House Passes Bill Targeting ‘Frivolous’ Lawsuits

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By Bruce Kaufman

Attorneys who file lawsuits found to be “meritless” will face mandatory sanctions under legislation that passed the House in a March 10 vote largely along party lines.

Federal judges currently have discretion to impose sanctions, but many choose not to do so.

The Lawsuit Abuse Reduction Act ( H.R. 720) passed the lower chamber by a 230-188 margin.

All but three Democrats opposed the measure, while five Republicans broke ranks and voted against the bill.

A similar measure passed the House in 2015 by a 241-185 vote, but died in the Senate.

“When this bill becomes law, it will hold plaintiffs’ lawyers accountable for filing frivolous claims so they cannot simply withdraw a lawsuit without consequence, resulting in fewer bogus lawsuits,” said Lisa A. Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform and a leading supporter of the bill.

But consumer advocate Joanne Doroshow, executive director of the Center for Justice & Democracy in New York, told Bloomberg BNA that the bill was never about frivolous lawsuits.

“It is about stopping legitimate cases against companies that harm people,” she said.

Fierce Senate Battle Ahead

No House committee hearings were held on HR 720. It now heads to the Senate where it faces greater scrutiny and uncertain prospects.

The Senate companion to the bill ( S. 237) is sponsored by Sen. Charles E. Grassley (R-Iowa), the powerful chairman of the Senate Judiciary Committee.

No hearings are currently planned on the Senate bill, but that may change with House passage of the bill.

To pass in the Senate, supporters like the Chamber of Commerce, the National Association of Manufacturers and the National Federation of Independent Business will have to convince at least eight Democrats to support the bill in order to defeat an almost certain filibuster.

That’s a stiff order in these partisan times.

Democratic Amendments Defeated

The House bill was expected to pass, and it did so with little drama.

Opposing the measure, Rep. Jerrold Nadler (D-N.Y.) said the bill would generate a “whole new set of litigation overburdening our already burdened federal courts.” It also will have a “chilling effect on novel claims,” he said.

But proponents like sponsor Rep. Lamar Smith (R-Tex.) won the day,

“All of us have constituents who are victims of frivolous lawsuits,” Smith said, urging support for the bill. “We aim to remedy that today.”

Prior to the final vote, four Democratic amendments aimed at weakening the bill were defeated, also on largely party-line votes.

Litigation Overhaul Package Advances

The House passed two other civil litigation bills March 9, including a measure overhauling almost all facets of class action practice, the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2017 ( H.R. 985).

H.R. 985 also mandates increased reporting of payments to plaintiffs by asbestos trusts that pay out asbestos exposure claims against bankrupt companies.

The House also passed March 9 the Innocent Party Protection Act ( H.R. 725), which 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.

The package of litigation overhaul measures that cleared the House this week are “ridiculous bills” that were written in “back rooms without the benefit of a single hearing. They take away important rights that we have under federal and state law,” Doroshow said.

But the “civil justice reform” bills are needed, Rickard said. The Chamber, which represents 3 million businesses, called on the Senate to “quickly” take up the bills and send them to the President’s desk.

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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