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

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Corporate Friends of the Court

Direct contributions by the PACs and executives of 50 corporations supplied 15 percent ($1.4 million) of the money that the seven justices raised. Houston-based Enron, America's largest natural gas corporation, has been the most lucrative corporate pipeline fueling the justices' war chests. During the period studied, Enron had three cases before the court and its executives gave the seven justices at least $78,700. Two San Antonio firms were the next largest source of contributions. Top executives at H.B. Zachry construction company contributed $61,200, while the top brass at Kinetic Concepts, a manufacturer of high tech hospital beds, gave $57,800.

Top Corporate Court Boosters

Company Funding of 7 Justices Supreme Cases

Industry

Base

Enron Corp. $78,700 3 Electricity/Gas Houston
H. B. Zachry Co. $61,200   Construction San Antonio
Kinetic Concepts $57,800   Hospital beds San Antonio
TRT Holdings $52,595   Energy/Hotels Corpus
H.E.B. Grocery Co. $52,169 1 Grocery retail San Antonio
United Services Auto Asc. $42,250   Financial services San Antonio
Coastal Corp. $41,600 2 Energy Houston
Wagner & Brown Ltd. $41,000   Energy/Investments Midland
Hunt Oil Co. $40,950   Energy/Development Dallas
O'Connor & Hewitt Ltd. $40,142   Oil/Investments Victoria
Houston Industries $36,350 6 Electricity Houston
Beecherl Investments $34,486   Development Dallas
Weekley Homes/Properties $33,000   Development Houston
Texas Utilities $32,600 2 Electricity Dallas
Rutherford Oil Co. $31,250   Energy Houston
Dow Chemical $30,100 3 Chemicals Midland, MI
Halliburton Co. $29,900   Energy Houston
Sterling Chemicals $28,500   Chemicals Houston
Exxon Co. $27,750 4 Energy Houston
Contran Corp. $27,500   Corporate raids Dallas
David Weekley Homes $27,000   Home building Houston
Farmers Insurance Group $26,859   Insurance L. A.
Red McCombs Enterprises $26,743   Auto retail San Antonio
Denitech Corp. $25,203   Copier leasing Irving
Valero Energy $24,850   Energy San Antonio
Texas Instruments $24,600   Electronics Dallas
Brown & Root Inc. $23,600   Construction Houston
Cogen Technologies $21,000   Electricity Houston
Union Pacific $20,978 1 Railroad Fort Worth
Helena Laboratories $20,414 1 Lab equipment Beaumont
Total $1,061,089 23    


Executives of two other leading sources of corporate funds, TRT Holdings and H.E.B. Grocery, accounted for more than $50,000 each. Like Enron, HEB had a case before the court during the period studied. HEB now has another case pending before the Supreme Court. HEB Grocery Co. v. Bilotto is a premises liability lawsuit filed by a plaintiff who slipped and fell on an HEB property. Charles Butt still wines and dines the court; on October 21, 1997, he contributed $5,000 to the San Antonio campaign kick-off for Justice Craig Enoch, an event that Butt graciously hosted in his home. Other major corporate contributors that also happen to pop up on the court's docket include: Tenneco, NationsBank, Diamond Shamrock, American General, Southwestern Bell and Shell Oil.

PAYOLA CASE STUDY #1

'Twofer' Tax Relief
For 2 Top Contributors

HEB Grocery Co. v. Jefferson County
Enron v. Spring Independent School District

In HEB Grocery Co. v. Jefferson County, the Court reversed an appeals court decision to rule that HEB, which operated six grocery stores in Jefferson County throughout 1992, should be permitted to pay inventory taxes on just one of its six stores there.
Under Texas law, businesses typically can opt to have taxes assessed on the inventory that they hold either on January 1 of the tax year or on September 1 of the preceding year. Jefferson County objected when HEB selected the earlier date (September 1991), because the company had only one store open in the county at that time. Four months later (January 1992), the company had six open stores in the county and a much bigger tax exposure. The County argued that using the earlier date would improperly let HEB duck 1992 taxes on five stores that it operated that entire year.
This decision benefited the justices' second-largest individual contributor, HEB Chair Charles Butt. All seven of the justices studied here were part of the May 5, 1996 per curiam decision. All seven also took money from the San Antonio-based Butt family, which owns the grocery chain. Altogether the Butt family gave the justices $53,098 (90 percent from Charles Butt), in amounts ranging from $2,000 to Justice Owen up to $13,600 to Justice Gonzalez. Lawyers and law firms representing HEB also contributed $17,379 to the justices, compared with $11,061 contributed by firms and attorneys representing Jefferson County.
On the very same day as the earlier HEB ruling, justices unanimously reversed an appeals court decision, handing down a similar inventory tax ruling benefiting the justices' biggest corporate contributor (see Enron v. Spring Independent School District). Enron executives doled out $78,700 among all seven of the justices, including $24,500 from CEO Kenneth Lay. One month before the ruling, Lay gave Chief Justice Phillips $5,000. This single court decision saved Enron $224,989 that it otherwise would have had to pay to educate children in Spring, Texas.

Executive Decisions
The largest individual contributors to the justices also are overwhelmingly drawn from top executives in corporations in which the bottom line is influenced—sometimes directly—by court decisions. The extent to which corporate giving is channeled through top executives is illustrated by the fact that many of these executives listed here are from the same companies mentioned above. Often all—or almost all—of the money that the justices took from a corporation came from its top executives.

The Court's Top Business-Class Supporters

Family Funding of 7 Justices Firm Industry Top TLR* Funder?
Dick/David Weekley $60,000 Weekley Homes/Properties Home/mall building X
Charles Butt $53,098 HEB Grocery Co. Grocery chain X
Reese/Rob't Rowling $52,195 TRT Holdings/Omni Hotels Energy/Hotels X
James Leininger $49,300 Kinetic Concepts Inc. Hospital beds X
Ray Hunt $40,000 Hunt Oil Energy/Development X
HB/JP Zachry $37,600 H.B. Zachry/Tower Insurance Construction/Insurer X
Louis Beecherl, Jr. $32,486 Beecherl Investments Oil & gas X
Gordon Cain $32,000 Sterling Chemicals Chemicals X
Pat/Mike Rutherford $31,250 Rutherford Oil Oil & gas X
Peter O'Donnell, Jr. $30,000 First National Bank Banking X
Harold Simmons $27,500 Contran/Valhi Corporate raiders X
Dennis O'Connor $25,800 O'Connor & Hewitt Ltd. Oil/Ranching  
Dennis Berman $25,203 Denitech Corp. Copier leasing  
Kenneth Lay $24,500 Enron Corp. Gas/Electricity X
Tipton Golias $20,414 Helena Laboratories Lab testing kits  
David Dewhurst $20,000 Falcon Seaboard Resources Oil & Gas/Electricity  
Total $561,353      

* (Texans for Lawsuit Reform)

A striking characteristic of the top 16 individual families contributing to the justices' political campaigns is that 12 of them are major contributors to Texas' best-financed special-interest group, Texans for Lawsuit Reform (TLR), each having given the group at least $10,000. In fact, only two of the top 15 (the families of David Dewhurst and Tipton Golias) have not contributed to TLR. Many of these top supporters of TLR and the justices make lucrative livings in companies that attract lawsuits.

TLR President Richard Weekley heads a strip mall development company (Weekley Properties) and owns part of David Weekley Homes. The Weekley brothers families contributed $60,000 to court justices in the period studied, making the justices more indebted to them than any other Texas family. At least part of the Weekley family's personal interest in the courts and the weakening of tort laws stems from its business. David Weekley Homes has been sued by dozens of angry customers, who allege, for example, that the company knowingly built inadequate foundations on shifting soils, causing new homes to crack.

After the Weekleys, the justices are most indebted to the San Antonio-based Butt family. The Butt family gave the justices $53,098, with 90 percent coming from HEB grocery chain Chairman Charles Butt. The Butt family's grocery spent four years in a legal fight with Jefferson County, Texas, which said HEB owed more property taxes than the company cared to pay. On May 10, 1996, the Supreme Court ruled for HEB, helping out the justices' second largest individual contributors (see "Twofer Tax Relief,")

Father and son Reese and Robert Rowling gave the justices $52,195. Texaco paid the Rowlings $477 million for their Tana Oil company in 1987. The family's TRT Holdings diversified this money, buying up: one-third of downtown Corpus Christi, control of Corpus Christi National Bank and $500 million worth of Omni Hotels.

The next family willing to contribute tens of thousands of dollars to Supreme Court campaigns is that of James Leininger. This San Antonio-based owner of a high-tech hospital bed manufacturing company, Kinetic Concepts, gave the justices $45,500. Leininger also is a major TLR supporter, as well as a leading funder of numerous conservative candidates and causes. His company has been the target of lawsuits and Food and Drug Administration complaints involving patients who contend that they have been thrown from, crushed or strangled by Kinetic hospital beds.

It is no coincidence that some of the strongest supporters of TLR and the seven justices are executives from companies that have had cases before the court or that confront the kinds of serious liability issues that characterize the chemical, oil and gas, construction and medical device industries. Many of these industries are investing heavily in litigation protection from the claims of injured employees, neighbors and customers.

PAYOLA CASE STUDY #2

Executive Hanky Panky

Helena Labs v. Snyder


Helena had a face that launched a thousand lawyers.
Helena Labs secretary Pam Snyder had an affair with her boss, Joe Golias. Golias was the vice president of the Beaumont lab testing equipment company owned by his parents. The jilted spouses of Golias and Snyder then became odd bedfellows when they jointly sued Helena Labs and its Golias family executives for failing to prevent the extra-marital affair.
A per curiam court majority on November 3, 1994 delivered a summary judgment in favor of Helena Labs, reversing an appeals court's decision that the facts of the case ruled out a summary judgment for the company.
This Supreme Court ruling probably would not be controversial if the Goliases also did not happen to be top court contributors. They gave a total of $20,414 to the seven justices in the period studied.
The four studied justices who were on the bench at the time of this decision (Justices Phillips, Gonzalez, Hecht and Cornyn), took $12,614 in Golias money. The amounts ranged from $300 to Justice Cornyn to $7,214 to Justice Hecht. Justice Hecht took $1,500 from the appreciative Goliases the day after the court ruled in Helena's favor.


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