Masonry Magazine November 2004 Page. 10
Government Affairs
Ending Frivolous Lawsuits, Protecting American Business
Congressman Pete Sessions
One of the most important challenges facing our nation today is the need to enact policies that will ensure that our recent economic growth continues, and that American businesses are strong enough to compete in the world marketplace. From frivolous lawsuits to unwieldy federal regulations, American businesses small businesses in particular-bear multiple burdens that drain their resources, prevent job creation, and negatively impact their competitiveness. But, we can end these impediments.
The U.S. House of Representatives recently passed legislation to crack down on frivolous lawsuits by mandating sanctions against personal injury lawyers who file meritless claims. The Lawsuit Abuse Reduction Act, H.R. 4571, passed with a vote of 229-174.
In today's litigious society, we hear all too often of frivolous lawsuits and outrageous jury awards. The resulting economic drain hinders American business, hitting small businesses especially hard, and prevents the American economy from being as competitive as it should be with the rest of the world.
In today's litigious society, we hear all too often of frivolous lawsuits and outrageous jury awards.
Greenspan compared excessive lawsuits to a tax on business activity, stating that such lawsuits "[have] the economic impact which is similar to a tax."
Take, for example, the impact of liability costs on small businesses. Small businesses contribute approximately three-quarters of all new jobs added to the economy. However, a recent report by the AEI-Brookings Joint Center for Regulatory Studies concluded that the "tort liability price tag for small businesses in America is $88 billion a year" and that "small businesses bear 68% of business tort liability costs, but take in only 25% of business revenue."
Unfortunately, for the last several years, the problem has only gotten worse. In the last 10 years, the number of lawsuits filed in state courts jumped 1,000%, and the number filed in federal courts have increased 300%. After leveling off during the 1990s, the tort system's direct cost to the nation soared by a stunning 14.4% in 2001 and another 13.3% in 2002, to a 2002 total of $233 billion. In fact, during the past 50 years, growth in tort costs has exceeded growth in Gross Domestic Product (GDP) by an average of two to three percentage points. For American citizens, that cost results in a tort litigation tab of approximately $809 per person per year.
In testimony before the House Banking Committee on Sept. 8, 2004, Federal Reserve Board Chairman Alan
The Lawsuit Abuse Reduction Act will create a disincentive for attorneys and plaintiffs to file many of the frivolous lawsuits that currently clog our court system and act as a drain on our nation's economy.
Specifically, the legislation restores mandatory sanctions for filing frivolous lawsuits in violation of Rule 11 of the Federal Rules of Civil Procedure. In addition, it permits judges to order plaintiffs to reimburse reasonable litigation costs, including attorney's fees, and mandates a one-year suspension of a law license after a lawyer has filed three or more frivolous lawsuits in the same federal court. The bill also removes the "free pass" provision of current law that allows plaintiffs and their attorneys to avoid sanctions for frivolous suits by withdrawing them within 21 days.
Finally, it reduces "court shopping" or "forum shopping," the practice by which personal injury attorneys cherry-pick courts and bring lawsuits in jurisdictions that consistently hand down astronomical awards, even when the case has little or no connection to the state or locality.