The Wall Street Journal spotlights an attempt by Democratic senator and presidential candidate Chris Dodd to help create a huge new business opportunity for America's trial laywers - who just happen to be one of the Democratic Party's most stalwart and generous groups of supporters.
You know something's fishy when Senator Chris Dodd is casting himself as the champion of a Republican-run Securities and Exchange Commission. The Senate Banking Committee Chairman wrote to the Bush Administration last week warning it not to take a position different from its own SEC in the Stoneridge dispute. That's the looming Supreme Court case which will test whether bystanders can be sued for secondary liability in securities class actions.
Taking a position contrary to the SEC, Mr. Dodd said, would "compound the damage already caused to the investing public by the failure . . . to advocate the views of the Commission." Cue the violins.
Mr. Dodd's argument is pretty rich, considering that the usual Congressional line is that the SEC is an "independent" agency. And in any case the Commission's views have already made it to the Court. An amicus brief filed by Democrats John Conyers and Barney Frank made ample use of the SEC's arguments, as well as citing the testimony of Chairman Chris Cox.
What's going on in Stoneridge is an attempt to allow the tort equivalent of guilt-by-association. The case involves whether the liability for an accounting fraud at Charter Communications, a cable company, can be extended to implicate some of Charter's deep-pocketed suppliers, including Motorola and Scientific Atlanta. If the Stoneridge claim is validated by the Supreme Court, any entity that did business with an alleged culprit could also be subject to a damages lawsuit. In a complex marketplace, it's hard to say where this legal contagion would end.
The trial bar is keen on winning this new jackpot, and a cynic might suspect this has something to do with the intervention of these high-powered Congressional Democrats on behalf of their campaign donors.
A cynic might. But so might any rational person who understands just how important trial lawyers, and their money, is to the Democratic Party.
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