Bush Signs Bill Curbing Class-Action Suits

Yahoo! News (AP) ^ | 2/18/2005 | Jesse J. Holland

[ohioWfan]

Hurting them in the long run works for me. :o)

[sanjacjake]

Thanks to you guys and gals from my home state...
OHIO....Bush again fulfilling a promise....Love it..
Wonder where pretty boy...Edwards is now??? He
is probably in denial...Jake

[mondonico]

This really is a good piece of legislation. It finally brings the law more into line with the primary purpose of the provision for federal "diversity" jurisdiction (i.e., federal court jurisdiction of suits between citizens of different states) provided by the Constitution.

One of the real reasons the plaintiffs' lawyers are p.o.'d is that the legislation also limits their fees in so-called "coupon" settlements to a percentage of the coupons actually redeemed.

In other words, if a lawyer brings a class action against Acme Puppy Chow for allegedly false claims as to the benefits of the product and then negotiates a settlement whereby ten million customers get a coupon for $5 off their next Puppy Chow purchase, the lawyer's fee is now calculated based on the coupons actually redeemed, rather than those just sent out. Often only a small percentage, say 10%, of members of the plaintiff class actually redeem the coupons. In the Puppy Chow case, this means only $5 million is ever paid to the class. However, under the old rule, the attorney's fees would often be calculated on the $50 million "value" of the total number of issued coupons. Assuming a fee of 25%, the attorney under the old practice would have gotten $12.5 million (25% of $50 million -- the total value of the coupons issued). Under the new law, the lawyer's fee is now calculated based on what is actually paid out (or projected to be paid out)--in our scenario, he gets 25% of $5 million, or $1.25 million.

Not chump change, but not enough to support a private jet (which is the defining toy for these guys).

The statement of purpose of the law is set forth below in case anyone is interested.




SEC. 2. FINDINGS AND PURPOSES.

(a) FINDINGS- Congress finds the following:

(1) Class action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.

(2) Over the past decade, there have been abuses of the class action device that have--

(A) harmed class members with legitimate claims and defendants that have acted responsibly;

(B) adversely affected interstate commerce; and

(C) undermined public respect for our judicial system.

(3) Class members often receive little or no benefit from class actions, and are sometimes harmed, such as where--

(A) counsel are awarded large fees, while leaving class members with coupons or other awards of little or no value;

(B) unjustified awards are made to certain plaintiffs at the expense of other class members; and

(C) confusing notices are published that prevent class members from being able to fully understand and effectively exercise their rights.

(4) Abuses in class actions undermine the national judicial system, the free flow of interstate commerce, and the concept of diversity jurisdiction as intended by the framers of the United States Constitution, in that State and local courts are--

(A) keeping cases of national importance out of Federal court;

(B) sometimes acting in ways that demonstrate bias against out-of-State defendants; and

(C) making judgments that impose their view of the law on other States and bind the rights of the residents of those States.

(b) PURPOSES- The purposes of this Act are to--

(1) assure fair and prompt recoveries for class members with legitimate claims;

(2) restore the intent of the framers of the United States Constitution by providing for Federal court consideration of interstate cases of national importance under diversity jurisdiction; and

(3) benefit society by encouraging innovation and lowering consumer prices.

[WmDonovan]

"LOL, I just had a lawyer in my office whining about this! He was going on and on about how the drug companies won't care who they hurt and kill with poorly researched drugs now because they don't have to worry about big lawsuits. They can blame their own greed for this bill."

If lawyers have such compassion for people injured by Doctors and Drug Companies, and are so brilliant at discovering what exactly they did that was so grievously and so obviously wrong then here is an idea: become a Doctor. That way they could prevent all these horrible mistakes and negligence in the first place. I mean, they find all these things wrong with Doctors with such ease, can't they do a better job? Oh, wait, that would actually involve work; besides when was the last time treating one patient put several millions dollars into a Doctor's pocket?

Just wish that there could be a class action suit against the tort industry as a whole, for lost jobs, higher prices, deaths (trained medical professionals are told not to stop at accidents to stay out of court), cold coffee, and for making life that much more nasty, brutish, and short.

[WmDonovan]

"If the "award" to the plaintiffs was going to be that paltry then why bother?"

"To make a long story short: they don't necessarily know how many plaintiffs there are or how much they were injured when the suit was initially filed."

If the tort lawyers are just doing it for "the little guys" can't they fork over some of their fee to those little guys? You know, in addition to the 32 cent coupons, toss in a couple of million from their fee and still go home rich? Oh, thats right, they aren't in it for the little guy. They are in it to get rich by looting where ever there is an excuse.

The point is that companies have come to expect this sort of nonsense and count it as the cost of doing business. When a case starts up they start building a reserve from higher prices passed onto consumers. Eventually they may elect to move the business overseas altogether or just close up shop. As it is mostly random I don't see it effecting the behavior of any company, indeed, in some cases the behavior of the company had nothing whatsoever to do with it. It is simply a lawyer subsidy tax on the public at large.

Here is a question to ponder: why do states and the federal government subsidize the education of law school students? Does society really benefit from more lawyers? It seems like there is a certain amount of honest work out there, but after that devilry is resorted to. It would be like trying to clone Pauly Shore: one is plenty already, two would just cause problems.

[Reagan is King]

Well said! They purport to be helping the little guy but they only line their own pockets with millions while the real injured parties get pennies. They probably get a big laugh out of bankrupting some of these smaller companies and putting people out of work with these ridiculous suits in the name of "protecting the consumer".

I didn't think I'd live to see the day that they actually got something accomplished on beating the lawyer lobby and stopping this lawsuit abuse but kudos to Congress and the Prez for getting this done.

[ohioWfan]

More likely Edwards is in mourning. :o)

And you're welcome from your home state.

We knew that we were at the heart of it all in this election, and the attitude and spirit among the thousands (25, I think) of volunteers was overwhelming.

The Kerry campaign admittedly didn't know what hit them.

We saved the nation!

[SedVictaCatoni]

If the tort lawyers are just doing it for "the little guys" can't they fork over some of their fee to those little guys? You know, in addition to the 32 cent coupons, toss in a couple of million from their fee and still go home rich?

Referring to my example: If the lawyers "refunded" a million dollars from their fee to the million plaintiffs, they'd get an extra dollar apiece. Er... okay.

The point is that companies have come to expect this sort of nonsense and count it as the cost of doing business.

As I mentioned in the post to which you replied, many of these cases are nonsense, and many are quite justified. If you found out that the electric company had been intentionally overbilling you for the last ten years, would you think that was a trivial matter, or that they shouldn't be held accountable for it? Do you think that they'd be likely to continue with the practice if they got smacked with a class-action lawsuit?

As it is mostly random I don't see it effecting the behavior of any company, indeed, in some cases the behavior of the company had nothing whatsoever to do with it.

Are you familiar with many class-action lawsuits? Numerous defective or dangerous products have been discontinued, and numerous efforts at price-fixing or fraud have been stopped by means of the class-action lawsuit. That is its place in American law - to permit a sort of citizens' mob to act as a private attorney general to go after a powerful wrongdoer.

This powerful tool is, like any, often abused, which is why the reforms referred to in this article are a good idea.

Here is a question to ponder: why do states and the federal government subsidize the education of law school students?

I'm not sure what you're talking about here. Some state universities have law schools, just like they have schools of engineering, journalism, and veterinary medicine; the tuition is similar to any other graduate program, so students are not really "subsidized". Most law schools are private institutions, of course.

Does society really benefit from more lawyers?

Not really. However, probably the majority of law school graduates can't find jobs as lawyers. They end up doing something else anyway.

[Right_in_Virginia]

It takes money away from the funding of the Dems. It's a beautiful thing!

It sure brings a smile to this face ;^)

[Blood of Tyrants]

Congress can pass a bill protecting businesses and manufacturers from lawsuits arising from injury or death due to criminal misuse or negligent behavior by the consumer of ALL non-defective products including guns, cars, alcohol, baseball bats, power saws, etc.

[satchmodog9]

bump

[Sonny M]

but in the short run those trial lawyers are still just as rich and *far* more motivated against us than ever before.

I'm not so sure. Alot of lawyers are furious that the Dems sold them out.

I know one laywer who is still steamed, and swears he will never give to the democratic party or any canidate ever again.

It did kind of surprise me, that no filibuster was used, and the dems caved in on this pretty easily.

[ran15]

I read in one election cycle 50% of the Democratic party spending and private groups supporting them came from trial lawyers.

--President Bush is visionairy in many ways as is the leadership of the Republican party. Moving towards an ownership society for example.

And now as yet another example ending the legal minefield that business in America is. Bringing competitiveness back, but also increasing standard of living. And liberty where people will one day be able to take risk to enjoy life again, without a billionaire lawyer and his father in law judge watching their every move.

[ReagansRaiders]

I was there in the East Wing of the White House for the signing ceremony yesterday. Very cool. I started working on this issue almost 13 years ago for W's father's '92 campaign, so it is good to finally have some closure on it!

[FR_addict]

I don't agree with the medical caps, but I like this bill.

Class action suits only make attorneys rich. It's about time they stopped this nonsense.

Each case should be tired on it's own merits.

[WmDonovan]

"Here is a question to ponder: why do states and the federal government subsidize the education of law school students?"

"I'm not sure what you're talking about here. Some state universities have law schools, just like they have schools of engineering, journalism, and veterinary medicine; the tuition is similar to any other graduate program, so students are not really "subsidized". Most law schools are private institutions, of course."

Every state school, and any private college receiving federal monies (Pell Grants, Subsidized Loans, etc.), is, supported, i.e., subsidized, at least in part by the public. Therefore the question is whether or not what the said educational institution does is in the public interest. Train an extra Veterinarian and overall Vet costs to the public go down and availability goes up--good things. Train an extra Engineer and the costs of manufactured items, roads, electrical power, etc. go down--good things. Train an extra Lawyer and...unleash frivolous lawsuits that are essentially a tax on the public? Train an extra Journalist and someone just wasted a lot of time, but at least was a mostly harmless waste of time.

I suppose the reason that others and myself have a particular dislike for tort lawyers is their pious claim of selflessly standing up for the 'little guy' when torts are simply a big business making big bucks for a handful of millionaires while the 'little guys' loose their jobs and pay higher prices.