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Lawsuit Abuse Reduction Act of 2004

Location: Washington, DC

LAWSUIT ABUSE REDUCTION ACT OF 2004 -- (House of Representatives - September 14, 2004)

Mr. SENSENBRENNER. Mr. Speaker, pursuant to House Resolution 766, I call up the bill (H.R. 4571) to amend Rule 11 of the Federal Rules of Civil Procedure to improve attorney accountability, and for other purposes, and ask for its immediate consideration.


Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from Wisconsin (Mr. Sensenbrenner), the chairman of the Committee on the Judiciary, for yielding me this time.

Mr. Speaker, frivolous lawsuits bankrupt individuals, ruin reputations, drive up insurance premiums, increase health care costs, and put a drag on the economy. Frivolous lawsuits are brought, for example, where there is no evidence that shows negligence on the part of the defendant. These nuisance lawsuits make a mockery of our legal system.

Of course, many Americans have legitimate legal grievances, from someone wrongly disfigured during an operation to a company responsible for contaminating a community's water supply. No one who deserves justice should be denied justice. However, gaming of a system by a few lawyers drives up the cost of doing business and drives down the integrity of the judicial system.

Let me give some examples. The Chief Executive Officer of San Antonio's Methodist Children's Hospital was sued after he stepped into a patient's hospital room and asked how he was doing. Of course, a jury cleared him of any wrongdoing.

A Pennsylvania man sued the Frito-Lay company, claiming that Doritos chips were "inherently dangerous" after one stuck in his throat. After 8 years of costly litigation, the Pennsylvania Supreme Court threw out the case, writing that there is "a common sense notion that it is necessary to properly chew hard foodstuffs prior to swallowing."

In a New Jersey Little League game, a player lost sight of a fly ball because of the sun. He was injured when the ball struck him in the eye. The coach was forced to hire a lawyer after the boy's parents sued. The coach settled the case for $25,000.

Today, almost any party can bring any suit in almost any jurisdiction. That is because plaintiffs and their attorneys simply have nothing to lose. All they want is for the defendant to settle. This is legalized extortion. It is lawsuit lottery.

Some lawyers file lawsuits for reasons that can only be described as absurd. They sue a theme park because its haunted houses are too scary. They sue the Weather Channel for an inaccurate forecast. And they sue McDonald's, claiming a hot pickle dropped from a hamburger caused a burn and mental jury.

Defendants, on the other hand, can unfairly lose their careers, their businesses and their reputations. In short, they can lose everything. This is not justice, and there is a remedy. The Lawsuit Abuse Reduction Act.

Mr. Speaker, this applies to both plaintiffs who file frivolous lawsuits merely to extort financial settlements and to defendants who unnecessarily prolong the legal process. If the judge determines a claim is frivolous, then they can order that person to pay the attorney's fees of the party who is the victim of their frivolous claim. This will make a lawyer think twice before he or she brings a lawsuit.

In addition, this legislation prevents forum shopping. It requires that personal injury claims be filed only where the plaintiff resides, where the injury occurred, or where the defendant's principal place of business is located. This provision addresses the growing problem of attorneys who shop around the country for judges who routinely award excessive amounts.

One of the Nation's wealthiest trial lawyers, Dickie Scruggs, has told us exactly how this abuse occurs, and the chairman of the Committee on the Judiciary used this example a while ago, but, quite frankly, it is just too good not to repeat.

Here is what one of the king of torts says about forum shopping: "What I call 'the magic jurisdiction.' It's where the judiciary is elected with verdict money, the trial lawyers have established relationships with the judges that are elected; they've got large populations of voters who are in on the deal, they're getting their piece in many cases. It's almost impossible to get a fair trial if you're a defendant in some of these places. Any lawyer fresh out of law school can walk in there and win the case, so it doesn't matter what the evidence or law is."

Mr. Speaker, I do not know how anyone can justify the continuation of this kind of abuse. One of these magic jurisdictions where trial lawyers flock is in my home State of Texas in Jefferson County. The Austin American Statesman noted that trial lawyers claim this is where "juries pass down sizable judgments." Soaring medical liability insurance rates have followed, which has caused doctors to flee the area.

Mr. Speaker, forum shopping is a part of lawsuit abuses and we must pass legislation to stop it from occurring. The following organizations support H.R. 4571: American Tort Reform Association, National Association of Home Builders, National Association of Manufacturers, National Restaurant Association, National Federation of Independent Business, American Insurance Association, and the U.S. Chamber of Commerce.

Also, I might add, both Republican and Democratic presidential and vice presidential candidates are on record as wanting to stop frivolous lawsuits. So the Lawsuit Abuse Reduction Act is sensible reform that will help restore confidence to America's justice system.

Mr. Speaker, I want to add one point and address a concern that was raised by my friend from Virginia and that had to do with a letter he raised from the Judicial Conference. Well, the Judicial Conference does not exactly enhance their credibility when they take a position contrary to the judges that they purport to represent. And, in fact, in surveys taken by the Judicial Conference before the rule was changed in 1993, it found that 80 percent of the judges favored the rule that we seek to go back to. After the rule was changed and weakened, which we opposed, they took another survey and found a majority of judges, in fact almost a majority of trial lawyers, liked the original rule that we seek to go back to in this legislation.

So, Mr. Speaker, I urge my colleagues to support this bill.


Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from Wisconsin for yielding me this time.

Mr. Speaker, let me respond to some of the concerns voiced by some of those who think they might oppose this bill. First of all, if a foreign corporation is involved, that does not prevent someone from having their day in court. The bill clearly says that it is where the plaintiff lives, and if one is a U.S. citizen, most likely they are going to live in the United States, or where the injury occurred, and the injury would have occurred in this country. So that takes care of their concerns there.

Another previous speaker from Massachusetts started off by talking about the ban on assault weapons. This bill has nothing to do with that, but we do attempt to ban frivolous lawsuits, and in that we are successful. But the gentleman from Massachusetts did make a good point, and I will embrace it entirely, and that is he acknowledged, which I thought was quite an admission, that today there are, in fact, even by his own standards, 11,000 frivolous lawsuits a year. He said they have come down. That is because of the asbestos lawsuits working their way through the various courts. Eleven thousand frivolous lawsuits filed today. I guarantee my colleagues that 99 percent of the American people think 11,000 frivolous lawsuits a year today is 11,000 frivolous lawsuits too many.

Another point I want to respond to, Mr. Speaker, was made by a gentleman who was concerned about the effect of this legislation on civil rights cases that might be filed. I want to assure him and others who might have that similar concern that if they look at section 5 of this bill, it reads: "Nothing in this bill shall be construed to bar or impede the assertion or development of new claims or remedies under Federal, State, or local civil rights law." The reason it says "new claims" is because claims that already exist under current law obviously are not frivolous. There is a basis in law for filing those lawsuits. So we protect anybody who might file a civil rights lawsuit in this legislation. Furthermore, if there was some concern about that, one would think that it would have been raised in the full Committee on the Judiciary consideration of this bill. It was not mentioned and no amendments were offered on that point.

Lastly, Mr. Speaker, I also want to reassure not only my colleagues but those who might be listening to this debate that this is not a bill trying to impugn the motives of all trial lawyers. In fact, the great majority of trial lawyers serve their profession and serve Americans honorably. We are talking about a very few attorneys who, quite frankly, abuse the system, who engage in legalized extortion, who file lawsuits for no other reason than they think someone can settle out of court and they are trying to extract money from them. That is the type of abuse we seek to stop in this bill, and that is the kind of abuse we intend to.

Finally, there are many pieces of legislation considered by this body where we can see where half of the American people might benefit, half might not benefit. But in this case we have at least 99 percent of the American people on one side and just a few lawyers on the other side. And it is very rare, I think, that we would have the vast majority of the American people so clearly favoring one cause, and that is the cause of trying to reduce frivolous lawsuits.


Mr. SMITH of Texas. Mr. Speaker, I thank the chairman for yielding me this time.

Mr. Speaker, anyone who is worried about what frivolous lawsuits will do to them, their family, their friends, or their businesses ought to rush to oppose this Democratic substitute amendment. That is because it is an amendment that will do very little to prevent frivolous lawsuits.

The underlying bill makes several key changes that will deter lawyers from filing frivolous lawsuits. The substitute amendment before us strips all these away.

First, this legislation, the underlying legislation, allows the court to require an individual who files a frivolous lawsuit to pay attorneys' fees incurred as a result of the frivolous lawsuit. This provision obviously makes attorneys think twice before they file such a frivolous lawsuit. However, the Democratic substitute amendment does not include this key provision. In other words, there is no disincentive to file a frivolous lawsuit.

This also means that under the Democratic substitute, small business owners would still suffer from the cost of frivolous lawsuits. Individuals would still suffer because they would see their insurance premiums go up. They would see their health care costs rise. They would still see their reputations damaged, all because of wrongfully filed, frivolous lawsuits.

In other words, Mr. Speaker, this substitute amendment does not provide any relief to those who would get unfairly slapped with a frivolous lawsuit. Those victims would still have to pay their own legal fees.

Next, this substitute claims to have a "three strikes and you are out" provision. But if you look at it closely, as the chairman mentioned a while ago, there are no real consequences for the attorney who repeatedly files frivolous lawsuits.

Instead, the substitute merely requires a court to refer the offending attorney to his State bar association; and you can imagine that means that nothing is going to happen.

By contrast, the base bill requires that attorneys who fill frivolous claims face real consequence. Those attorneys can be barred from practicing in that Federal court for a year. That is a real disincentive to file frivolous lawsuits.

Also, the Democratic substitute we are considering now places heavy mandates on States. It requires a new regulatory scheme to deal with "civil justice expense and delay" issues. Mr. Speaker, I think that is a very nice but meaningless euphemism for frivolous lawsuits. The requirements would create a new bureaucratic nightmare instead of dealing with the real problem, which is of course frivolous lawsuits.

Finally, Mr. Speaker, the substitute amendment does nothing to address the problem of forum shopping and that is at least half the problem. We simply cannot continue to allow trial attorneys to flock to counties that will award unreasonably high verdicts to any plaintiff who walks in the door. This does too much damage to many Americans and it is, quite frankly, time to put a stop to this type of abuse.

Mr. Speaker, I urge my colleagues to oppose to substitute amendment and vote yes on the underlying bill which would deter lawsuit abuse.


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