SEE SHELLY SILVER MAKE THEM JUMP.
NEW YORK REMAINS THE ONLY STATE
WITH UNLIMITED VICARIOUS LIABILITY


By Henry J. Stern
June 17, 2005

Yesterday's Times contained an appalling story, mitigated only by the fact that some people, particularly insiders, are aware of this pattern of inappropriate legislative behavior, so it does not have the freshness needed to shock voters.  An editor, once asked to define news, said "News is what makes you jump."
 
Nonetheless, we think what is happening in the sewer called Albany is important, and you should understand it clearly.  A story by Al Baker which began at the top of  B1, the lead page of the Times' metro section, is more helpful than some political science textbooks in explaining the real world.
 
A bill, that has been proposed year after year in the State Assembly would end unlimited vicarious liability (UVL) in New York State.  The word 'vicarious' means: performed or suffered by one person as a substitute for another.  In this case, if a driver of a rented or leased car causes an accident for which he would be liable, the blame (and the damages) also fall upon the company that leased or rented the car.  That means "deep pockets"-- the judgment in any single case may be for millions of dollars, but if the driver can not pay it, the car renter or lessor must.
 
As a result of this rule, unique to New York State, car rentals and leases have become much more expensive.  Consequently, the number of transactions has sharply declined.  Consumers near the borders rent or lease from dealers in neighboring states.  Some dealers have gone out of business entirely.  Most major automobile manufacturers no longer lease cars in New York State.
 
Some lease arrangements have been structured as purchases, with an option to repurchase.  This avoids vicarious liability, but it makes the buyer, the lessee, responsible for paying state sales tax on the vehicle, which can run into thousands of dollars.
 
Why is New York State the only state in the nation with unlimited vicarious liability?  The State Senate has approved ending UVL in New York State.  But Assembly Speaker Sheldon Silver will not even allow the bill to come to a vote in his chamber.
 
Maybe the reason is that Mr. Silver is not only Speaker of the Assembly, but also a participant in a major negligence law firm, Weitz & Luxenberg.  The amount of his compensation from the firm is not required to be made public, so no one is allowed to know it (except the IRS, and that is properly confidential.)  It is widely believed, however, that his take from the law firm far exceeds his Assembly salary, which is $121,000 (consisting of $79,500 for an Assemblymember, plus $41,500 for being Speaker).  He forgoes the $12,500 he would also receive for chairing the Rules Committee, which decides what legislation goes to the floor for consideration.
 
This situation is, in our opinion, horrific on its face.  The head of a legislative body is also an employee of a private corporation.  He uses his enormous influence to prevent the passage of legislation, approved in all 49 other states, which could adversely affect his private employer, in terms of prospective loss of business.  The phenomenon of conflict of interest is not unique in American politics.  What is remarkable here is the magnitude of the conflict, the enormous power of the Speaker, and the ease with which he can bend other Assemblymembers to his will, all of whom are independently elected public officials.  Many of them demonstrate in their votes the same level of independence as members of the former Supreme Soviet.
 
Some legislators are widely known to favor certain companies and the causes they support.  If the companies are in their district, their views may reflect parochialism which is understandable and reasonable if not ideal.
 
But there are other connections which are less wholesome than standing up for the home team, or the views of one's constituents.
 
These ties are formed by substantial campaign contributions, travel (including vacations and inspection trips at corporate expense), high-fee speaking engagements before trade associations, hiring relatives and friends of the legislator, straight-out bribes, or any other form of reward for a legislator who then can be considered bought and paid for.  This is part of the web of private and personal influence that controls so much legislative and executive behavior. 

The incentive may not be financial at all: it could be the threat of political retaliation, what they call "primarying" an incumbent, or gerrymandering him out of his seat.  There are carrots as well as sticks: higher status and a larger lulu (payment in lieu of expenses) for a committee chair, or a post-legislative benefit such as nomination for a tranquil position on the bench, far removed from the burdens of seeking biennial reelection and soliciting campaign funds.
 
The talented  leader counts on legislators he can control.  As President Lyndon Johnson memorably said, "I never trust a man unless I've got his pecker in my pocket."
 
Baker tells us in the Times article that Senate Leader Joseph Bruno kills legislation that he disapproves of as effectively as Speaker Silver.  In the case Baker cites, concerning a bill to grant protection to smaller wetlands, there are interest groups on both sides, with environmentalists in support and local property owners opposed.
 
The effect of the bill Bruno quashed would have been to limit to a small extent individual rights to destroy natural beauty that they happen to 'own' legally, by purchase, marriage or inheritance.  Land ownership, beyond family farming, is a tenuous concept in a mutually-dependent environmentally-threatened planet.  Why should one person or corporation be legally entitled to blow up a great mountain, destroy a forest, or drain a lake?
 
With regard to the Assembly bill on vicarious liability, the opposition comes from trial lawyers, who would much rather sue cities, towns and private companies with deep pockets, than sue the persons who actually caused the damage by their dangerous driving.  In the end, of course, it is the rest of us who pay the huge judgments that juries may impose.  These mega-verdicts include the substantial share that plaintiffs' lawyers receive in contingent fees (based on the amount of the recovery rather than the hours of work performed), as well as their expenses, disbursements, etc.
 
We are particularly interested in hearing your views on the subject.  We will your post your responses on our blog, if you wish, or you can post them directly.  If you do not wish your response posted, advise us and your privacy will be totally respected.  If you have information on the situation described in this article, or you know of similar cases, please advise us directly or on the blog.  If you have any questions as to how this works, just ask us, by e-mail or by telephoning us at 212-564-4441.

We cannot conclude without sadly recalling that today, June 17, 2005, marks six years and one month since May 17, 1999, the day Speaker Silver used his remarkable powers over the hearts, minds and votes of his Assembly colleagues to force the repeal of the commuter income tax.  The levy had been collected for three decades, at the low rate of 45/100 of one per cent, on people who work in New York City but live elsewhere.  So far, that decision by the Speaker has cost the City of New York approximately three billion dollars.

 
Have a wonderful weekend.  The weather appears to be promising.    SQ