Steve and Amber Mostyn
Two trial lawyers take from the little guy to give to the Left, deep in the heart of Texas
By Jonathan M. Hanen, Foundation Watch, November 2014 (PDF to come)
Summary: A Texas power couple composed of two trial lawyers is pouring millions into politics to stop tort reform and turn Texas—and the rest of America—blue. The two give far less to their charitable foundation. In their most notorious case, they took almost half of the winnings in a huge lawsuit they filed on behalf of the “little guy.” As the losing insurance company began paying the fat legal fees, little guys all over Texas saw their premiums rise. Charity, in this case, begins and ends at home.
Steve “Hurricane” Mostyn grew up in the East Texas town of Whitehouse, was the first in his family to earn a college degree, and then was graduated from South Texas College of Law in 1996. Mostyn established his eponymously named law firm in 1999 and “found success by representing people who wanted to sue their insurance companies, such as those who had mold or foundation problems in their houses or who were denied coverage by their health carriers,” according to Jason Embry of the Austin American-Statesman.
Mostyn reportedly met his wife, the former Amber Anderson, while volunteering with her at the Texas Trial Lawyers Association, where he previously served as president.
When Hurricane Rita swept through Texas in 2005, Mostyn and his law firm aggressively snapped up the cases of homeowners who believed their insurance companies had underpaid them for damages. Mostyn quickly became the premier hurricane lawyer in the Lone Star State, filing 1,200 Rita claims. His strategy was to flood the zone, filing such a torrent of cases that insurance companies would be overwhelmed and decide to settle instead of litigate.
Mostyn followed up on his victories when Hurricane Ike struck Texas on Sept. 13, 2008. At its most powerful, Ike was classified as a Category 4 hurricane while over the ocean. Ike was the costliest hurricane ever to strike Texas. The Insurance Council of Texas reported that “insured losses as a result of the storm totaled $12 billion—$10 billion caused by wind damage and $2 billion caused by flooding.” Ike hit Galveston with 110 mile an hour winds, sending “a 20 foot wall of water over the Bolivar Peninsula and created a rising tide that flooded most of Galveston and many nearby communities along Galveston Bay” (ClaimsJournal.com, Sept. 9, 2013).
Ike gave Mostyn a chance to repeat his shock-and-awe approach to litigation that worked so well with Rita. Mostyn’s law firm proposed a $189 million settlement with the Texas Windstorm Insurance Association (TWIA)—the insurer of last resort in vulnerable coastal areas—in a class-action lawsuit on behalf of 2,400 Galveston County homeowners. When the $189 million settlement was accepted, he earned the moniker “Hurricane Mostyn.” His law firm took a rather astounding $86 million in fees for its efforts.
According to the Statesman’s Embry, “TWIA General Manager Jim Oliver complained in a December letter to a legislative oversight panel that Mostyn had demanded more than $86 million in legal fees for 315 cases it filed against the association, not including economic and punitive damages.” The Houston Chronicle quotes Oliver as saying, “These demands came almost always at the very beginning of the lawsuits, with no explanation as to how attorneys’ fees could possibly be so high, so fast.”
Trial lawyers are the single greatest funding source for the Democratic National Committee (DNC) and Democratic Party candidates nationwide. So naturally the Left reflexively opposes any sort of tort reform or caps on damages, and defends the often outrageously excessive fees gobbled up by trial lawyers on the grounds that these legal entrepreneurs—traditionally known as “ambulance chasers”—defend the “little guy” from the depredations of insurance companies, doctors, and corporations. For example, Embry quotes Amber Mostyn as saying, “The reason I’m a trial lawyer is I believe in individual access to courts and that the little guy should get a fair shake against an insurance company or a big corporation. That’s what being a Democrat is about for me, is lifting all boats. It’s really all tied together.”
But Steve Mostyn’s breathtakingly large cut of the TWIA lawsuit—$86 million out of a $189 settlement—amounts to 45 percent of the take. It may be hard to find anyone on even the farthest reaches of the Left who would dub that kind of profit-taking to be social justice, redistributive justice, or economic democracy. Journalist Michael Isikoff reports that the settlement “triggered an increase in premium payments by the TWIA and calls by Republicans in the state Legislature to curb what were called the association’s ‘out-of-control legal expenses’” (NBC News, Oct. 22, 2012).
Given the massive proportions of the hurricane, it is likely that many of the plaintiffs in the class-action suit were under-compensated for the damage to their homes. Mostyn and his law firm probably helped these “little guys” to achieve a more just settlement of their initial claims. But as Andrew Stiles of the Washington Free Beacon reports, “The $86 million in payments to Mostyn’s firm was more than what the TWIA takes in for premium payments each year. Earlier this year the TWIA approved a 5 percent increase in premium rates in an effort to recoup its substantial losses associated with Hurricane Ike and the resulting lawsuits. State officials have said the TWIA may need to collect as much as $250 million a year to fund its total losses.”
Since the TWIA’s payouts and legal fees exceeded its insurance premium revenue, it would appear that the insurance companies in this case were not nearly as greedy as the far Left makes them out to be. Quite to the contrary, the avaricious character in this drama is Mostyn, whose greed has burdened “little guys” all over coastal Texas with a 5 percent premium increase to fund his windfall. Mostyn thus achieved what free-market economists call a classic case of concentrated benefits to an individual or group, i.e., Mostyn and his law firm, and dispersed costs to the community, i.e., the coastal residents of Texas who depend on hurricane insurance.
And so it was that a local boy from Whitehouse made good. In short, it looks as if Mostyn managed to privatize a big chunk of the TWIA’s profits and premiums for 2008 and to socialize most of the costs going forward.
The whole affair offers an object lesson in the conservative case for tort reform. Conservatives tend to take the view that class action lawsuits are a right and proper means of defending private property. But at the same time the principle of federalism holds that states should retain the right to limit or cap damages in tort cases and, if necessary to discourage frivolous lawsuits, institute a rule that the loser in a lawsuit pays for all legal fees—a rule that Britain and Canada have long followed.
In lieu of caps or limits that could short change the victim, Paul Rosenzweig of the Heritage Foundation proposes two reforms. First, require trial lawyers to offer the plaintiff a choice between a percentage of the settlement and “an equivalent hourly rate,” thus preventing trial lawyers from hoodwinking the victim by dealing only in the abstraction of a settlement percentage. Second, require lawyers to offer to settle each case out of court, and if the plaintiff decides to accept the deal, allow the lawyer to bill only for the hours required to draw up and conclude the settlement. These policies are a topic of debate in conservative circles, but any of them is preferably to allowing trial lawyers like the Mostyns to prey on disaster victims and future payees into the insurance system.
The Mostyns maintain a 501(c)(3) charitable foundation based in Houston called the Mostyn Moreno Foundation that was created in 2006. The complete name of the couple’s philanthropy, which was granted charitable status by the IRS in October 2011, is the Glenda Jean Mostyn and Joe E. Moreno Educational Foundation.
The Mostyn Moreno Foundation barely registers in the world of institutional philanthropy. In its most recent reporting year ending December 2013, the foundation disclosed assets of just $3,212 and income of $241,386. In the Schedule of Contributors attached to its 2012 IRS filing, the foundation acknowledged having one donor that year. The donor was the Mostyn Law Firm PC, which gave $175,000.
According to its website, the foundation “supports, promotes and operates programs, projects, and collaborative efforts in Texas, primarily in Houston and the Gulf Coast region, that serve to encourage the abilities of children with special needs.” It focuses “specifically on children with special needs and supports our community through our ‘Christmas Lights’ program—an experiential life skill training program, our ‘Community Connections’ program—a special needs child assistance program for families, our ‘Rodeo Day’—Ritch’s Little Raiders rodeo extravaganza, and our ‘V.I.P. Day’ program—a high school girls’ self-esteem improvement effort.”
The foundation has given small contributions to local causes. In its 2012 IRS filing it disclosed $110,474 in grants, largely to independent school districts around Texas. According to its tax filings available on Guidestar.org, the foundation gave no money away in the years 2006-2010.
Glenda Jean Mostyn (1939 – 1996) was Steve Mostyn’s mother. “In August of 1988, she accepted a position with the Saint Louis School in Tyler, Texas,” according to her website biography. She worked with children with “significant impairment” until her death and was “strongly motivated to empower this special group of children to achieve all they could.”
Steve and Amber Mostyn created the foundation “to honor Jean and provide unique and special opportunities for the students that she loved. Jean’s love for these students was amazing and continues through her children and the mission of the foundation.”
The foundation is sponsoring and will receive the proceeds from the inaugural Annual Joe E. Moreno Memorial Golf Tournament that will be held June 15, 2015, at Quail Valley Golf Course in Missouri City, Texas. The golf contest is named after Joe E. Moreno (1964-2005), the foundation’s other namesake. Moreno, a Democrat, was elected in 1998 to the Texas legislature from House District 143. He was a member of Council Number 60 of the leftist racial identity group, League of United Latin American Citizens (LULAC).
Moreno was part of the infamous, illegal effort by Texas Democrats to prevent the Texas legislature from voting on congressional redistricting in 2003, openly defying the will of Texas voters as expressed at the ballot box. Cheered on by the national media, Democrats went into hiding in order to obstruct the legislative process of redistricting that is a constitutionally guaranteed power of the states and an essential element of representative democracy.
“When the House Democrats boycotted the Legislature over congressional redistricting in 2003, Moreno brought the movies the Democrats watched on their chartered buses secretly bound for Ardmore, Okla. One of them, ‘Catch Me If You Can,’ underscored the humor of hiding from the Republican leadership and helped evoke a communal sense on the trip. It became the theme of the four-day holdout that drew national media attention” (Austin American-Statesman, May 7, 2005).
The last laugh, however, was on the Texas Democratic Party, which has yet to recover from the consequences of its free choice to publicly humiliate itself in 2003 after losing control of the statehouse in November of 2002. The legislature has remained in Republican hands ever since, with the GOP expanding its narrow control of the House in 2010 from 75-73 to 95-54 in 2012 and maintaining its 19-12 lead in the Senate.
It is not clear precisely when Steve Mostyn’s desire to fundamentally transform Texas began. In 2002, the GOP wrested control of the state legislature from Democrats, and set about cutting spending and passing limits on jury awards in 2003. Embry asserts that Mostyn was dissatisfied with cuts to children’s health insurance, increases in college tuition, and “barriers at the courthouse.” He quotes Mostyn as saying, “It burned a hole in me pretty deep.”
Following the Texas GOP takeover in 2002, the Mostyns and their law firm increased donations to Texas state candidates in each successive election cycle; $24,000 in 2004, $130,000 in 2006, $1 million in 2008, and over $2 million in 2010, according to Linda Scott of the American-Statesman.
Mostyn ramped up his spending to outside groups in a failed effort to take back the state legislature. As Andrew Stiles wrote at the Washington Free Beacon, “Mostyn has even set up a number of shell political organizations designed to support Republican candidates who pledge to oppose tort reform—groups such as Texans for Individual Rights, Conservative Voters of Texas, Texans for Insurance Reform, and Back to Basics PAC, which spent more than $4 million since 2010 attacking Gov. Rick Perry (R., Tex.) and other proponents of tort-reform legislation. By some estimates, Mostyn donated more than $10 million to such groups in 2010 alone.”
Of course it was Steve Mostyn’s right to create these political nonprofits and spend $10 million on them, but any conservative donor doing the same thing would have been demonized by the mainstream media. Such a donor would be branded as the Charles or David Koch of Texas, and accused of attempting to buy both the governor’s mansion and the Texas state legislature.
In 2012, the Mostyns bounded onto the national stage and have been ranked as high as fifth on the list of top donors to outside groups that supported President Obama’s re-election. They have also joined the secretive Democracy Alliance, a cabal of billionaires, multimillionaires, and wealthy labor unions begun by financier George Soros with the goal of steering millions into left-wing nonprofits and electing Democrats (see the October Foundation Watch for more on the Alliance).
The Mostyns’ largest single donation in 2012 was their $3 million gift to Priorities USA Action, a super PAC that is usually remembered for its video that sought to blame Mitt Romney for the cancer death of a woman named Ranae Soptic, who putatively lost her health insurance when her husband’s employer was closed by Bain Capital, the private equity management firm at the time headed by Romney. Subsequent investigations revealed that the claims against Bain Capital and Romney were groundless, and the woman in fact had access to healthcare coverage either through her husband or from other sources throughout the time of her illness.
Defining Romney Early
Isikoff of NBC News reports that Priorities USA Action raised $52 million for the 2012 election cycle, with $19 million coming from its top six donors. With their $3 million donation, the Mostyns joined the ranks of Jeff Katzenberg, the CEO of Dreamworks Animation who gave $3 million; Fred Eychaner, a Chicago based media mogul who donated $3.5 million; James Simons, a hedge fund billionaire who donated $3.5 million; Irwin Jacobs, the founder of Qualcomm who gave $2 million; and Jon Stryker, a gay rights activist who gave $2 million. Honorable mention for $1 million donations went to director Steven Spielberg and David Boies, the lawyer for Al Gore in the Florida 2000 recount.
To put the Mostyns’ $3 million donation in context, it must be emphasized that super PACs are forbidden by law from coordinating with campaigns. Their messaging nevertheless tends to mirror the story arc, policies, and talking points set by campaign strategists. In the case at hand, the timing of the video campaign against Romney conducted by Priorities USA Action coincided exactly with the implementation of the so-called “grand gamble” strategy of Obama’s campaign manager Jim Messina. The idea was to risk spending the bulk of the campaign’s advertising dollars in the spring of 2012, in order to brand Romney as a heartless capitalist who ruined lives by closing companies for the sake of profit-taking or outsourcing jobs to foreign countries for the sake of efficiency.
Messina’s idea was risky because it meant that the Obama campaign would be outspent by Romney down the stretch in September and October 2012. Indeed, it is unorthodox for a campaign to let itself be outspent by the opponent in the final weeks since the majority of voters in past presidential elections start to make up their minds after Labor Day and about 40 percent of voters in congressional and local races make up their minds in the last two weeks of voting.
But this early offensive branding campaign worked for Obama and his strategist Messina in 2012. Messina’s strategic concept relied on the fact that Romney was then ensconced in a competitive multi-player primary and would not be able to respond to the attacks until June or July when it would be too late. Messina’s big bet was plausible, because it is a well-known adage in political consulting circles that if you go to sleep on an attack ad, the next day it becomes the effective truth in the media.
Since the Obama 2012 campaign flouted the usual timeline of campaign advertising, it will forever remain a subject of speculation whether Messina’s grand gamble would have worked without the help of outside groups like Priorities USA and mega-donors like the Mostyns.
What did the Mostyns get for their $3 million? According to Isikoff, Steve Mostyn had a “private meeting with the president … at the W Hotel after he gave his first $2 million to Priorities USA Action.” The final million came after Obama’s improved performance in the second presidential debate, which led Mostyn to wire $1 million to Priorities USA Action. “I needed to see some fight,” Mostyn explained.
But the first installment did not come without some prodding and salesmanship from high-level political operatives. According to the New York Times, Priorities USA Action sent strategists Bill Burton (former Obama White House deputy press secretary under Robert Gibbs) and Paul Begala (former Bill Clinton strategist and TV pundit) to Key West, Florida, in April 2012 to meet with the couple on one of the Mostyns’ three yachts.
The two men asked for a $1 million donation, even though the Mostyns were upset that Obama had not governed as far to the left as they wanted. Burton buttressed the Priorities USA case with “polling data indicating voters’ lack of familiarity with Romney’s business record at the private-equity firm Bain Capital, as well as financial figures from the 2010 midterm election showing how well-spent donations could help a Democrat prevail over a better-financed Republican opponent.”
Burton also showed the Mostyns “raw video footage” of campaign ads featuring “somber images of several men and women who were laid off by Bain.” The crux of their argument was that TV spots are cheaper when purchased early in the cycle and that, as Begala pointed out, defining the opponent early was crucial. “That’s what we did to Bob Dole in 1996,” he said. “It’s what the Bush campaign did to John Kerry in 2004,” Burton added, “because voters at this point don’t know much about Romney, every dollar we spend now is worth more, exponentially.”
In sum, the timing and the class warfare content of Priorities USA Action’s ad buy matched that of the Obama campaign and Messina’s grand gamble, although there was apparently no illegal coordination between the two. It will come as no surprise if it should ever be discovered that the Mostyns are among the anonymous donors to Organizing for Action, the revamped Obama for America presidential campaign that operates as a 501(c)(4) nonprofit and relocated to Texas, retaining the services of Jim Messina and several high-ranking Obama strategists. Politico reported in January 2013, “Along with Messina will be Obama campaign and White House alumni Stephanie Cutter, Robert Gibbs, Jennifer O’Malley-Dillon, Julianna Smoot and Erik Smith. Senior adviser David Plouffe will also join when he leaves the White House later this month.”
Organizing for Action’s mission is to promote the agenda of Obama’s 2012 campaign. According to Politico, the agenda items listed by Obama were “immigration reform, climate change, balanced deficit reduction, reducing gun violence, and the implementation of the Affordable Care Act.” One can trust the above-mentioned political operatives to stick to the stated agenda in their messaging. In the boardrooms of far-left foundations and nonprofits, however, these agenda items invariably translate into comprehensive amnesty for illegal aliens, a carbon tax, war on the coal industry, higher corporate and income taxes, increased Keynesian stimulus spending, gun control and confiscation, and single-payer government-run healthcare.
Recent Strategic Giving
Perhaps emboldened by Obama’s re-election, the Mostyns expanded their political giving repertoire in 2013. The Huffington Post reports that “Texas trial lawyer and Democratic donor Steve Mostyn, through his Mostyn Law Firm, and his wife, Amber Mostyn, gave $1,392,500 to super PACs in 2013 … The Mostyns, who emerged as major national donors in the 2012 election, gave $750,000 to Americans for Responsible Solutions, $255,000 to Battleground Texas, $250,000 to Planned Parenthood Votes, $100,000 to House Majority PAC, $25,000 to Ready for Hillary, and $12,500 to Texans for America’s Future.”
Founded by 2012 Obama campaign national field director Jeremy Bird, Battleground Texas is a political action committee focused on improving Democratic fortunes in the thus far inhospitable Lone Star State. In the words of its deputy field director, Adrienne Bell, the PAC is “dedicated to turning Texas blue.” But it has experienced some high-profile missteps. Guerrilla video journalist James O’Keefe III of Veritas Visuals caught Battleground Texas operatives illegally copying voter registration data for campaign purposes and apparently ignoring one of their volunteers breaking election laws.
Americans for Responsible Solutions (ARS) is the pro-gun control PAC of former U.S. Rep. Gabrielle Giffords (D-Ariz.), and her husband Mark Kelly, an astronaut. Giffords became prominent nationally through personal tragedy. In January 2011 she was shot in the head by Jared Lee Loughner, who listed the Communist Manifesto as one of his favorite books. Although gravely wounded, Giffords survived and with intensive therapy has since recovered some of her ability to walk, speak, read, and write.
ARS claims to support the Second Amendment, but advocates universal background checks, which would destroy both the gun show industry and online gun sales. ARS also advocates tougher penalties on what it calls “gun traffickers” who both sell firearms without a license and engage in a “straw purchase”—presumably to a felon or criminal who has lost the right to bear arms. It is not immediately obvious what ARS means by this terminology, but its proposed remedy is once again universal background checks and some sort of federal statute against its conception of gun traffickers. In fairness, ARS does stop short of advocating for a federal gun registry, which is a common agenda item among far-left foundations and nonprofits that would force Americans to register with the federal government before they can exercise a constitutionally guaranteed right.
According to the Center for Responsive Politics, in 2014 Amber Mostyn doubled down with a $500,000 dollar donation to Planned Parenthood Votes, and the couple maxed out at $64,800 in both 2013 and 2014 to the Democratic Congressional Campaign Committee (DCCC).
Amber Mostyn has had a singular focus in the 2014 election cycle: the seemingly bootless attempt to have Texas state senator Wendy Davis elected governor of Texas. Davis gained national attention in June 2013 for her 11-hour filibuster in the Texas senate over a bill that sought greater restrictions on abortions. She built up her 2014 gubernatorial campaign narrative by claiming that she was a poor single mom who worked her way through Harvard Law School, but it was later revealed that her second husband borrowed the money to pay for her undergraduate and Harvard Law degree (she left him the day after he made the last payment to Harvard). At press time most election prognosticators thought little of her chances of defeating Republican candidate Greg Abbott. Back in March, the Huffington Post quoted Ford O’Connell, Republican strategist and former McCain adviser, as saying “It’s not a race. Essentially this is more about Democrats saying they’re expanding the maps and making baby steps toward progress.”
A July 2013 article by the New Republic’s Molly Redden sheds light on the motivations of Texas’s most celebrated female liberal mega-donor. Amber Mostyn chairs Annie’s List, the Texas counterpart of the pro-abortion political action committee EMILY’s List (which means “early money is like yeast” – in that it raises dough); both groups support female candidates with a liberal agenda. Mostyn reportedly helped recruit Davis to run for State Senate in 2008, and she and Annie’s List donated $155,000 to Davis’s campaign, which amounted to about one-tenth of its fundraising. Redden claims, “The $421,000 they funneled to Davis’s 2012 bitter re-election fight helped Democrats stave off a Republican supermajority in the [Texas] Senate. Soon, Annie’s list will launch a down-ballot program to lard the lower ranks—school boards and city councils—with what they hope are future Wendy Davises.” Redden also observes that Annie’s list recruited Nicole Collier and Mary Ann Perez to run in 2012, two victories which broke the GOP’s supermajority in the Texas House.
According to Redden, “Mostyn and her husband already have donated $25,000 to Ready For Hillary, a super PAC raising money for Hillary Clinton’s widely anticipated 2016 presidential run (albeit without Clinton’s endorsement). In exchange for her fundraising prowess, Mostyn has demanded a say in the PAC’s strategy discussions.”
If true this means that Amber Mostyn is taking a seat alongside George Soros, the founder of the far-left Open Society Institute who advocates bringing European social democracy to the United States. Soros has likewise jumped onto the Hillary Clinton 2016 bandwagon with a $25,000 donation to the Ready for Hillary PAC and secured a position as co-chair of the PAC’s national finance committee.
In sum, this survey of the Mostyns’ philanthropic and political giving leading up to 2014 reveals that the Texas power couple is not merely out to defend the interests of “the little guy” from insurance companies and corporations. By funding Priorities USA Action, Planned Parenthood Votes, Battleground Texas, Americans for Responsible Solutions, the House Majority PAC, the DCCC, and Ready for Hillary PAC, the Mostyns have gone well beyond the stage of supporting Bill White in his failed bid to defeat Rick Perry for Texas governor. Through these donations, they have tacitly endorsed the entire national agenda of the Democratic Party, including decreased rights for the unborn, lower standards of ballot security and voter integrity, increased gun control, amnesty for lawbreakers, and cap and trade.
While writing huge checks to super PACs, leftist donors like the Mostyns spread horror stories in which they claim that super PACs somehow abridge free speech rights by making the speech of some individuals more equal than that of others. They also claim that super PACs will somehow drown out individual voices and transform America into a plutocracy. They reject the compelling legal logic of the Supreme Court’s ruling in Citizens United v. Federal Election Commission (2010) reaffirming that corporations, including labor unions, have a constitutionally protected right to engage in political speech. (SpeechNOW.org v. FEC, decided March 26, 2010 by the U.S. Court of Appeals for the D.C. Circuit, is credited with giving birth to super PACs as campaign finance funding vehicles.)
As Michael Isikoff writes for NBC News, Mostyn “said he shares the general liberal distaste for Super PACs, but given the vast amounts flowing into the GOP Super PACs, he was persuaded to contribute to Priorities USA Action by Paul Begala and Bill Burton during a meeting aboard his yacht last spring: ‘You don’t bring a knife to a gun fight.’” In this manner, Steve and Amber Mostyn, along with their fellow mega-donors, have learned how to embrace contradiction and live with hypocrisy.
Jonathan M. Hanen is a freelance writer and political consultant based in Washington, D.C. A native of Connecticut, he earned his Ph.D. in philosophy from Boston University.