Congress took its first big step Thursday to implement President Bush’s plan to overhaul the nation’s legal system, as the Senate approved a measure long sought by business to impose new restrictions on class-action lawsuits.
Republicans hailed the lopsided vote–72-26–as an important legislative victory in their campaign against what they call “lawsuit abuse.” The legislation has strong support in the House, which is expected to pass it next week.
“The class-action bill is a strong step forward in our efforts to reform the litigation system and keep America the best place in the world to do business,” Bush said in a statement after the vote.
Republican leaders said they hoped approval of the bill–the president’s first legislative victory of his second term–would build momentum for other measures on the GOP agenda, including new curbs on bankruptcy, asbestos litigation and medical malpractice.
“It’s obviously a big victory because it was our No. 1 legislative priority,” said Stanton Anderson, chief legal officer for the U.S. Chamber of Commerce.
Class-action suits allow plaintiffs with claims against the same defendant to combine their cases into one suit. Under the legislation passed Thursday, large multistate suits–such as the state governments’ lawsuit against tobacco companies, which ended in a $246 billion settlement–would be moved from state to federal court, where judges tend to be more favorable to business and less likely to approve large damages.
Class-action lawsuits could be heard in state court only if the damages sought were less than $5 million and more than two-thirds of the plaintiffs were from the same state.
Proponents said the bill was necessary to curb abuses of the system, including “forum shopping,” where lawyers file large suits in obscure local courts believed favorable to plaintiffs, and settlements that grant huge fees to lawyers and little to claimants.
System `needs fixing’
“All citizens should have the right to band together and settle grievances with bigger companies,” said Sen. Thomas Carper (D-Del.), who voted for the bill. “But that system is broken and it needs fixing. There are too many instances where consumers are getting very little or nothing from their settlements, while companies are not being forced to change the way they do business.”
The bill divided Democrats, with 18 of the chamber’s 44 Democrats favoring it and 26 opposing it. Illinois’ senators were divided; Barack Obama voted for it and Dick Durbin against it.
The Senate’s sole independent, James Jeffords of Vermont, voted in favor of the bill, as did 53 Republicans. No Republicans voted against the measure; two did not vote.
Senate Democratic leader Harry Reid of Nevada was one of the staunchest opponents, labeling the measure “one of the most unfair, anti-consumer pieces of legislation to come before the Senate in a long time.”
“It slams the courthouse doors on a wide range of injured plaintiffs,” he said before the vote. “It turns federalism upside down by preventing state courts from hearing state law claims, and it limits responsibility at a time of rampant corporate scandals. Instead of turning up the heat on corporate shenanigans, this bill lets corporate wrongdoers off the hook.”
Republican strategists say one aim of the bill is to curb the influence of trial lawyers, who are important financial backers of many Democrats.
“Every American’s legal rights are diminished by this anti-consumer legislation, which establishes greater procedural hurdles for consumers, workers, homeowners and shareholders,” Todd Smith, president of the Association of Trial Lawyers of America, said in a statement after the vote.
Chamber major proponent
The bill was heavily promoted by business, especially the U.S. Chamber of Commerce.
According to financial disclosure documents compiled by Public Citizen, the consumer watchdog group founded by Ralph Nader, the U.S. Chamber of Commerce spent more than $100 million from 2000 to 2003 to fund its Institute for Legal Reform, which promotes changes in the legal system. Spending information for 2004 is not yet available.
“They’ve got hundred of lobbyists working this legislation. The consumer side has maybe 15,” said Frank Clemente, director of Public Citizen’s Congress Watch. “Our side was outnumbered 20-1, just on the numbers of lobbyists.”
Anderson, who oversees the Chamber of Commerce’s legal programs, described the Public Citizen numbers as wildly inflated. He declined to provide specifics but said only one-third of the institute’s budget is spent on Washington lobbying, and only one-third of that was aimed at the class-action bill.
