Business-Friendly Litigation Overhaul Stalls in Senate

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By Bruce Kaufman

The 2016 elections gave Republicans control of the White House and both houses of Congress, and the party seemed primed to make good on a long-standing goal for the business community—enacting sweeping changes to the federal litigation process, including curbs on class actions.

The strategy was to fast-track legislation through the House, to give the bills more time to advance in the more deliberative Senate.

Today, those plans appear to be in disarray, a surprise even to a host of consumer advocates including Pamela Gilbert and Joanne Doroshow, veteran opponents of the business-friendly “tort reform” movement, and Remington A. Gregg, Public Citizen’s new counsel for Civil Justice and Consumer Rights.

Gilbert, a partner at Cuneo Gilbert & LaDuca in Washington, says the biggest surprise has been the “unexpected Republican opposition” to bills long coveted by industry.

“For the most part, these bills are passing the House without one Democrat in support, but with both Democrats and Republicans in opposition,” Gilbert told Bloomberg BNA.

“The growing unease that many Republicans feel about blocking access to the courts is very interesting and it isn’t something we have seen for many years,” she said.

Doroshow, executive director of the Center for Justice & Democracy in New York, agreed.

“The strength of conservative opposition to some of the House bills surprised us,” she said.

“It does seem like on a range of issues, the Republican leadership has been out of touch with the views of many rank-and-file Republicans,” she said.

Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform in Washington, told Bloomberg BNA that although she is hopeful these bills will “cross the goal line” this Congress, the Chamber is working first to build a consensus on legal reform, and that takes time, she said.

“We hope to achieve that this Congress,” she said.

Challenging Times

“It is a challenge to move any bill in the Senate, especially those that face major opposition from the trial lawyer lobby,” Victor Schwartz, a partner at Shook, Hardy & Bacon in Washington and the dean of the “legal reform” movement—which aims to roll back what it sees as “abusive” litigation practices—told Bloomberg BNA.

“That does not mean the strong and united constituencies behind these helpful civil justice reforms will not keep trying,” he said.

Rickard said it’s too soon to count out supporters of the legislation.

“It’s a challenging legislative environment on almost every issue, including legal reform,” she said.

“We’re realistic. We believe there’s a path forward for legal reform in this Congress, and are doing everything we can to advance our priorities,” Rickard said.

On the surface, it seems little is happening in the Senate Judiciary Committee, where the three chief litigation overhaul bills are parked.

The bills, two of which still lack Senate sponsors, are:

  •  The Fairness in Class Action Litigation Act and Furthering Asbestos Claims Transparency Act ( H.R. 985) affects nearly all facets of class action practice, and mandates increased reporting of payments to plaintiffs by trusts that pay out asbestos exposure claims against bankrupt companies. It passed the House March 9 by a 220-201 vote.
  •  The Innocent Party Protection Act ( H.R. 725) targets what is known as fraudulent joinder—the improper addition of local defendants to suits in a bid to keep cases in more plaintiff-friendly state courts. It passed the House March 9 by a 224-194 margin.
  •  The Lawsuit Abuse Reduction Act ( H.R. 720; S. 237) requires judges to impose mandatory sanctions on attorneys who file “meritless” civil cases in federal courts. It passed the House March 10 by a 230-188 margin.
But surely internal negotiation or discussions must be taking place that will grease the path for these bills in the upper chamber?

Not so, says Gilbert, who is unaware of any discussions or negotiations on the measures.

Haven’t heard a peep, Doroshow said.

“It doesn’t sound like anything is happening at all,” Doroshow said, “Congress clearly has bigger priorities.”

Movement on this issue has ground to a halt because the legislative process as a whole has ground to a halt, Gregg said.

Gregg told Bloomberg BNA that it is reasonable to assume that a party that controls both houses of Congress and the White House would have an easier time passing legislation.

“However, they didn’t count on a several important factors getting in their way, including their general ineptitude at governing and the sheer unpopularity of these pieces of legislation,” he said.

‘Definite Interest’ in Senate, Chamber Says

But Rickard said the business community and the U.S. Chamber Institute for Legal Reform are “constantly discussing legal reform priorities with both sides of Capitol Hill.”

“Based on our conversations, there’s very real interest in advancing legal reforms in the Senate,” she said.

In the near term, there is “definite interest on the Senate Judiciary Committee in looking for scheduling opportunities on the bills that have passed the House,” she said.

Long term, the goal is, of course, enactment. But success may be measured through passage of standalone bills or helpful language added to other legislative vehicles.

Even so, the charged political environment has made the Chamber’s work more difficult, especially in the more deliberative upper house, where 60 votes are needed to end debate.

“Legal reform has traditionally been a bipartisan and bicameral issue, with members from both sides of the aisle and both sides of Capitol Hill supporting efforts that have become law,” but the current bills face an enormous challenge in working “across party lines” and “assembling a bipartisan coalition of 60 votes,” Rickard said.

To reach that threshold, bill supporters will need to retain all 52 Senate Republicans, while convincing eight Democrats to sign on—a tall order.

Despite the optimism from Rickard, bill opponents are pinching themselves, trying hard not to take their early success to date for granted.

Gregg, with Public Citizen, says he and other opponents “continue to worry about the Chamber of Commerce and big business’s strong hold on many Republicans, meaning that these and similar bills will continue to pop up in different iterations.”

As these bills are “high priorities for the Chamber of Commerce,” we will “continue to educate Congress and the public about the terrible effects the bills would have on individual rights and liberties,” Gilbert said.

No Help From Trump Administration

Although enacting controversial legislation is always difficult no matter who is in power, more was expected from President Trump in pushing these bills to victory in a supportive Congress.

Is there still a realistic path for these bills to make their way to President Trump’s desk?

“It will be difficult,” Gilbert said.

“Very difficult,” Doroshow said, citing “bipartisan opposition to these bills,” including from Liberty Caucus conservatives.

Doroshow has “heard of no Senate interest in these bills,” she said. And “I haven’t seen much evidence of Trump Administration involvement,” she said.

At the moment, “there are no developments that worry us,” Doroshow said.

But there is a realistic path to make it to the president’s desk given that the Senate is controlled by Republicans, Gregg said. The administration, however, has “played no role in this debate.”

Although the Administration issued Statements of Administration Policy in support of a related medical malpractice measure—H.R. 1215—"it didn’t seem to make a difference to the Republicans who voted no,” Gilbert said.

The House barely passed H.R. 1215, with 19 Republicans joining every Democrat in voting no. “I’m not sure how much influence Trump has,” Doroshow said.

So far, the administration has been mum on the three House-passed litigation bills.

Rickard, however, said the Trump administration “remains open to legal reform legislation.” It’s currently “focused on the big-ticket health care and tax reform overhauls,” she said.

If any of these bills reach the president’s desk, Rickard has “no reason to believe that they would not support these bills.”

She noted that in “his first speech to Congress, President Trump mentioned fixing the country’s broken medical liability system which shows that he is sympathetic to curbing runaway litigation.”

But Gregg saw little to indicate the president will become an active participant in this area.

“The president and his team will not wade into this debate in any substantive way because they are preoccupied with simply keeping their head above water trying to govern,” he said.

Schwartz reminded litigation reform supporters that they need to cast a wide net, and not focus only on the federal legislative process.

“In the interim, we are hopeful that federal judges will curb at least some of the lawsuit abuses that the legislation that the House has passed is meant to address, including frivolous claims, fraudulent joinder, and misuse of the class action system,” he said.

Gregg doesn’t seem worried.

These bills aren’t failing because supporters aren’t trying hard. They’re failing because they are “unpopular.”

“A strong civil justice system is important because it gives the Davids of the world an opportunity to meet on equal footing with the Goliaths. These bills would negatively change those dynamics,” he said.

To contact the reporter on this story: Bruce Kaufman in Washington at bkaufman@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

For More Information

For Bloomberg BNA's three-part series exploring the prospects for enactment of the bills, see part one, two, and three.

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