General Motors Corp., Pfizer Inc. and Allstate Corp. are among companies joining forces to seek a quick payoff for their support of Republicans in the last election: congressional
passage of limits on lawsuits.
On Monday, the Senate began debating legislation to move most class actions against companies from state to
federal courts, the first of three measures designed to reduce the cost of litigation.
Companies and trade groups say they are optimistic the legislation will pass this year because of President
George W. Bush's support, reinforced in last week's State of the Union address, and Republican victories in November that
widened the party's majority in Congress.
"This is the best opportunity we've had in recent history," says Kevin McMahon, chairman of the American Tort
Reform Association, a business coalition that includes Detroit-based GM and New York-based Pfizer.
Passage of the bill, which cleared the House in the last Congress and is likely to do so again, could create
political momentum for other, even more controversial, parts of Bush's agenda, such as creating private Social Security accounts.
"There's nothing that beats winning," said Sen. Rick Santorum, R-Pa., the chamber's third-ranking
Republican.
The other two components of the litigation agenda are proposals to restrict damage awards in malpractice suits
and to resolve litigation over asbestos exposure by setting up a business-financed trust fund to pay claims without going
to court. Santorum says both bills would be brought up later this year.
The U.S. Chamber of Commerce and other business groups, which spent more than $116 million to support Bush and congressional Republicans in the last election,
are backing up face-to-face lobbying of lawmakers with advertising targeted at drumming up public support.
The chamber, the National Association of Manufacturers and the American Tort Reform Association are all part
of the Class Action Fairness Coalition, which sent letters to senators on behalf of its members in support of the class-action
bill...
The Senate Judiciary Committee approved the class-action legislation Feb. 3, sending it to the Senate floor.
The committee's 10 Republicans were joined by three Democrats in approving the bill, which is designed to bar trial lawyers
from filing some lawsuits in local courts where judges and juries have reputations for being sympathetic to plaintiffs and
hostile to companies. In one such location, Madison County, Ill., the number of class actions grew from three in 1998 to 106
in 2003.
The legislation will "prevent judge shopping in states, even counties, where courts and judges have a previous
prejudicial predisposition on cases," Pennsylvania Republican Arlen Specter, chairman of the committee, said Monday on the
Senate floor.
Santorum says he expects the bill to pass, especially with the November defeat of Senate
Democratic leader Tom Daschle of South Dakota, who led the opposition last year. "There seems to be broad consensus
we can move it this year," Santorum said in an interview last week.
Lawsuits over torts, which are wrongful acts that can be compensated with damages, cost businesses $162 billion
in 2003, up from $153 billion in 2002, according to a study by Tillinghast, a division of the Philadelphia-based consulting
firm Towers Perrin. Individuals accounted for another $84 billion in tort costs, primarily from automobile accidents. The
total of $246 billion was 2.2 percent of the gross domestic product; in 1960, total tort costs of $5.4 billion accounted for
1 percent of GDP.
Former Michigan Gov. John Engler, president of the Washington-based National Association of Manufacturers,
said last month in announcing a business-backed campaign to generate support that "lawsuit abuse" is costly to business and
threatens jobs.
He cited a Jan. 25 federal appeals court decision to reinstate a lawsuit brought by two New York teenagers
against Oak Brook, Ill.-based McDonald's Corp., blaming their obesity on a diet of McDonald's food. "Common sense tells you
this particular case makes no sense," McDonald's spokesman Walt Riker says.
Proponents of the legislation also cite a 1995 class action against Minneapolis-based General Mills Inc., the second-largest cereal maker in the United States, after a vendor used nongovernment-approved pesticides on some of
the oats the company bought for Cheerios. In the settlement, consumers got newspaper coupons for cereal. The lawyers got $1.75
million. A General Mills spokesman declined to comment
By Jonathan D. Salant, Detroit Free Press, Feb 8, 2005
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Senate Approves Measure to Curb Big Class Actions
Handing President Bush a significant victory, the Senate overwhelmingly approved a measure on Thursday that would sharply
limit the ability of people to file class-action lawsuits against companies...
The measure would prohibit state courts from hearing many kinds of cases they now consider, transferring them to federal
courts. Experts say many cases will wind up not being brought because federal judges have been constrained by a series of
legal precedents from considering large class actions that involve varying laws of different states.
The legislation also makes it more difficult for class-action lawsuits to be settled by payments of coupons for goods and
services instead of cash by the defendants, a practice that has been heavily criticized by Democrats and Republicans.
The measure does not affect pending cases...
The legislation has long been promoted by large and small businesses, particularly manufacturers and insurance companies,
and failed by a single vote in the Senate in 2003. It could have an especially significant effect on cases involving accusations
of defective products, like drugs and cars; plaintiffs in such cases have had success in bringing large class actions in state
courts. Automakers and drug makers have worked for years with manufacturers and insurers to press Congress to adopt the bill.
The business groups have asserted that the legislation is necessary to curtail frivolous litigation that benefits lawyers
more than plaintiffs. They have said it is important to eliminate the unfair practice of lawyers' shopping for state courts
that were more favorable to plaintiffs...
But the measure has been attacked by civil rights organizations, labor groups, consumer organizations, many state prosecutors
and environmental groups, who say it would sharply curtail important cases and provide new protections for unscrupulous companies.
Many federal and state judges and state lawmakers have also criticized the bill, saying it would strip states of an important
role in judging such contests and could add a considerable number of cases to already burdened federal dockets.
"This bill is one of the most unfair, anticonsumer proposals to come before the Senate in years," said Senator Harry Reid
of Nevada, the minority leader. "It slams the courthouse doors on a wide range of injured plaintiffs. It turns federalism
upside down by preventing state courts from hearing state law claims. And it limits corporate accountability at a time of
rampant corporate scandals."
In the vote on Thursday, 18 Democrats joined 53 Republicans and the lone Senate independent, James M. Jeffords of Vermont,
in supporting the measure. Democrats cast all 26 dissenting votes. Two Republicans, Rick Santorum of Pennsylvania
and John Sununu of New Hampshire, did not vote.
Republicans say they hope the vote will provide momentum for two other major bills overhauling the tort law system, one
on asbestos litigation, the other on curbs on medical malpractice lawsuits. Critics of these bills say that part of the effort
by the White House is to attack trial lawyers, a vital financial base of support for the Democratic Party. They have also
said that like Social Security and the war in Iraq, tort law problems have been exaggerated by the Bush administration, and
that proposed solutions go much further than necessary.
The legislation approved by the Senate would prohibit state courts from hearing most of the kinds of class actions that
have most troubled corporate America - those in which the class consists of many consumers or employees from around the nation
who assert significant injuries of one sort or another. It precludes state courts from considering cases involving claims
of more than $5 million and having a member of the class living in a state different from the defendant's.
Critics of the legislation say that since the Supreme Court and several appeals courts have imposed limits on the ability
of federal district judges to consider cases involving the varying laws of multiple states, the legislation will deter the
filing of meritorious lawsuits.
Some experts in civil procedure and class actions said they believed that the fight would now move to federal courts and
that some federal judges might become more receptive to hearing such claims now that they know that their dismissal would
mean that no one else would hear them.
"The assumption of business interests was that federal courts will continue to dismiss them blindly, ignorant of the fact
that there is nowhere else for these cases to go," said Samuel Issacharoff, an expert on civil procedure at Columbia Law School
who is the main author of a coming treatise on different kinds of cases involving many parties, including class actions, for
the American Law Institute, an influential organization of lawyers, academics and judges. "I think more highly of federal
courts," Mr. Issacharoff said, "that they will realize that they stand between justice and the breach."
Stephen B. Burbank, an expert on class actions and civil procedure at the University of Pennsylvania School of Law, also
expects federal judges to try to find ways to hear the cases...
But he said lower federal courts would remain constrained by the precedents set by the Supreme Court and appeals courts
that sharply limit their ability to hear cases involving the differing laws of multiple states.
Professor Burbank, who recently completed a study on the sharp decline in the trials of all civil cases, said he feared
that one impact of the legislation would be a further reduction in such cases, particularly since federal judges must give
priority to criminal cases and already have heavy dockets. Class-action lawsuits rarely make it to trial but require considerable
time because judges are called upon by lawyers from both sides to rule on a variety of pretrial motions.
Prof. Arthur R. Miller of Harvard Law School, a longtime critic of the legislation who in previous years worked with organizations
that tried to soften the measure, said that the legislation could lead to the balkanization of class-action litigation by
encouraging plaintiffs' lawyers to file smaller suits in different courts, rather than a single large nationwide action.
"This will clearly have a dampening effect on class actions," Professor Miller said. "But accomplished law firms will figure
out how to work with it."
He also said that the vague language of the new legislation was certain to spawn a significant amount of new litigation
over the law's terms.
"This is not neat and crisp like the Ten Commandments," he said...
By Stephen Labaton, New York Times, Feb 11, 2005
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