American College of Coverage Counsel Newsletter
Monday, April 27, 2020
Doug Houser, one of the nation’s preeminent bad faith lawyers, has announced plans to retire. What does a great lawyer do for a second act, after 60 years with one law firm and a 137-6 record trying bad faith cases (a court record rivaled only by the Harlem Globetrotters). To answer these and other questions, ACCC President Michael Aylward sat down with Doug to talk about his life in the law and plans for the future.
ACCC: Doug, I know that you’re a native Oregonian, but is it true that your family was among the first settlers of Oregon?
Houser: My great-grandfather came to Oregon in 1843 on the Oregon Trail. He was a 13-year-old orphan from Germany who spoke no English. He arrived in New York with little but a violin and a letter to an uncle who was in the beer business in St. Louis. By the time he got to St. Louis, his uncle had moved on. So he was sitting on the banks of the Mississippi River near a camp fire, listening to a man with a fiddle. My great-grandfather got out his violin and started playing, too. One of the wagon masters came over and invited him to travel to Oregon for free if he’d provide entertainment along the way. And so that’s how he got to Oregon.
ACCC: What steered you to a career in the law?
Houser: My mother’s brother had gone to law school during the Depression before he became a newspaper publisher in Oregon. He encouraged me and every teacher that I had told me that I was going to become a lawyer. I wanted to go to Stanford. I got accepted and got a full tuition scholarship, but that still meant I was going to have to work my way through school. So, I took it upon myself to write a letter to the Stanford Law School and they told me that they were a national law school and that only 10-15% of their students had been undergraduates at Stanford. That told me that I’d have to get really good grades to get into Stanford Law and that probably wouldn’t happen if I was working every night at the Cardinal Laundry, which was the job that I’d already lined up. At the recommendation of a family friend (Mark Hatfield), I ended up applying to and attending Willamette University, which turned out to be the perfect situation for me. After that, I went to the Stanford Law School.
ACCC: So what did you do after Stanford? Did you go to work for Hatfield?
Houser: No, I did a stint in the Army as a typist in a Civil Affairs Unit. I was really fortunate in the commanders that I worked for. One went on to become the chief judge in the Ninth Circuit and the other was the presiding judge in Multnomah County for years.
ACCC: So what was your first job as a lawyer?
Houser: I took a job with an 8-person law firm in Portland, where I’ve been since 1960. Our best and biggest client was First National Bank, which was the biggest bank in Oregon at the time, and I did a lot of bank work. I was working for a partner named Rupert Bullivant, who was a remarkable lawyer. He did some insurance coverage work and through him I got to go to the Roundtable that property underwriters used to hold very month in San Francisco. Our office wrote a lot of the forms and endorsements for property insurance and special coverages. He was the expert in that and when he moved on to other kinds of work, I ended up doing more insurance work. A big break came in the 1960s when my cousin Phil Knight, who had been at the Business School two years behind me at Stanford, quit his job as an accountant to follow his dream of creating a track shoe company with his old coach at the University of Oregon. So, I incorporated Nike and served on their Board of Directors for the next 50 years. I was also their outside general counsel for years, but I said no to going in-house. I turned down what turned out to be an awful lot of money, but I wanted to continue doing the things that I love. I wanted lots of clients, not just one. I like to try lawsuits and you can’t do that and be general counsel.
ACCC: What was your first big insurance coverage case, Doug?
Houser: In 1962, there was a big windstorm on Columbus Day with 110 mile-per-hour winds that did a lot of damage in the Portland area. A local company named Fred Meyer lost electricity and all their refrigerated products were lost. We had a coverage dispute over the scope of the off-premises electrical outage coverage. It’s the only time to this day that I got mentioned as the losing lawyer in the national insurance press for a case that I lost. At the time I felt like my career had been ruined. Actually, it was a big break for me and changed my career. As it turns out, clients thought of me as a “big case” lawyer. In any event, we later rewrote the policy, and it has withstood numerous tests since.
ACCC: How did you acquire a reputation to handle cases nationally?
Houser: Two things, probably. First, an extensive collection of cases published in an article that my partner Ron Clark and I wrote entitled, “The Insurance Company’s Right To Be Wrong.” The article was translated into French and chosen as the best insurance article of the year in the 1980s. Secondly, I think that clients liked the idea that I was willing to try cases that other people were not. I would frequently take cases where someone else had lost summary judgment and the company decided that they wanted to change counsel and I’d get a call asking whether I’d like to try this case in Texas or New York or Louisiana or wherever. I have tried cases in 21 different states. I’ve always been optimistic and didn’t mind taking over other people’s cases just before trial. I’ve tried 137 insurance cases with punitive damages, and most of those were bad faith claims. We only lost six, but thanks to appeals, we only paid money three times. I have just one more of those to finish, and then I can retire.
ACCC: Do any of those cases really stand out in your memory?
Houser: They were all fun, even the ones that I lost. It’s funny, but the one that I really remember was one that I lost back in 1968. Maybe you really remember the ones that you lost most of all. It was a case involving defective construction of airport office buildings in Seattle. The case was tried in federal court in Los Angeles and lasted over a month. The key witness for my client was the vice president of property claims. The plaintiff’s counsel had done a very good job in my client’s deposition in pinning him down and getting him to state under oath that there were no memoranda or other documents on the key issue in the case. However, during the fourth week of trial, he decided that he would tell the truth. I thought he had told the truth the whole way. I had no idea, but he told the judge that there was a memo and he had saved it. He admitted that he had lied to me, he had lied to the other lawyer, and he had lied to the judge. The jury was out for two days and had a lot of questions, but the only issue was how bad it was going to be. By the time the jury came back, my client had already left two days before and “retired” from his insurance company position. I was all alone for two days at counsel table waiting to learn how large the verdict would be. The jury came back with a $9 million verdict, which was an awful lot of money back in 1968. After the trial was over, the judge invited all trial counsel to interview the jurors. I figured I’d go and just be a fly on the wall to listen and maybe learn something. When the elevator opened, I saw the foreperson, who was a very attractive woman who I thought had been flirting with the plaintiff all through the trial. But when the elevator doors opened, she pushed the plaintiff and his lawyer aside and ran up to me and put her arms around me and said, “We’re so sorry. We all thought that you were wonderful, but your client was awful.” I only had one question for her: “Did you consider any other amount?” She said that the rest of the jury wanted to award $25 million, but she got them to knock it down to $9 million. It proved to me that I couldn’t really read a jury. The person I had thought was against me all along was the only one for me. If you can survive, sometimes a loss is really actually a win.
ACCC: You’ve been practicing law for nearly 60 years. What’s the biggest change you’ve seen in how insurance coverage cases get tried or adjusted?
Houser: I think the biggest change is that all too often those cases don’t get tried. A lot of people in the insurance industry are intimated by bad faith claims that are automatically brought now in many jurisdictions. If the plaintiff survives summary judgment, too many carriers are willing to give up. Sadly, if they don’t give up and they lose, their experience is that they may very well be fired. A lot of my clients had stiffer backbones earlier on, but they are no longer in the business.
ACCC: Has there been a change in the relationship between insurance coverage counsel and their clients?
Houser: I’ve been blessed with several clients that I’ve worked with for 30 or 40 years. Of course, when I started, there were more than 30,000 insurance companies, and we would represent 200 or 300 every year. Today, there are only about 3,000 carriers doing business in America. There’s certainly been a lot of consolidation in the insurance industry during that time. Nowadays, a lot of insurers are more interested in the economics of litigation and what it costs to defend than they are in getting the best lawyers to carry out the true intention of the parties.
ACCC: Any plans for retirement?
Houser: Oh, I plan to play a little more golf, read a few more books. I’m active in the community in a lot of ways, and I’ll continue to do some pro bono stuff and work for nonprofits that are meaningful to me.
ACCC: Any regrets with respect to things that you had hoped to do but never got around to?
Houser: I don’t have a regret at all. I loved every damn day of it. I’ve never had a sick day in my life. I’ve been blessed in a lot of ways. And I’ve had wonderful partners. The other thing that has been hugely important to me has been being married for 60 years to a woman who really understood that I loved what I did. Lucy is a retired Episcopalian minister. She loved what she did too. She’d listen to my closing arguments, and I’d listen to her sermons. We’ve made a good team. Not only were my family and my partners supportive, but one of the things that really made it so much fun, have been the organizations that I belonged to and the people that I got to meet. Some of the best friends that I’ve made in my life have been lawyers in this field. We were all lucky to be lawyers at that time. There can’t have been a better period of time to practice law than the years after World War II.
ACCC: Doug, we all wish you well.
Houser: Thanks. I’m going to stay on as an emeritus member of the College, so I hope to make it to a few more meetings in the future.
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