July 19, 2016

Come and Take It: Texas Resident Fights $2 Billion Wood Pile Lawsuit

They say everything is bigger in Texas, and a $2 billion lawsuit over a wood pile certainly fits with this adage.

Government prosecutors in Hunt County are seeking this astronomical amount from Kirk Grady and Republic Waste Services of Texas, alleging that Grady violated 13 Texas water and health codes by keeping a pile of wood on his land before selling it to Republic Waste in 2002.   

The lawsuit claims that Grady engaged in unlawful waste disposal by storing the wood on his property for 6,208 days.  Each of the 13 alleged violations come with a penalty of $50 to $25,000 – per day.

Why such an uproar over a pile of wood? Because it’s worth more than kindling to Baker Wotring, the firm hired by the Hunt County prosecutors to bring the case on a contingency-fee basis.  Baker Wotring will get up to 35% of the damages received from the case. 

Contingency-fee contracts are often used when the county prosecutors claim they do not have the expertise or personnel to effectively handle a case.  But the county isn’t seeking out plaintiffs’ firms to bring cases, the firms themselves are pitching lucrative cases to county prosecutors – a door-to-door sales team of sorts.

According to Baker Wotring’s website, this is at least their fourth contingency-fee case, and not their first time working with Harris County.  In 2014, the firm was hired to prosecute AT&T for alleged violations of the Texas water code, resulting in a multi-million dollar settlement. 

These contracts provide an incentive for the county to take on cases that it normally wouldn’t, as there is no loss to them if the case is not successful and, if it is, both the county and the private firm walk away richer.

Unfortunately, the defendants in these cases aren’t so lucky.  Private firms have an incentive to drive up the damages sought from a defendant in order to increase their own payout.  The case becomes a pursuit of dollar signs rather than justice.

A recent Wall Street Journal article highlighted the proliferation of these lawsuits as budget-strapped state and local offices look to for new sources of revenue from litigation.  According to the Dallas Morning News, there are 50 such cases in Texas.  This includes a $63 million case against an individual over waste and storm water violations in neighboring Sulphur Springs.

Alleging that a pile of wood on private land is “unlawful dumping” in order to make a case for $2 billion in damages certainly raises questions, and Grady is looking for answers.  He’s counter suing the county in federal court arguing government use of contingency-fee counsel violates his due process rights, as the prosecution is no longer impartial.  Unlike government lawyers, he says, private contingency-fee attorneys have a financial incentive rather than a desire for justice.

There is judicial precedent to back up Mr. Grady’s claims.  In an amicus curiae brief filed in the case, the U.S. Chamber cites Marshall v. Jerrico, where the Supreme Court wrote that “a scheme injecting a personal interest, financial or otherwise, into the enforcement process may bring irrelevant or impermissible factors into the prosecutorial decision and in some contexts raise serious constitutional questions.” 

Mr. Grady is fighting back, but most defendants are pressured into settling by the sheer size of the fines and penalties against them – fueled by outside plaintiffs’ lawyers.  Perhaps Mr. Grady’s case will set a precedent, and future local governments will think twice before messing with Texans and their justice. 



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