Class Action Defendants Seek Reforms to Stave Off Big Losses

CNSNEWS.com ^ | 7/02/02 | Christine Hall

[kattracks]

(CNSNews.com) - Hammered by a burgeoning number of costly class action lawsuits, American businesses are asking Congress to make a few procedural changes that would consolidate redundant lawsuits and try to re-direct damage awards to injured plaintiffs, rather than their lawyers.

The reforms advocated by the National Association of Manufacturers (NAM) will help "lift one more burden off the beleaguered American business sector that finds itself in the most intensely competitive world marketplace the world has ever seen," said Michael Baroody, NAM executive vice president, speaking at a Monday roundtable forum.

"There's no derogation of anybody's right to sue or be compensated for actual harm," said Baroody.

The problem, as the business community sees it, is that trial lawyers are taking advantage of the legal system in ways unforeseen when the system was started, giving campaign cash to state court judges and filing cases with national implications in plaintiff-friendly state courts.

The upshot is a chilling effect on new prescription drugs and other products offered to American consumers; state court dockets flooded with redundant, wasteful class action suits; court decisions that "hijack" the law in other states; and big cash settlements that benefit trial lawyers but shortchange plaintiffs and threaten defendants with bankruptcy, according to John Beisner, who heads the 120-attorney Class Action Practice Group at O'Melveny & Myers LLP.

Rather than confronting one class action lawsuit on a given matter, defendants face five, ten, maybe even a hundred, says Beisner, who describes the situation as a "massive litigation juggernaut" that makes companies feel like they wake up to the same lawsuit every day, akin to the scenario depicted in the 1993 comedy Groundhog Day.

The solution, NAM believes, is contained in the "Class Action Fairness Act," which would move interstate class actions to federal court. The bill also sets forth a number of consumer protections, such as a ban on fees paid to plaintiffs in exchange for allowing their names to appear as plaintiffs on a class action lawsuit.

Whatever its merits, though, the cause of reform may hit a brick wall in the form of the Democratically-controlled Senate.

The House passed the NAM-endorsed "Class Action Fairness Act" in March 2002, mostly along a party line vote (only 17 Democrats voted for it). And the President supports the bill, according to NAM.

The Senate judiciary committee will hold a July 31 hearing on the companion bill sponsored by Sen. Charles Grassley (R-Iowa). The committee passed the bill last year, but a Grassley spokesperson could not say whether Senate Majority Leader Tom Daschle (D-S.D.) will bring the bill to the floor for a vote.

Moreover, the Association of Trial Lawyers of America (ALTA), a big donor to the Democratic Party, is actively fighting the bill.

"It is the ultimate in forum shopping for defendants," said Carlton Carl, a spokesman for ATLA.

"It would allow virtually any defendant in any state class action to have the case removed to federal court at any time during the proceeding," said Carl. "If the defendant decided on the last day of trial 'this ain't goin' my way,' all the defendant has to do is move that it be removed to federal court and it will be."

The federal court system is more expensive, cumbersome and time-consuming, says Carl, so "the [U.S.] Chamber of Commerce, funded by the tobacco industry and the insurance industry and the pharmaceutical industry, wants to change the rules because they think that they will intimidate plaintiffs into not filing suit."

The bottom line, says Carl, is that the legal system is not a cakewalk for either side but that there are already safeguards in place against frivolous lawsuits.

"There are a lot of things in litigation that may not seem fair to some parties, and courts have a great deal of discretion to ... throw out frivolous cases...combine cases that are fundamentally the same...[and] sanction lawyers who bring frivolous cases or who offer frivolous defenses," said Carl.

As for trial lawyer contributions to judicial candidates, Carl pointed to big campaign contributions coming from the Chamber and its allies -- $15 million last year and a promised $30 million for this year's mid-term election.

Indeed, Baroody said NAM is orchestrating a massive election year push to educate businesses and workers and pressure candidates about the need for reform. No candidate will doubt that this is a priority issue, and NAM will hold members of Congress accountable for their position they take on class action reform, Baroody promised.

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[concerned about politics]

The costs of litagation gets passed on to the consumer. For every frivolous lawsuit the businesses go through, we end up getting the the bill in the long run.
Liberals litigate to get others to do their will, and those who are on the other end are forced to accept the politically correct oppression.
Without the trial lawyer "get rich quick" scemes (where they're the ones actually getting rich) we wouldn't have such high costs on products and services. I remember reading how the forest service spends something like 1/3 (?) of their budget fighting legal battles with the enviro-wacos.
Then there's Jessie Jackson litigating funds for his organization.
If there's a good reason to sue (not just because someones "feelings got hurt"), I'd like to see the victim get the cash, and the lawyers get the crumbs instead.
I've gotten at least 3 notices in the mail saying I could join a class action lawsuit and to call "this number." Heck, if I felt I was wronged enough to sue, I'd know what the lawsuit was for without "calling this number"!