U.S. Chamber Institute for Legal Reform Says Lawsuit System Still Faces Threats

Although much has changed in the nation’s tort climate in 15 years continued vigilance is needed to protect against liability lawsuits coming from new directions and heavy-handed government actions against business, the U.S. Chamber Institute for Legal Reform reports.

The Institute was created in the late 1990s to combat a legal crisis caused by out-of-control, class-action litigation and mega lawsuits in a few “jackpot” jurisdictions favorable to plaintiff lawyers.

“Much has changed in 15 years, the Institute reported Wednesday, the day it hosted the 14th Annual Legal Reform Summit in Washington, D.C. “Crises have abated, and sanity has steadily returned to parts of our lawsuit system.”

State legislatures addressed some of the worst problems and Congress passed the Class Action Fairness Act in 2005, bringing order to the system, the Institute said. (Alabama’s Legislature this year approved and Governor Robert Bentley signed a bill limiting the product liability exposure of large aircraft manufacturers to 12 years and imposing a two-year statute of limitations on filing lawsuits.)  Attention also was focused on jurisdictions friendly to the plaintiffs’ bar and unbalanced court rulings.

The Institute said reformers must keep watch in order to preserve past victories and confront new trends like in tiny Madison County, Ill., where one in four asbestos lawsuits were filed last year – a record 1,563 cases.

Now federal agencies are using liability-expanding regulations and enforcement actions against businesses. The Food and Drug Administration currently is considering a rule that will result in more lawsuits against generic pharmaceutical companies, increasing the cost of life-saving medicines.

Also, the Department of Justice and other agencies have forced companies into large settlements by threatening catastrophic consequences like corporate criminal indictments or exclusion from federal contracts.

“There is no trial, no due process and no justice,” the Institute said. “Just the government using its overwhelming power to force businesses into submission.”

At the same time, plaintiffs’ lawyers are advancing novel legal theories, developing new business models, and spreading some of the worst elements of the U.S. lawsuit system around the globe.

“These are all significant challenges facing legal reformers,” the Institute said. “But as past history has shown, we can be successful against strong odds as long as we don’t let up. By being proactive and persistent, we can achieve a healthy lawsuit system.”

The U.S. Chamber of Commerce said its plan to achieve legal reform includes exposing lawsuit abuse and advancing commonsense reforms that will reduce the costly drag on the American economy, standing up for American business in the courts, enforcing legal ethics rules, and ensuring that damage awards are fair and equitable. Plans also include advancing commonsense legislative reforms, challenging overzealous regulators in the courts at the federal, state, and local levels, and monitoring the development of and preventing the spread of problematic litigation trends around the world.

The non-partisan statewide Business Council of Alabama represents the interests and concerns of nearly 1 million working Alabamians through its member companies and its partnership with the Chamber of Commerce Association of Alabama.  The BCA is Alabama’s exclusive affiliate to the U.S. Chamber of Commerce and the National Association of Manufacturers.

The BCA is a long-standing advocate for legal and judicial reform to reduce the cost of discovery, promote just and efficient dispute resolutions, reduce the filing of frivolous lawsuits, reform non-economic damages, reduce prejudice in litigating stale claims, and to clarify what constitutes “the use of a product” in product liability actions.

According to the U.S. Chamber Institute for Legal Reform, America’s civil justice system is the world’s most expensive, with a direct cost in 2010 of $264.6 billion, or 1.8 percent of U.S. GDP. The tort cost per person was $857 in 2010, a sevenfold increase from 1950 when adjusted for inflation.

Lawsuits cost small businesses $105.4 billion in 2008 — money that could have been invested in more jobs, higher wages, or better benefits. Seventy-percent of senior executives and litigators at America’s largest employers believe that a state’s lawsuit environment is likely to impact important business decisions at their companies, including whether to grow jobs or do business in a state.

-Dana Beyerle