Every so often in the annals of high-stakes corporate lobbying, a curious thing happens: the special-interest pleading outlives the special interest.
Lobbyists savor such moments. For once they can strut into a hearing room and declare, with a high-mindedness the other side can no longer casually dismiss, that it was the principle of the thing, after all.
The Mead Corp. was able to make that sort of case in the House Judiciary Committee last week, putting a twist on what has already been one of the most intriguing lobbying sagas of the 97th Congress.
"Now we'll see who's been wearing the white hat all along," said Alan Wiseman, a Howrey and Simon lawyer who is part of the army of Washington operatives that has been carrying Mead's colors in the bitterly fought campaign.
For the past 18 months, the Ohio-based paper products company has been the ringleader of a band of five major corporations that have pressed Congress to pass a law that could dramatically reduce the potential damage judgments they face in civil price-fixing suits they have already lost.
The lobbying fight hasn't been over the merits of the bill, which involves obscure changes in the antitrust law, but over whether the proposed changes should apply to pending cases.
Opponents of retroactive application have dubbed it a "Price Fixers Relief Act" and the "Mead Bailout," and the bill has been running a slow, tortuous course through Congress.
But last Tuesday, Mead removed all elements of self-interest from its piece of the lobbying equation. It reached an out-of-court settlement in its case, a step it had resisted for four years.
The company agreed to pay $45 million over the next six years to 200,000 class-action plaintiffs who had accused Mead and 36 other companies of conspiring to fix the price of corrugated containers.
The figure represented a concession by both sides, though Mead went up more from its last public settlement offer ($28 million) than the plaintiffs came down from their last demand ($50 million).
From the start, the legislative effort has been viewed on both sides as a textbook application of one of the most sophisticated gambits in the Washington lawyer-lobbyists' tactical briefcase -- forum cross-pressuring. The idea is to create action within one branch of government that will produce a happier result for one's client in another.
On that level, the lobbying battle was a draw. Neither side was sure if the bill would go through in the form Mead wanted, and the uncertainty appears to have brought both to the table.
"If we'd gotten this bill through, Mead would have never settled," said former attorney general Griffin B. Bell, whose firm, King and Spaulding, has been paid $460,784 over a 13-month period to lobby the bill on behalf of one of Mead's corporate allies, the Georgia-Pacific Co.
"If we were sure the bill wouldn't make it, I can't say for certain that we would have accepted this figure," said Stephen Susman, lead attorney for the plaintiffs, who is trying to collect an $8 million fee for his work.
In settling, Mead gave up the right to appeal the case, an appeal many believe it had a good chance to win. The plaintiffs gave up the right to wait for a court-ordered damage judgment, due by the end of the year, that was expected to be in the $300-to-$600 million range.
It was the vast size of that potential judgment that kicked off the lobbying effort. Mead's corporate brass has insisted that the law as now written gives plaintiffs' attorneys the power of legalized "blackmail" and "economic terrorism" over defendants in price-fixing cases.
Here was Mead's problem: Under the law, when a co-defendant in a price-fixing case settles out of court, it leaves the remaining non-settling co-defendants exposed to the risk of a court-ordered damage judgment based not only on their own wrongdoing, but on the wrongdoing of the settling defendant as well.
Plaintiffs' attorneys in large class-action, price-fixing suits have found that under this law they can set up a classic whipsaw. They can offer sweetheart deals to the most culpabale defendants to get them to settle early, then increase the price of settling to the holdouts, whose exposure to damage keeps escalating with each settlement.
By the time Mead's case went to the jury, its 36 co-defendants had settled, leaving Mead, which had only 3 percent of the market share of the alleged conspiracy, liable for a judgment based on the entire industry-wide scheme.
In settling for $45 million, Mead may have cut its potential losses considerably, but it also paid out far more than any other co-defendant. Indeed, unlike Mead, companies that settled early had been found guilty of criminal charges and they were able to pay the plaintiffs just $1 million in damages per percentage point of market share, while Mead paid at a rate of nearly $15 million. (It must gall Mead to have rejected an offer four years ago to settle for $3 million.)
For the last 18 months, Mead has been railing about the inequity of all this as a special-interest pleader, seeking a bailout.
Now it has paid its way to the higher moral ground of victim. Judging from its reception last week before a once-hostile judiciary panel, now that Mead has nothing left to gain, it has a much better chance to win.