Bush Legal Reform Agenda Faces Uphill Battle
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President Bush faces an uphill battle to pass the rest of his legal reform agenda, despite a decisive win in the Senate on a class-action reform bill last week, political and legal analysts tracking the issue said yesterday
While the class-action measure prompted heated debate on the Senate floor, the impact of the legislation on the number and size of class-action settlements is likely to be limited, according to both supporters and opponents of the measure.
A law professor at Yale who supports the class-action bill, George Priest, said Mr. Bush will find it “far harder” to achieve his other tort-reform goals, such as changing medical malpractice laws and reining in asbestos litigation. “This was the easiest and the clearest,” Mr. Priest said of the class-action measure, which passed the Senate by a 72-to-26 margin.
The House is expected to approve the bill without difficulty later this week. The legislation allows companies to move most class-action cases that involve consumers from multiple states into federal court. The measure also instructs judges to ensure that legal fees are not awarded in so-called coupon settlements until it is clear how many class members actually took advantage of the offer.
The drive for the legislation was fueled in large part by stories of dozens of class-action cases in which each consumer got a coupon worth a few dollars or a check for a trivial amount, while lawyers involved got millions in fees.
“It’s a small, modest reform,” Mr. Priest said. “Is it going to help things a lot? No, it will help things a little.”
One of the nation’s most prominent class-action lawyers, William Lerach of San Diego, said transferring cases to federal court may be less of a boon to business defendants than advocates of the legislation suggested.
“I can honestly see some advantages to the bill,” he said in an interview yesterday. “I’m very hopeful that a federal judge sitting and looking at what we would have historically thought to be a state-court class action will realize it’s either him or nobody.”
Mr. Lerach said the bill’s wording will encourage state-by-state lawsuits, which may ultimately prove more onerous to businesses. He predicted new alliances among plaintiffs’ firms across the country.
“Be careful what you ask for, you might get it,” the attorney said. “Do you really want to defend 35 state-court class actions?”
Mr. Lerach noted that nationwide settlements give companies a finality they cannot achieve in state-by-state litigation. “When a defendant has a big problem on its hands, they become very happy about a national class action to solve their problem nationwide,” he said.
The difficulty in predicting the impact of legal-reform legislation is illustrated by a securities-litigation law passed in 1995 that many expected would put Mr. Lerach and his colleagues out of business. “That did not happen,” he noted yesterday. The class action bill does not address securities lawsuits, which are already handled by federal courts.
A spokesman for the U.S. Chamber of Commerce, Stan Anderson, said the most significant impact of the class-action measure would be seen in specific counties that have become magnets for plaintiffs’ lawyers looking for friendly courts and judges. Under the bill, companies would be able to maneuver cases out of these venues, such as Madison County, Ill., which have been dubbed “judicial hellholes” by critics.
“It’s going to eliminate what our members are most concerned about: getting stuck in Madison County and the judge certifying it or threatening to certify it no matter what the facts were,” Mr. Anderson said. Once a class action is certified by a court, companies almost always settle to avoid the possibility of a massive jury verdict.
Mr. Anderson said the lopsided vote tally in the Senate bodes well for the prospects of further reform to the legal system. “Having nearly three-quarters of the Senate vote for legal reform, I think, is highly significant,” he said.
However, Mr. Anderson acknowledged that all of Mr. Bush’s other legal priorities will likely be more difficult to realize than the class-action legislation.
The business lobbyist said he expects that Congress’s next move will be to consider legislation to streamline litigation over health problems allegedly caused by asbestos. “It’s not ready for prime time, but it can be,” Mr. Anderson said.
A spokesman for the Association of Trial Lawyers of America, Carlton Carl, vowed that the group’s failure to block the class-action bill will have “zero impact” on other tort-reform issues that may soon be raised in Congress.
Mr. Carl said that if and when medical liability changes are debated, his group will be able to produce sympathetic victims who were rarely part of the class-action discussion. “It’s certainly much easier to see the human impact of malpractice when you have kids who are killed and grandparents who are abused in nursing homes and people who are killed by dangerous drugs like Vioxx,” he said. “Those are very different issues people can see much more clearly.”
Mr. Carl was quick to dismiss any suggestion that the White House now has the momentum to seek broader tort reform on the heels of the class-action victory. “It’s an assault on people’s rights, but there’s no reason to think it’s a juggernaut,” he said.
A law professor at Seton Hall, Howard Erichson, said he doubts that all of the senators who backed the class-action measure can be counted on to support other tort reform. “If anything, this is more likely to serve as a kind of safety valve, where some steam has been vented over this,” he said.
Mr. Erichson said he believes that once the bill takes effect, most class actions will still end with settlements, as they do today, but that the settlements will be smaller than before. “What changes is the bargaining leverage of the two sides,” he said.