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Public Statements

Lawsuit Abuse Reduction Act of 2013

Floor Speech

Location: Washington, DC


Ms. JACKSON LEE. Madam Speaker, let me thank the gentleman for his outstanding leadership of this committee, and let me thank the manager as well. This is an important initiative. Using the time to be able to speak to the Members is very important, and I am glad to have been given the courtesy of being yielded as much time, and I will use it efficiently for this particular legislation.

This is another gift to large, prosperous, and threatening entities against a single plaintiff, the plaintiff who secures a lawyer, who is attempting to create the scales of justice and to balance, if you will, the needs of that individual plaintiff, those small plaintiffs, those collective plaintiffs who are seeking justice.

It is a fact that the threat of lawsuits is not a concern of small businesses, as has been represented. A 2008 study by the National Federation of Independent Business indicated that the biggest threat facing small businesses was other concerns and was not costs and frequency of lawsuits. That was No. 65. They have other issues that we should be concerned about.

It is a fact that judges support the current version of the rule, and rule 11 is just one of many tools that judges use. It is not the only tool to be able to be responsive to someone who may be abusing the system.

Remember, we are here to perpetuate justice, and justice has scales. In many instances, that scale is tipped towards the one with the most money, the deepest pockets, and the longest time to wear you out as a plaintiff.

Let me refresh my colleagues' minds and understanding of the Federal system, that tort cases are a very small percentage of that civil docket. So this is not an instance. Many of these cases are filed in State court, these personal injury cases, these cases dealing with large damages because people have been injured because of bad products and other matters.

Here we have a bill looking for a problem. In actuality, LARA will increase, not decrease, litigation, and you can see the spiking that occurred. The Lawsuit Abuse Reduction Act would return rule 11 to the 1983 version. Litigation spiked after the 1983 amendment to rule 11. From 1982 to the peak in 1991, satellite litigation increased by more than 10,000 percent. Here we go with a gift to those who are truly litigious.

Just as we have been on the floor of the House pounding the Affordable Care Act because cancelation letters have been sent--they haven't been sent by Republicans. They haven't been sent by Democrats. They haven't been sent by Health and Human Services. They haven't been sent by people who are committed to making sure every American has health insurance. They have been sent by fat-cat insurance companies who are sending cancelation letters.

Here we go again, the scale of justice imbalanced. Again, the same problem: the mother, the single parent, the family waiting to get on the Affordable Care Act. In the normal course of the process, they get a cancelation letter. What an unnecessary act. That letter could have been that they were modifying their insurance, but there go the big guys again. You haven't heard one single sound coming out of the mouths of insurance companies to answer the question of why did they send the letters, and here we are on the floor of the House making it even worse.

Under the LARA regime, with mandatory sanctions and no opportunity to correct mistakes, the parties to a lawsuit have every incentive to file rule 11 complaints and seek court costs and legal fees, and to defend against such actions to the bitter end. This is a dynamic that should not happen. We should allow a pullback. We should allow a correction. All we are doing is just throwing them over the cliff and under the bus.

The changes would create a disincentive to abandon or withdraw a pleading or claim that lacks merit and thereby admit error after determining that it no longer was supportable by law or fact. As I have indicated, we have seen this kind since 1983 spike.

I have another statistic. Rule 11 cases spiked to 7,000 during the decade following the 1983 rule. So when a lawyer wants to do right with his client, the little guys, then, of course, they are blocked from solving the problems.

They use horror stories like demand letters, where a lawyer writes a letter demanding compensation in order to get a potential defendant to settle without having to file suit. That is not covered by rule 11. As far as I know, that is not an illegal procedure to engage in discussion, to be able to resolve the matter before going to a costly lawsuit. Again, that is the little guy's tool. So you are going to beat up on the little guy--the construction worker that falls because of violations of OSHA rules, or the person that works in a chicken plant who has carpal tunnel syndrome because there were no appropriate rest times for them to get off of the line, and you are going to make the argument that this is right for justice.

Madam Speaker, this graph speaks for itself. This will add an extra burden of cost to those who are trying to find a way for Lady Justice's scales to be balanced. My belief, under the Sixth Amendment, the right to counsel, and many other aspects of the Bill of Rights, is that the Founding Fathers believed that justice should be rendered regardless of your race, color or creed, regardless of whether you were an indentured servant, regardless of whether or not you came in Pilgrims' Pride or came in some other matter.

Rule 11 completely disputes that concept of justice. I am appalled that we are here at this point today, and it equates to the fat-cat insurance companies who have decided to send out letters when they well knew that this was a process that would work ongoing in their modification that could be noted to those recipients that their insurance was not going away, it was only going to be made better. I would like to make the justice system better.

I thank the gentleman for his time, and I would like to make sure that the little guy has an opportunity to walk into any court of the United States of America and stand tall and feel that the judge, no matter what size his pocketbook is, will give him as much credence and respect as the big guys coming in with millions, maybe billions, to make sure he does not or she does not win justice in the court.

Today I would ask our colleagues to vote for fairness for Lady Justice and to vote against this initiative and this legislation.

Mr. Speaker, I rise in opposition to H.R. 2655, The Lawsuit Abuse Reduction Act--a flawed piece of legislation and a step backwards.

It amazes me that we did not learn the lesson from the ten years we had under the 1983 mandatory version of Rule 11. H.R. 2655 and its Senate companion S. 1288, the Lawsuit Abuse Reduction Act, known as LARA, would amend Rule 11 of the Federal Rule of Civil Procedure by replacing the current version of the Rule, which has been in effect since 1993, with the 1983 version of Rule 11. Based on what we have seen it is quite likely that the effect of this bill if enacted would be to increase litigation costs due to the filing of sanction motions--leading to more delay.

The bill should be called ``The Lacking All Rational Analysis Act of 2013,'' because any impartial look would inform that this bill is unnecessary and a waste of time.

Congress should reject this measure, which would force the federal judiciary to enforce a

rule that legal scholars, judges, and lawyers agree was a complete failure. LARA would increase litigation, unnecessarily meddle with the authority of the federal judiciary, and disproportionately affect plaintiffs, especially plaintiffs in civil rights cases.

Encourages satellite litigation. For the 10 years that mandatory sanctions were in effect, litigation surrounding Rule 11 significantly increased. Any time a party filed a Rule 11 motion--because judges had no discretion and were forced to issue a sanction for even the smallest violation of the Rule--a countermotion would be immediately filed and a whole side or ``satellite'' litigation business erupted. Congress does not need to be in the business of promoting more paper wars amongst attorneys.

Threatens an independent judiciary. Since 1993, Rule 11 has been discretionary rather than mandatory.

Under current Rule 11, judges are able to use their discretion to assess the complex nature of a case, and evaluate potential violations of the rule and issue sanctions accordingly. This appropriately leaves the determination of whether or not sanctions should be imposed for a violation of Rule 11 to the judges who hear the cases, and not Congress. Perhaps it is time that we allow judges to do their jobs and then we can move on to comprehensive immigration reform, tax reform, and other prudent legislative initiatives that the American people would like us to do.

Jeopardizes civil rights cases. Sanctions were more often imposed against plaintiffs than defendants and more often imposed against plaintiffs in certain kinds of cases, primarily in civil rights and certain kinds of discrimination cases. A leading study on this issue showed that although civil rights cases made up 11.4% of federal cases filed, 22.7% of the cases in which sanctions had been imposed were civil rights cases. Unfortunately Mr. Speaker, we are not at a time in our nation's great history where we can upend the law and make the filing of civil rights cases prohibitive. As we have seen recently with such appalling examples such as the Trayvon Martin case--we have a long way to go--and the civil rights bar should not cringe in fear at the thought of filing a case to do justice.

I urge my colleagues to reject this legislation.


Ms. JACKSON LEE. The gentleman is very kind to yield.

Very briefly, let me say it is about policy and process. The gentleman knows that most of America is very happy about the changes in the Affordable Care Act to get them out of the junk insurance policies that they have had.


Ms. JACKSON LEE. I thank the gentleman very much.

Madam Speaker, let me be very clear. I want to say to the gentleman from Virginia that I would venture to say that those attacks on frivolous lawsuits are the big guys against the little guys, who had very legitimate and good intentions. It may be their resources were limited, and so they have to be subjected to a rule 11 on a perfectly legitimate litigation to be called frivolous.

The other point that I was making is that there is something between process and policy. I will stand again to say that the policy of making better health plans and better and healthier Americans is supported by all.

The process that I challenge is that the big insurance companies decided to use the process of cancelation letters, not letters that said modify. They decided to use their big authority to be able to undermine a policy of lifting the boats of all Americans for good health.

That is what I see rule 11 as. I see that as undermining the basic scales of justice. It says to get back money for frivolous lawsuits. Well, the frivolous lawsuits may be on one individual or a group of small individuals who feel

that they have been harmed. They may have lost. They may be in the midst of pleadings, but they don't have the resources to file a rule 11. So what happens is those who want to be punitive will use a rule 11.

I think a judge can make determinations under the present system, and so the spiking that we are talking about is a spiking of rule 11 filings. That is more litigation. That is more litigation. That is what we are suggesting that we don't want.

And this response and respect that the President and others are giving, all of us want to give respect to the mishap that has been created by the insurance companies. And so, fine. The President is giving respect to the constituents because his bottom line is to make sure all uninsured Americans, like the 6 million in the State of Texas, get the opportunity to be insured.

Let me thank the gentleman for the time. I believe that we are going down the wrong path for rule 11.

I thank the gentleman for yielding.


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