, an excellent point. We are not here
to talk about limiting a grieved consumer's access to justice.
We are here to talk about transparency, regulation, disclosure
around third-party litigation funding, which has an effect of
actually diluting the claims that have merit with the influx of
meritless lawsuits.
Mr. Raskin. OK. So, you have no problem with the litigants
who went to court in the opioid cases or in other mass toxic
tort cases, the BP oil spill or the talcum powder case or so
on?
Ms. Wein. Congressman, as a lawyer----
Mr. Raskin. Yes.
Ms. Wein [continuing]. I believe in access to justice.
Mr. Raskin. Got you. And there were no Rule 11 sanctions
that your company sought against any of the litigants in those
cases, right?
Ms. Wein. The ones that you mentioned, Congressman?
Mr. Raskin. Yes.
Ms. Wein. Not as far as I am aware.
Mr. Raskin. OK.
Ms. Wein. In the mass tort context, it is actually
extremely different because we have no access to information
regarding the thousands of claims brought against us because
plaintiffs are not required to actually produce evidence of
product usage, or injury alleged from the product, we are
essentially hamstrung from using Rule 11 to bring sanctions on
those individual cases. We are also hamstrung in many cases
from filing 12(b)(6) motions because that motion practice is
usually suspended in the MDL process.
Mr. Raskin. So, you are saying you cannot move to dismiss
in a class action lawsuit?
Ms. Wein. Not a class action, Congressman, right. We are
talking about multidistrict litigation, which is a different
animal.
Mr. Raskin. Yes.
Ms. Wein. Multidistrict litigation, the aggregation of
thousands of claims, typically what we see are judges
suspending motion practice 12(b), 12(e), the usual discovery
practices.
Mr. Raskin. Yes. OK. Well, that might be something
interesting to look at, but to my understanding, anybody who
brings vexatious, frivolous or meritless litigation can be
sanctioned by the courts. But I appreciate your candor in
saying that that was not the case in the opioid litigation, or
in the talcum powder case.
Ms. Wein. What I said, Congressman, is that we believe in
access to justice, so----
Mr. Raskin. Yes.
Ms. Wein [continuing]. Those who brought those cases had
their day in court. We do not stand in the way of that, of
course.
Mr. Raskin. Right.
Ms. Wein. As I mentioned earlier, we do not believe that
the talcum powder cases have merit. We believe that that is
actually all driven by third-party litigation funding.
Mr. Raskin. All right. Fair enough. Well, maybe we should
stop there because we are just going to disagree about that,
and obviously, the settlement speaks for itself. One of our
colleagues, actually, several of our colleagues raised this
issue, but one of them asked whether the Chinese government
might have used intellectual property law or lawyers to achieve
power over the U.S. Government and to undermine American
society, and I think I found at least one good answer to this
question.
And I would like to submit for the record this November 6,
2018, Associated Press article, ``Headline: China Grants 18
Trademarks in 2 months to Donald Trump and Daughter.'' And in
the early days of the Trump Administration, Donald Trump and
his daughter Ivanka, got 18 trademarks from the Chinese
government that she had been unable to get before, and there
were lots of allegations about conflict of interest in the
influence peddling and the scheme.
So, I would like to submit that for the record, Mr.
Chairman.
Mr. Grothman. Very good.
Mr. Raskin. Yes, I yield back. Thank you.
Mr. Grothman. Thank you. Mr. Gosar.
Mr. Gosar. Thank you. I first want to thank the Chairman
Comer for this important hearing. You know, the thing I heard
earlier was the gentlelady from New York claiming that this
fishing trip cost $100,000 one way. That has got to be some
kind of fishing trip because that is not going to be $100,000
one way. It is vital that law firms and those who fund them put
the interests of the victims first, and not their bottom line.
As a representative with a large mining constituency, I
work hard to defend the mining industry from radical
environmentalists and the third-party litigants who have funded
them, whose goal is to end the mining in the United States. I
also worked very hard to make sure that the mining companies
uphold their part of the bargain, that what they say they do,
they follow through with that.
One of the most egregious examples of third-party
litigation funding that has yielded devastating consequences
was the attempt by the Democratic Party prior to 2020 to change
the voting laws. This practice was nothing less than the
weaponization of the judicial system to overturn the will of
the people as expressed in the voting laws created by their
duly elected representatives. Marc Elias, the same man who
hired Christopher Steele to lie about President Trump in the
infamous dossier, who was sanctioned by a Federal court in 2021
for misleading motion, was hired by the Democratic Party in
2020 to harass states by filing at least 50 lawsuits against
them for laws seeking to preserve electoral integrity.
Elias' law firm Perkins Coie received at least $41 million
since 2019 from left wing organizations. It is unclear how many
millions the Democratic Party and their allies spent trying to
destroy election integrity in the run up to the 2020 elections.
They should come clean and be transparent with American people,
and the same American people who I am sure they claim they are
fighting for in their bogus lawsuits.
Sound legal representation in any setting requires a moral
compass that puts at first the interests of the injured party.
Third-party funded litigants that have made half of our country
doubt the integrity of our elections is unacceptable and is a
very big stain on our country. Ms. Lucas, you are from a mining
area, aren't you, from Minnesota?
Ms. Lucas. Yes, I am, sir.
Mr. Gosar. I have been up there. It has been very
interesting. What are the average incomes of the smaller
communities that have mining?
Ms. Lucas. The average of--that currently have mining?
Mr. Gosar. Yes.
Ms. Lucas. I would have to get back to you on that one.
Mr. Gosar. Would you say it is above $60,000?
Ms. Lucas. The mining incomes are for sure above $60,000.
Mr. Gosar. That is my whole point. I am trying to get to
those miners.
Ms. Lucas. Yes.
Mr. Gosar. This is, you know, if you cannot mine it, you
cannot grow it, you cannot fish it. You are not going to make a
bunch of money off of it.
Ms. Lucas. Correct.
Mr. Gosar. How about the comparison of others in the state?
They are much lower, aren't they, on average?
Ms. Lucas. Yes, especially in rural areas.
Mr. Gosar. Now, can you estimate the amount of state and
Federal permits and regulations a mining company may have to
comply with to be able to operate in Minnesota?
Ms. Lucas. It takes a lot of permits, and it should.
Mr. Gosar. Yes.
Ms. Lucas. We have to have air permits, we have to have
water permits, wetlands, land use, permit to mine, tailing
space and all of those things that can be over 20 permits.
Mr. Gosar. You know, we are losing copper out in Arizona,
and it is going on this 20th year. They have invested over $2
billion, with a b, billion dollars in reclamation and they
still have not got a permit. The water is cleaner coming out
than going in. It is amazing what you have to do. Can you
briefly describe how existing regulations encourage and require
extensive community and stakeholder engagement to solicit
feedback and address these concerns?
Ms. Lucas. Yes, our system is set up to make sure that
people know what is going to happen in their backyard. We need
to have that system. It is important that we have that system.
We have a legacy that demands we have that system. And every
step along the way from the beginning of the scoping EAW
through the EIS through the permitting process, we ensure that
we have multiple opportunities for the public to ask questions.
If you live in a mining area, you understand mining, but
``normal people'' may not. So, we need to provide all the
opportunities people can get to ask those questions about what
are you doing with our water, how will you protect our air,
what will you do about wetlands, and we ensure we have all of
those opportunities for people because it is a critical step in
the process.
Mr. Gosar. I get it. You think we can have our mining and
have our cake and eat it too, right?
Ms. Lucas. I think without mining, sir, we do not have this
room that we are in, we do not have this building we are in, we
do not have lights on, we are not kept cool from the humidity
that D.C. has. I thought we had bad humidity. I was wrong, but
we do not have the world without mining, sir.
Mr. Gosar. I absolutely agree with you. Thank you for your
quest to keep mining a pivotal part of this economy. Thank you
very much. I yield back.
Mr. Grothman. Thank you. Ms. Greene.
Mrs. Greene. Thank you, Mr. Chairman. I agree that third-
party litigation that is funded by groups that have interest in
these issues is causing many frivolous lawsuits. I want to
explain a situation that is happening in politics. Dark money
funded lawfare is waged against candidates, against groups to
sway politics, and also interfere in elections.
On March 24, 2022, a group called Free Speech For People,
which is an ironic name, filed a lawsuit against me using the
14th amendment to try to remove my name off the ballot in my
district in Georgia. This group, Free Speech For People has
received funding from leftist groups like San Francisco
Foundation, Kohlberg Foundation, Leonard & Sophie Davis Fund,
Overbrook Foundation, Park Foundation, Schumann Media Center,
and Cloud Mountain Foundation and many more. These groups are
groups that claim they care about defending democracy, but they
funded a group called Free Speech For People that was
interested in taking away the free speech of the voters in my
district.
These groups from San Francisco and New York, all they did
was fund a group to interfere in an election in my district in
Georgia. On April 22d, I had to go to court where I took the
witness stand, defending myself under oath against a lie,
launched and funded by this dark money group and run by far-
left political operatives like David Brock and Norm Eisen, but
I won, and it cost me almost a million dollars defending
myself.
And then 1 month later, I had my election day on May 24,
2022. Well, I want to tell you, I won again because the voters
in my district voted for me with over 70 percent, but this is
still happening, and it is happening again to interfere in the
2024 election. Last Wednesday, a lawsuit was filed by Citizens
for Responsibility and Ethics in Washington, CREW, to have
President Trump removed from Colorado's ballot over claims he
violated Section 3 of the 14th amendment on January 6. This is
the same thing Free Speech For People tried to do with me and I
beat them and President Trump will beat them as well.
CREW was founded in 2003 by Norm Eisen, the same activist
that was probably involved funding mine, and Melanie Sloan to
be a progressive watchdog group. Democrat operative, David
Brock, of Media Matters, also well-known for the Brock memo,
was chairman of the board of directors from 2014 to 2017. Norm
Eisen worked for the ADL in the 1980's investigating anti-
Semitism and civil rights violation. He worked in his law
school classmate Barack Obama's Presidential campaign and then
was named Special Counsel for Ethics and Government Reform in
the White House. In 2019, Eisen was appointed consultant to the
House Judiciary Committee, where he worked on the first
impeachment of President Trump.
You can see where this goes, ladies and gentlemen. It is
all about politics. Eisen implemented the David Brock blueprint
for suing the President into paralysis and his allies into
bankruptcy. He helped mainstream and amplify the Russia hoax.
He drafted 10 articles of impeachment for the Democrats a full
month before President Trump ever called the Ukrainian
president in 2018. He personally served as special counsel
litigating the Ukraine impeachment. He created a template for
internet censorship of world leaders and a handbook for mass
mobilizing racial justice protesters to overturn democratic
election results.
There is perhaps no man alive with a more decorated resume
for plots against President Trump than Norm Eisen. All of these
actions were part of the David Brock memo, which outlined how
to defeat President Trump through lawfare, funded lawfare. The
next step in Eisen and Brock's plan is to take President Trump
and his allies out before the Presidential election of 2024.
They are trying to use January 6 as the reason for filing
lawsuits against President Trump in various states, arguing he
violated the 14th amendment and is supposedly guilty of some
so-called insurrection that never was, and therefore would be
ineligible to run for office.
CREW, the organization Eisen founded and Brock chaired, is
one of the main groups devoting funds to this goal. We have to
stop funded lawfare by political organizations that want to
take away people's freedom of speech to vote for the candidate
that they want to vote for. And we also have to stop these dark
money funded groups from interfering in elections. I yield
back, Mr. Chairman.
Mr. Grothman. Thank you. If there is no further business,
without objection, the Committee--we have another show coming
up afterwards, so we are going to not deal with the closing
statements.
If there is no further business, without objection, the
Committee stands adjourned.
[Whereupon, at 2:46 p.m., the Committee was adjourned.]