A Nov. 8 Senate Judiciary Committee hearing on how so-called lawsuit abuses affect small business could signal that the Senate is ready to move on one or more pieces of a package of pro-business litigation legislation.
Supporter Victor Schwartz told Bloomberg Law the hearing sets the ground work for future consideration of the bills, which cleared the House in March. Schwartz is 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.
Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform in Washington, agreed. “The hearing follows passage of several critical legal reform bills by the U.S. House of Representatives earlier this year, and signals that the Senate may be setting up to do the same,” she said.
But opponents of the legislation say the hearing doesn’t necessarily mean the bills are going anywhere.
“Sen. Grassley prides himself on considering legislation that is bipartisan and non-controversial,” Remington Gregg, Public Citizen’s counsel for civil justice and consumer rights, told Bloomberg Law. He referred to Sen. Chuck Grassley (R.-Iowa), who is chairman of the Senate Judiciary Committee.
“All of the bills that passed the House are very controversial and passed on a near party line vote,” Gregg said. “If anything, I’m hopeful that this hearing will emphasize that we shouldn’t drastically change the laws that govern our civil justice system because the U.S. Chamber of Commerce found two or three instances where the system could have worked better.”
A committee vote, or markup, hasn’t been scheduled for any of the bills yet. The Lawsuit Abuse Reduction Act (H.R. 720, S. 237), which is aimed at so-called meritless suits, may get the most traction: Grassley is the lead Senate sponsor of the bill and it got the most support in the House.
Grassley said the hearing was necessary as an overdue checkup on the civil justice system. Small businesses could be spending funds hiring new employees but are instead forced to funnel the money to handle frivolous litigation, he said.
Small businesses are often easy targets for “cookie cutter lawsuits” by unscrupulous plaintiffs’ attorneys, witness Elizabeth Milito, senior executive counsel of the National Federation of Independent Business Small Business Legal Center in Washington, said. These businesses are quick to settle because they can’t afford to hire lawyers to pursue litigation, she said.
But Sen. Al Franken (D-Minn.) said he finds the timing of the hearing puzzling in light of recent scandals involving Wells Fargo’s banking practices, Equifax’s safeguarding of its customers’ data, and sexual harassment claims against a host of other businesses. This is the perfect time to strengthen Amercians’ access to the court system, not shield corporations from liability, he said.
Witness Myriam Gilles, professor of class action and aggregate litigation at the Benjamin N. Cardozo School of Law at Yeshiva University, New York, called frivolous litigation a “bugaboo.” Business interests provide anecdotes that are supposed to stand for a tsunami of abusive lawsuits.
Gilles said 87 percent of front-line judges say frivolous litigation isn’t a problem, and they already have tools to deal with the bad apples.
The three bills that passed in March are:
The malpractice bill passed the House 218–210 in June; the other two bills passed 238–183 and 234–187 respectively in October.
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