Legal Reformers Must Act to Heal the Lawsuit System

Oct 23, 2013

If you’ve ever gone through a major health crisis, you know that surviving the immediate illness is only the first step. Long-term health depends on a lifetime of commitment—to a changed lifestyle, doctor visits, tests, and medicines. 

The health of our lawsuit system demands the same vigilance. Fifteen years ago, the U.S. Chamber Institute for Legal Reform was born in a time of legal crisis. Class action litigation was out of control. Mega lawsuits were sucked into a few “jackpot” jurisdictions favorable to the plaintiffs’ bar. 

Much has changed in 15 years. Crises have abated, and sanity has steadily returned to parts of our lawsuit system. State legislatures in some of the worst states cleaned up their tort messes. Congress passed the Class Action Fairness Act (CAFA) in 2005, bringing order to an out-of-control class action system. Attention was focused on some of the worst jurisdictions, making it harder for self-dealing by the plaintiffs’ bar and unbalanced court rulings. 

But while there is much to show for 15 years of focus on legal reform, reformers must be vigilant in order to preserve past victories and confront new trends. 

“Jackpot” jurisdictions remain. One of the most notable is Madison County in Illinois. Despite having only .0008 percent of the U.S. population, this county now accounts for one in four asbestos lawsuits filed in the U.S. Last year a new record of 1,563 new asbestos cases were filed there. 

Only one in ten of the lawsuits filed in Madison County is filed by a plaintiff who ever worked or lived in the county. Plaintiffs come from as far as Texas and Virginia to file cases in this plaintiff-friendly jurisdiction, where defendants are routinely denied rights they receive in almost every other court in the country. 

While landmark legislation like CAFA helped with class action lawsuits, new liability threats emanate from federal agencies. From the Consumer Financial Protection Bureau to the Food and Drug Administration, businesses are facing a deluge of liability-expanding regulations and enforcement actions. 

Take drug labeling. Right now, the FDA is considering a rulemaking that will have only one direct result: more lawsuits against generic pharmaceutical companies. As a result, Americans will be forced to pay more for life-saving medicines. 

Enforcement practices are equally problematic. In the last few years, we’ve seen the Department of Justice and other agencies force companies into large settlements. The companies are threatened with catastrophic consequences, like a corporate criminal indictment or exclusion from federal contracts, if they don’t acquiesce. 

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

At the same time, plaintiffs’ lawyers are undaunted. They 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. 

Many of these trends were discussed at today’s 14th Annual Legal Reform Summit. Titled “Healing the Lawsuit System,” this year’s summit featured panels of experts discussing some of the most important issues on the legal reform front today, including the False Claims Actclass actions and emerging litigation trends

These are all significant challenges facing legal reformers. 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

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