Payola Justice: How Texas Supreme Court Justices Raise Money from Court LitigantsHome

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Business and Trade Group Groupies

Trading Favors?
Donations From Business Groups Affected by the Court
Trade Group Funding of 7 Justices
TX Society of CPAs* $116,450
TX Medical Association $98,217
TX Association of Realtors $51,000
TX Association of Defense Counsel $49,500
TX Restaurant Association $47,377
TX Civil Justice League $45,095
TX Association of Business & Commerce $41,250
TX Apartment Association * $39,250
TX Association of Insurance Agents $36,755
TX Chamber of Commerce $31,000
TX Dental Association $30,250
Texans for Lawsuit Reform $30,000
TX Auto Dealers Association $29,658
TX & Southwestern Cattle Raisers Assoc. $21,500
TX Association of Life Underwriters $16,500
Total $683,809
 * Includes contributions from the Houston chapter of this group.  

PACs and employees of business and professional associations are another source of major financial support to the justices. The top 30 of these contributing groups gave a total of $854,825 to the seven justices, or nine percent of all the money that these judges received in contributions of $100 or more. The justices routinely pass judgment on tax cases, liability suits and other bread-and-butter issues that affect the members of these business, professional and trade associations.

Lest the justices forget where these contributor trade groups stand on cases affecting their members, the groups regularly file friend-of-the-court briefs with the court. For their part, the justices can hardly argue that they are unaware of these contributors. In the 1994 elections a brouhaha erupted after current Justices Hecht, Owen and Gonzalez endorsed the Texas Civil Justice League (which promotes weaker civil justice laws) in its political fundraising mailers. "All I knew was they wanted to brag about the judges they had helped elect," Hecht explained. "Since they had helped me, I helped them." Justice Hecht also appeared in a Texas Medical Association PAC video that appealed to members to contribute to court candidates who would be tough on medical malpractice plaintiffs.16

The Texas Society of CPAs and the Texas Medical Association led the pack, raising $214,667 for the seven justices from their accountant and doctor members. As it happens, the justices who took this money have the last word on malpractice suits filed against doctors and accountants in Texas courts. During the period in which the Texas Society of CPAs raised $116,450 for the seven justices, for example, three of the so-called "Big Six" accounting firms had cases before the court.17 The court ruled for the big accounting firms in two of the three cases.

Doctors and other individuals employed in health care professions, along with the various health care PACs, contributed at least $675,654 to the seven justices studied, or 7 percent of all the money that they raised.18

PAYOLA CASE STUDY #3

Unaccountable Accountants

Arthur Andersen v.
Perry Equipment

Relying on Arthur Andersen & Co. (AA) audits that portrayed Maloney Pipeline Systems as profitable, Perry Equipment Corp. (PECO) paid $4 million to buy Maloney in 1985. Maloney soon ran out of cash and declared bankruptcy.
In court testimony, one expert witness called this AA audit one of the worst he had ever seen, while an accounting professor testified that he would flunk a student who submitted such work. A jury found the auditing company liable for $5.5 million in damages; the damages rose to $9.3 million with litigation costs and Deceptive Trade Practices damages.
But Justice John Cornyn's unanimous decision of May 16, 1997 reversed lower court judgments, instructing the trial court to recalculate AA's damages with much tougher criteria. The trial court was ordered to determine if all of PECO's lawyers' contingency fees—which AA must pay under the Deceptive Trade Practices Act—were "reasonable and necessary."
An analysis of recent court decisions by Texas Citizen Action called this one of the court's 10 worst decisions for consumers. This precedent "makes it harder for injured consumers to find lawyers," the study said. Wealthy corporations can afford to contract attorneys by the hour, whereas consumers rely on the all-or-nothing contingency fees that the court targeted.
While the seven studied justices evenhandedly took $250 apiece from employees of Arthur Andersen and PECO, the Texas Society of Certified Public Accountants gave them $116,450.

PAYOLA CASE STUDY #4

Mangled Baby, Mangled Law

St. Luke's Episcopal v. Agbor

Dr. Suzanne Rothchild delivered the Agbor family's baby with a permanently disabled arm in 1990. The parents filed a malpractice suit against the doctor and Houston's St. Luke's Episcopal Hospital. They accused the hospital of negligently giving staff privileges to a doctor who had been sued repeatedly and who lacked proper malpractice insurance.
The court determined whether or not patients can sue a hospital for granting staff privileges to reckless doctors. This question turned on the Texas Medical Practice Act (TMPA). The TMPA was passed to stop hospitals and their medical review committees from being sued by doctors who are denied hospital staff privileges because they are deemed unsafe. But Justice Gonzalez's June 20, 1997 majority opinion stretched this law to not only shield hospitals from lawsuits filed by doctors but also from lawsuits filed by the very patients that TMPA was supposed to protect.
The dissenting opinions of Justices Cornyn, Spector and Phillips marvel at how the majority used a mangled interpretation of a law that protects patients to deliver a patient-hostile decision that shields the medical establishment from malpractice victims.
Lawyers with Mayor, Day, Caldwell & Keeton, which represented the defendants in the case, contributed $44,600 to the seven justices, including $28,450 to the five justices who voted with the majority.
The Texas Hospital Association (THA) contributed $9,549 to five of the seven justices. Almost half of this amount ($4,549) went to Justice Gonzalez, the author of the majority opinion. Concurring Justices Hecht and Owen received $2,000 and $1,000 respectively from THA. Dissenters Phillips and Cornyn received $2,000 in THA money.
Finally, Justice Hecht took $500 from St. Luke's President Michael Jhin in 1994.
(For another noteworthy ruling for malpractice defendants, see the court's 1995 opinion in Broders v. Heise).

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