As a Lawyer, Ted Cruz Defended Huge Jury Awards. As a Politician, He Opposed Them.

In private practice, Cruz made money defending the kind of multimillion-dollar awards he has publicly decried.

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As a politician, Ted Cruz, the junior Republican senator from Texas, has championed tort reform—the nationwide effort pushed by conservatives and business interests to restrict malpractice and other wrongful injury and death lawsuits, limiting how much a jury can award a harmed individual for pain and suffering and in punitive damages. When Cruz ran for Senate in 2012, his website declared he had defended a landmark pro-business tort reform law passed in Texas in 2003 that severely constrained the ability of consumers to sue medical professionals and nursing homes and to collect punitive damages in other cases. Cruz also boasted that when he had been a policy adviser on George W. Bush’s first presidential campaign he developed Bush’s pro-tort reform proposals. During the Senate race, the Texas Civil Justice League, a supporter of tort reform, enthusiastically endorsed Cruz. After becoming a senator, Cruz told the Austin Chamber of Commerce that Texas-style tort reform—which places a cap of $750,000 on punitive damages—ought to be a national law.

Yet, as a lawyer in private practice, Cruz—at least twice, in 2010 and 2011—worked on cases in New Mexico to secure $50 million-plus jury awards in tort cases prompted by corporate malfeasance. These are precisely the kind of jury awards that the tort reform Cruz has promoted would abolish. That is, Cruz the attorney, who sometimes billed clients $695 an hour, made money defending jury awards that Cruz the politician wanted to eliminate—and he did so at the same time he was running for Senate as a pro-tort-reform candidate.

The two cases Cruz worked on were gruesome. In 2004, Barbara Barber, an active 78-year-old resident at a ManorCare nursing home in Albuquerque, bled to death over the course of several days. Her daughter, Lori Keith, sued the Ohio-based ManorCare Inc., one of the largest for-profit operators of nursing homes in the nation, for wrongful death. At a 2007 trial, a nurse testified that Barber, after suffering days of internal bleeding, “should have been shipped to the hospital.” But she wasn’t. The nursing home was short-staffed at the time, and Barber did not receive the attention and medical care she required. Evidence at the trial indicated that after Barber died, staff at the nursing home removed her bloody linen and clothes and replaced them with clean bedding and clothes and did not inform Barber’s daughter or her doctor of the bloody scene that the staff had found. The trial also included evidence that Barber’s medical records were falsified following her death.

Barber’s family sought compensatory damages for the alleged negligence and punitive damages, claiming the nursing home had engaged in willful and reckless misconduct. In the court room, the attorney for Barber’s family, Carl Bettinger, presented a visceral case. As he later recalled,

I recreated Barbara’s death scene in the present tense, walking off the dimensions of the room in front of the jury, placing the virtual objects in the room, and then describing, in present tense, the observations of the aide who found her dead: “The aide is walking into the room. She pauses at the door and peeks behind the curtain. She is seeing Barbara and Barbara is not breathing. She pulls back the sheets and there is blood and vomit on the pillow, she rolls Barbara over and sees blood on the sheets.” As I was speaking these words, I engaged in actions that they described. From that point forward, we respected Barbara’s space in the courtroom—it was Barbara’s bed. The defense, predictably, kept walking through it, trampling her.

The jury found that the nursing home had been negligent and awarded Barber’s family $53.2 million, with $50 million of that in punitive damages. This was one of the largest jury awards in the history of New Mexico.

ManorCare Inc. appealed the decision, contending that it was not legally responsible for the nursing home’s employees—the company claimed that its subsidiary, which was not named as a defendant in the suit, was responsible—and it argued that the $50 million in punitive damages was “unconstitutionally excessive.” In 2009, the New Mexico court of appeals sided with ManorCare on one issue, ruling that the trial judge had not properly resolved the issue of whether ManorCare Inc. was accountable for the employees of its subsidiary. It did not rule on the constitutionality of the $53.2 million award but ordered the case to be tried again.

The filing Cruz helped write echoed an argument often used by consumer advocates and plaintiffs attorneys who oppose tort reform and claim it protects companies that seriously harm people, especially the elderly and infirm.

Enter Ted Cruz. Bettinger wanted to appeal this ruling. In early 2010, he and his co-counsels asked the state Supreme Court to review the case, arguing that ManorCare was indeed the employer of the negligent caregivers and that the trial judge had handled this issue properly. Once the petition with the state Supreme Court was filed, according to Bettinger, he and his legal team recruited Cruz. At the time, Cruz was a partner and legal hotshot at the Houston office of international law firm of Morgan Lewis. After having served over five years as Texas solicitor general, Cruz had joined Morgan Lewis in 2008, and he had the reputation as a talented appellate attorney. By this point in his legal career, he had been named one of 20 young Hispanic Americans to watch by Newsweek magazine and cited by American Lawyer as one of the 50 top litigators under 45 in the nation.

Cruz took the case, and Bettinger was delighted. “Ted was and is an outstanding appellate attorney,” Bettinger says. “An appeals case is completely different from the underlying trial. There is no jury, no evidence. What’s being argued is whether there were legal errors made by the judge. A good appellate attorney has to be a combination of a fabulous writer and legal researcher and be very quick and persuasive on their feet. And Ted had argued several times in the US Supreme Court and federal appeals courts.”

But Cruz’s skills were never put to full use in this case. Oral arguments were scheduled in the appeal, and Cruz was all set to present a case for holding ManorCare Inc. responsible and preserving the hefty $50 million punitive award. But the night before he was to stride into the New Mexico courtroom, the Barber family and ManorCare reached a settlement. Bettinger told a reporter at the time that the family would receive unspecified “millions.” He added that the settlement “stands for the proposition that little people can take on the big corporations and sometimes achieve justice.” Cruz, Bettinger recalls, was “very involved in the settlement negotiation.”

Cruz was now on Bettinger’s radar, and soon the New Mexico plaintiff attorney had a similarly tragic case that required Cruz’s appellate skills.

In 2004, Larry Selk, a profoundly mentally and developmentally disabled man—he could not speak or effectively use his limbs—was raped, presumably by an employee at the Roswell group home where he lived and which was operated by the New Mexico subsidiary of ResCare Inc. (RCI), a Louisville-based health services firm. Selk was completely dependent on caregivers who had to bathe and feed him. He communicated through smiles, frowns, and body language. He had lived in institutions for most of his life. His sister Rani Rubio sued RCI and its New Mexico subsidiary on Selk’s behalf, and Bettinger was one of the lawyers she hired.

During the 2009 trial, Selk’s attorneys offered evidence that the group home had not adequately vetted or properly trained the employee who allegedly raped Selk. Trial testimony indicated that after Selk had been left alone with this employee—the first night this man had been on the job—other workers discovered that Selk’s anus was bloody and torn. A subsequent examination by a nurse found six lacerations in Selk’s rectum. The nurse testified that she could not tell whether the tears had been caused by a penis, a fist, or another object. A caregiver at the group house testified that the day after the rape Selk made unusual groaning noises for a long time. In his closing argument, Bettinger quoted Martin Luther King Jr. and sang the lyrics to a Sarah McLachlan song: “screaming inside but you can’t be heard.”

“If he runs for president, he won’t have my vote or support. But if he goes back to litigation, I’d hire him in a heartbeat—if I could afford him.”

The jury slammed RCI and the subsidiary, awarding $4.95 million in compensatory damages and a whopping $49.2 million in punitive damages. “The [jurors] felt this was not just about Rani’s brother, it was about all of us,” Bettinger said after the verdict was announced. A lawyer for RCI noted, “Sometimes even the best of systems cannot prevent a terrible incident.”

The trial court judge subsequently reduced the punitive damage portion of the award to $9.7 million. Both the family and RCI appealed.

Bettinger and his co-counsels enlisted Cruz for this round. In a filing that Cruz, Bettinger and several other lawyers submitted to the New Mexico appeals court in October 2010, the Selk legal team contended that RCI could be held liable for the damage done to Selk and that the punitive damages award had been appropriate. RCI’s conduct in this case, the brief asserted, “was highly reprehensible, and that reprehensibility alone would warrant the jury’s substantial award of punitive damages. But there was more…[A] large punitive damages award is justified by the need to deter conduct that is hard to detect and often goes unpunished.” The filing Cruz helped write echoed an argument often used by consumer advocates and plaintiffs attorneys who oppose tort reform and claim it protects companies that seriously harm people, especially the elderly and infirm: “Restoring the punitive damages awarded by the jury in this case is crucial if there is to be any hope of deterring companies like RCI from engaging in reckless conduct against vulnerable individuals.”

The Cruz-backed brief ended with a passionate contention:

Throughout this litigation, Defendants have maintained that Mr. Selk’s profound disabilities make his injuries less worthy of compensation. Defendants recklessly hired a rapist pursuant to policies designed to maximize corporate profits. And after the predictable result—a violent rape that left Mr. Selk bleeding and scared—Defendants ignored the medical advice and failed to provide him any physical or emotional treatment. At trial, they analogized him to an animal, and they told the jury he was “essentially the same” as before the rape. Mr. Selk is not the same, and the jury found that the multi-billion dollar corporation that caused, belittled, and ignored his suffering is properly liable under New Mexico law.

For the appeal, Cruz’s main task was to sway three appeals court judges during oral arguments. On November 15, 2011, Cruz took time off from his Senate campaign to appear in an Albuquerque courtroom to argue for Selk and the $54 million jury award.

He began his presentation by declaring this case was “straightforward and simple.” (One of the judges quipped, “I’m glad you think so.”) Cruz first took on the question of whether RCI could be held liable. With a powerful command of the facts of the case and the relevant precedent—he quoted Supreme Court Justice William Douglas and famed Judge Learned Hand—Cruz argued that “everyone is liable for their own actions.” To show that RCI was responsible for the wrongdoing that occurred within the group home run by its subsidiary, Cruz pointed out that the corporation had issued directives to its New Mexico operation regarding how to cut hot dogs and what bleach alternative to use. “RCI was running things,” Cruz maintained: “It was an RCI employee who decided to take somebody with no background check and put him in a room alone with someone who had been entrusted to their care.”


Listen to Ted Cruz argue in a New Mexico court to preserve a $54 million jury award for Larry Selk.
 
Moreover, Cruz argued, RCI’s rapacious pursuit of profits had led to the rape of Selk:

In this case, the parent was dictating cut costs so that caregivers are paid less than maintenance men. Slash costs…so that every profit is sucked up to the parent, and the subsidiary is going to be faced in an instance when there aren’t sufficient resources to carry out its task.

Cruz next tackled the matter of the size of the jury’s award for punitive damages. Citing Supreme Court and New Mexico precedent, Cruz insisted that “the most important criteria is reprehensibility, and in term of reprehensibility, this case is off the charts.” He hammered RCI’s trial attorney for having suggested that the damage to Selk might not have been significant because of his disabilities:

It was not lost on the jury, for example, when RCI’s lawyer told the jury that Larry Selk was “like an animal.” That was the question he asked: can an animal experience rape? For a caregiver that is charged with taking care of a profoundly disabled person, to view those people as animals, surely has significant impact on the jury’s assessment of reprehensibility. That to this day the argument is—the argument that the RCI counsel has presented to this court—is that it doesn’t impact Larry Selk. It doesn’t impact Larry Selk that he was violently raped, that he had no ability to speak out and no ability to defend himself. He was violently raped by those who were supposed to take care of him, but it has no impact.

The appeals court, Cruz told the judges, was obliged “to respect the jury’s finding,” regarding the substantial punitive damages, which, he noted, represented only 3 percent of RCI’s gross revenue. Toward the end of his presentation, he put it plainly: “The purpose of punitive damages is to punish and to deter…The jury rightly concluded the appropriate amount to punish and deter was $48 million.”

Cruz’s courtroom performance delighted Bettinger. “I thought he was superb,” Bettinger recalls. “I’m not a slouch in persuasive skills, but I couldn’t hold a candle to him. My politics are not even close to Ted Cruz’s, but as an appellate attorney, he was the bomb.”

Did Cruz win over the judges on behalf of the $54 million award in the Selk case? The public will never know. After the oral arguments, the case was settled before the appeals court reached a decision. Bettinger won’t reveal the terms of the settlement. But he says of Cruz, “If he runs for president, he won’t have my vote or support. But if he goes back to litigation, I’d hire him in a heartbeat—if I could afford him.” Bettinger notes that he never discussed tort reform or capping damages with Cruz.

Cruz’s involvement in the Selk and Barber cases does raise a question: How could the senator who hails tort reform argue in favor of preserving the megamillion-dollar jury awards that tort reform advocates decry and seek to eliminate? If either the Selk or Barber case had been brought in Texas, the noneconomic damages could not exceed $250,000, according to Paula Sweeney, a Dallas attorney and former president of the Texas Trial Lawyers Association. “These jury verdicts would not be possible in Texas,” she says. And, Sweeney notes, the tort reform in Texas that Cruz supported has created serious obstacles to even filing such lawsuits. (In 2006, the American Bar Association Journal noted that “Texas plaintiffs layers have been leaving in droves from nursing home and medical malpractice litigation in the wake of tort reform.”) Under Texas tort reform, Sweeney points out, a victim (or relative) cannot ask a jury to hit a corporation with tens of millions in punitive damages, as Cruz in the Selk case contended is necessary to deter serious wrongdoing.

Asked if Cruz’s work to defend these immense punitive awards was consistent with his support for tort reform that does not allow for such jury awards, a spokeswoman for Cruz, in a statement, said, “Lawyers have an ethical responsibility to zealously represent their clients, and Sen. Cruz endeavored to do so both in public service and in private practice.” She added,

These were egregious cases. Both concerned the brutal abuse and victimization of the defenseless—specifically the violent rape of a disabled man and the gross neglect of a nursing home patient that resulted in her death. Cruz zealously represented his clients and helped them successfully pursue justice.

Tort reform is primarily a question of state law, and the judgments entered by the New Mexico juries were pursuant to New Mexico law.

In the courtroom—when he was being paid—Cruz was an articulate and forceful champion of super-size punitive awards, insisting such lawsuits and punishments were needed to protect consumers from reckless corporations that put profits ahead of people. On the campaign trail—when he is trying to score political points and draw the support of the business community—Cruz has embraced tort reform that disempowers consumers and protects negligent companies from such penalties. So what does Cruz truly believe? It might depend on whether he is trying to win cases or win elections.