Litigation Bills Threaten Economic Recovery

Sunday, March 1, 2009 - 01:00

Tiger Joyce

American Tort Reform Association (ATRA)

Editor's Note: In the present economic crisis, corporate counsels' principal role is to assist their corporations to survive the crisis and to join in the recovery efforts. As Tiger Joyce points out in this article, plaintiffs' counsel are exploiting changes in political leadership to open up new opportunities for litigation that will thrust burdensome and unnecessary expenses on corporations at precisely the wrong time.

By identifying major legislative threats, ATRA performs an essential service. In the months ahead, this Special Section - Hot Issues will continue to include articles and interviews from the nation's leading law firms that will provide corporate counsel across the nation with the information they need to explain to their managements how such legislation will impact their corporations. Armed with such information, corporations will be able to determine what actions are appropriate.

As corporate and defense counsel know, last November's elections strengthened trial lawyer-biased majorities in Congress and several statehouses across the country. And though at least one election night poll conducted by the U.S. Chamber of Commerce indicated that 83 percent of voters still believe that the number of frivolous lawsuits in America was a serious problem, many lawmakers - spurred on by generous campaign contributions from the personal injury bar - will nonetheless try again this legislative season to rollback recent tort reforms and otherwise expand liability on behalf of their political patrons.

Accordingly, the American Tort Reform Association is leading a nationwide effort, with a focus in the states, to defend against this latest, well-funded onslaught. It is calling upon those who understand the economic and moral threats posed by unchecked and sometimes unscrupulous plaintiffs' lawyers to join in what must be an all-hands-on-deck, multi-state response to the politically powerful litigation industry.

Congress

Along with the rest of America, official Washington recently marked the 200th anniversary of Abraham Lincoln's birth. A VIP crowd in Washington, including President Barack Obama and many congressional leaders, packed a celebration at the newly renovated Ford's Theater where the 16th president was assassinated in 1865. Each of the policymakers who spoke that evening had high praise for Lincoln's brilliant Civil War leadership and emancipation of the slaves. But none of the elected officials made any mention of Lincoln's preference as a young trial lawyer in Illinois to emancipate his neighbors fellow citizens from the "fees, expenses, and waste of time" inherent in lawsuits.

Lincoln's notes from a law lecture in 1850 warned members of the trial bar to "[n]ever stir up litigation. A worse man can scarcely be found than one who does this. Discourage litigation. . . . Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser. . . . As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough."

Even if Lincoln himself could today reiterate his thoughts on lawsuit abuse, he wouldn't likely win a majority of hearts and minds in the 111th Congress. By way of foreshadowing perhaps, the first two bills passed by the new Congress and sent to the president's desk in January were trial lawyer bonanzas. Sure, the bills' supporters promoted the legislation as anti-pay discrimination measures. And certainly no one's against fair pay. By ostensibly eliminating the statute of limitations on pay discrimination claims and otherwise making such claims more rewarding for plaintiffs' lawyers with passage of the "Lilly Ledbetter Fair Pay Act" and the "Paycheck Fairness Act," a bigger, bolder congressional majority has quickly established itself as one that seems to believe there are too few lawsuits hindering American competitiveness, not too many.

Along with a slew of similar stand-alone bills yet to come, such as the "False Claims Act" and the so-called "Employee Free Choice Act," civil justice reformers also fully anticipate countless "trial lawyer earmarks," smaller provisions tucked away in larger pieces of legislation, all of which will work to expand liability and boost the bottom line of the plaintiffs' bar.

Preemption

Displeased with last year's near-unanimous Supreme Court decision in Riegel v. Medtronic , Sen. Edward Kennedy (D-Mass.) and others are poised at press time to reintroduce last year's stalled "Medical Device Safety Act." The bill intends to undo the high court's reaffirmation of longstanding federal law that preempts state claims challenging the safety and design of certain medical devices already approved by the Food and Drug Administration.

Despite what some of the historical revisionists on Capitol Hill are saying these days, Congress clearly intended in the preemption clause of the "Medical Device Amendments" of 1976 to make the FDA the nation's top authority in assessing the benefits and risks of certain lifesaving and life-enhancing medical devices. Furthermore, personal injury lawyer lobbyists and the lawmakers who are beholden to them are simply wrong about patients' legal rights under existing law. Patients already have redress if a device is manufactured improperly, and fraudulent behavior or misrepresentations to the FDA during the approval process by a manufacturer are not shielded under current law.

One doesn't have to believe that the FDA is without its bureaucratic imperfections to believe its experts are still far better suited to regulate the safety and effectiveness of medical devices than are lawsuits driven by personal injury lawyers. Nevertheless, even as the economic recession deepens, a congressional majority seems willing to help such lawyers in threatening manufacturers of critical medical technologies with speculative, potentially bankrupting lawsuits.

Other industries will be similarly threatened as the trial bar's federal legislative and regulatory agenda calls for an all-out war on laws and rules that preempt lawsuits in state courts.

Arbitration

Just as the trial bar is loathe to let experts at federal agencies preempt lay judges and juries, they're determined to end the cost efficient and generally well regarded process of arbitration when it comes to a wide variety of finite disputes between individual consumers and service providers or an employee and employer, for example. Compared to the cost, time and stress that Lincoln warned against as inherent in lawsuits that go to court, arbitration is inexpensive, timely and simple. Best of all, a claimant needn't retain a lawyer to receive fair treatment. So naturally, lawyers want Congress to put the kybosh on arbitration.

The national trial lawyer lobby, the American Association for Justice (formerly known more forthrightly as the Association of Trial Lawyers of America), is expected to press its anti-arbitration campaign one industry at a time, ultimately generating multiple bills and earmarks, as opposed to targeting all industries' arbitration contracts in one giant omnibus bill that would draw a broad coalition of opponents. Credit card, cell phone and employment contracts will be among those scrutinized, as will nursing home and home buyer contracts. Motor vehicle sales and leases also will be targeted.

Space is limited here, so before moving on to look at what's afoot at the state level, it should be noted that the litigation industry also expects Congress to press ahead in inviting more questionable consumer lawsuits from sometimes politically motivated state attorneys general under the "Consumer Product Safety Act" and even, perhaps, criminalizing the accidental or isolated manufacture of defective products. Invariably, consumers will pay the costs for all such litigation in the form of higher prices and lost jobs.

In The States

During the past 20 years, state legislatures, much more so than Congress, have taken positive action to address problems affecting the civil justice system that can result in unfair assignments of liability that harm small businesses, limit access to health care, hinder the economy, hurt consumers and erode the public's faith in the rule of law.

States have enacted joint and several liability reforms to ensure that defendants are responsible for their fair share of damages, not more, not less. They've lessened bond requirements for staying execution of judgments during appeals so defendants can seek judicial review of extraordinary awards. State legislatures also have limited awards for pain and suffering and punitive damages that had, in the words of former Supreme Court Justice Sandra Day O'Connor, "run wild."

In the past, plaintiffs' lawyers concentrated their efforts on stopping such commonsense reforms in the courts. They took advantage of lengthy state constitutions that are filled with vague clauses, such as so-called "open courts" provisions, which have no equivalent within the U.S. Constitution. Indeed, a number of state courts chose to "nullify," or strike down on state constitutional grounds, the reasonable civil justice policymaking of legislators. Often with slim majority decisions, these courts in effect substitute their own public policy preferences or those of the plaintiffs' bar for those of duly elected lawmakers.

While personal injury lawyers continue to seek judicial nullification in the courts, they've now launched a frontal assault on tort reform in legislatures, too, and they expect considerable help from their political allies in those legislatures. Beyond seeking such "tort deform" rollbacks, the plaintiffs' lawyer lobby is otherwise seeking to expand liability and increase lawsuits in several ways. So it is in the states where ATRA has now focused much of its attention and seeks additional support for its efforts.

Consumer Protection Acts

Consumer protection laws have emerged as a powerful tool for plaintiffs' lawyers to launch new types of litigation. These laws generally prohibit "unfair or deceptive" acts in the sale of a product or service. But because the range of consumer products is so complex and varied, these statutes are purposely vague and broadly designed. This can make such laws attractive to innovative trial lawyers as means to circumvent the traditional requirements of product liability law or to seek regulations that would accomplish this.

Washington, D.C.'s infamous $54 million "pantsuit" against a dry cleaner that allegedly misplaced a pair of suit pants was a classic exploitation of well-intentioned but overly broad statutory language that allows individuals to sue for $1,500 "per violation" without demonstrating injury. Trial lawyers now seek comparable liability-expanding amendments of definitions, recognition of specific conduct as a violation, or coverage of industries already regulated by government agencies.

Wrongful Death

With legislation that expands the scope of claimants in wrongful death actions, personal injury lawyers can create more litigation and profit. They're also pushing legislation to allow non-economic damages, such as pain and suffering and loss of consortium or society, in such actions. These damages come on top of traditional economic damages allowed under existing state statutes to compensate a plaintiff for all of the direct pecuniary losses incurred as a result of the decedent's wrongful death. But non-economic damages are subjective in nature, of course, and can thus lead to much higher overall awards, even excessive awards.

Statutes of Limitation and False Claims

The plaintiffs' bar also hopes to lengthen statutes of limitation for filing various types of lawsuits and expand certain states' false claims laws, determined as it is to boost an increasingly lucrative line of so-called qui tam lawsuits wherein whistleblowers may be motivated more by significant shares of damages awards than by any sense of altruism when they allege that providers of goods or services to the state have engaged in fraudulent conduct.

Tracking all of this trial lawyer legislation at the state level and providing alerts with respect to the need to defend against it is a full time job, so ATRA has just dedicated a new Web site solely to this purpose. For up-to-date information about specific bills and the latest from the statehouses in which they're moving, visit www.DefendTortReform.com. Please work with ATRA so that we can keep up the good fight at the federal level, too, working hard to convince lawmakers everywhere that Lincoln had it right all along: "Never stir up litigation."

Please email the author at tjoyce@stradley.com with questions about this article.