Senate Moving on Pro-Biz Litigation Bills? Maybe

By Perry Cooper and Bruce Kaufman

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.

Overdue Checkup or Puzzling Timing?

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.

Bills in the Package

The three bills that passed in March 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.
Other litigation measures favored by business and pending in the Senate are H.R. 1215, a broad medical malpractice overhaul measure; H.R. 732, aimed at curbing some federal agency settlements; and H.R. 469, which would alter the citizen suit settlement process.

The malpractice bill passed the House 218–210 in June; the other two bills passed 238–183 and 234–187 respectively in October.

To contact the reporters on this story: Perry Cooper in Washington at; Bruce Kaufman in Washington at

To contact the editor responsible for this story: Steven Patrick at

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