“Lawsuit Abuse Reduction Act” Aims To Make Litigation More Expensive

Late last week, when I heard that the U.S. House of Representatives passed the “Lawsuit Abuse Reduction Act,” a certain Mark Twain quote came to mind: “Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself.”

 

Currently, if a lawyer violates Federal Rule of Civil Procedure 11 (which prohibits, for example, filings presented for an improper purpose or which contain a false statement of fact), a Court may impose a sanction, including a monetary penalty. The “Lawsuit Abuse Reduction Act” would change that to require monetary sanctions whenever a Court finds Rule 11 was violated.

 

I discussed the same bill two years ago, noting that the bill would actually make litigation in federal courts more expensive for everyone involved, by encouraging lawyers on both sides to file endless sanctions motions against one another, as was the case for ten miserable years between 1983 and 1993 when a similar rule was in effect. I’m not alone in my views: as the Judicial Conference of the United States wrote earlier this year in opposition to the Act, the old rule “quickly became a tool of abuse in civil litigation” that absorbed money and time on “Rule 11 battles that had everything to do with strategic gamesmanship and little to do with underlying claims.” A whopping 91 percent of federal trial judges oppose the bill’s requirement for mandatory sanctions, hence the Judicial Conference’s opposition. The American Bar Association has opposed it as well.

 

The bill is unlikely to pass in the Senate, and, if it does, it will be vetoed by President Obama, but it nonetheless deserves close scrutiny because it reminds us of an important point about tort reform: big businesses and big insurance companies want the civil justice system to be more expensive, not less.

 

The lobbyists and lawyers at the U.S. Chamber of Commerce, American Petroleum Institute, and National Association of Manufacturers — all of which support the bill — aren’t fools. They know and understand exactly why federal judges and the ABA oppose the bill; the difference is that they want civil justice to be as slow and as costly as possible. The slower the process, the more likely the plaintiffs are to settle at a compromised amount, as the economic damage they’ve suffered (and the stress of litigation) takes its toll. Similarly, the more expensive and time-consuming cases are, the less likely plaintiffs’ lawyers will be to take them in the first place. It’s one of the main reasons they want cases in federal court: because those courts are hampered by stonewalling over nominees.

 

It’s appalling that this sort of blatant special interest legislation — a bill that hurts everyone who isn’t a billion-dollar corporation with money to burn on wars of attrition in taxpayer-funded courtrooms — can pass a chamber of Congress without any consequences whatsoever for the representatives that supported it. But I suppose that, per Mark Twain, they’re not the sorts of people who can even be shamed into good behavior.

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  • MB

    It’s “nice” to see our representatives at work. Everyone who voted for this bill should be kicked out of office. I like how, in your earlier post on the subject, you called the bill “welfare for unethical lawyers.” That’s who these representatives want to help (corporate lawyers “who want to pad their bills with needless weak sanctions motions”), not their own constituents. It’s shameful.

    • http://www.litigationandtrial.com/ Max Kennerly

      Indeed, those members of Congress expect their constituents to pay for the privilege of padding corporate law firm’s profits, as the federal courts become overrun with needless sanctions motion practice.