Might there be tort reform in our lifetime? While it may sound like a fevered hallucination to millions of lawsuit-weary Americans who have had to endure tales of ridiculous class action suits for years, if not actually participate in such suits as unwitting plaintiffs, prospects have improved substantially with George W. Bush in the White House.
The issue didn’t get a mention in the State of the Union, likely because of the Enron scandal, but the wheels are in motion nonetheless. Last June, a bipartisan group of reformers in the House introduced a bill called the Class Action Fairness Act of 2001; the first hearing on the bill was held last Wednesday before the House Judiciary Committee.
While the bill stops short of radical measures — such as requiring members of class action suits to opt-in, or forcing losers to pay court costs for frivolous lawsuits (wouldn’t life be a lot better if losers were forced to pay for everything?) — it does take an important first step toward ending class action abuses.
Specifically, it targets the egregious practice of forum shopping. Forum shopping, for the uninitiated, is the process by which trial lawyers file similar lawsuits against a business or corporation in a number of different jurisdictions, trolling for a sympathetic judge and jury, much like wolves searching for a broken fence post.
In the last few years, those wolves have spent a good deal of time mauling the likes of Hilda Bankston, a retired small-town pharmacist who testified at the hearing Wednesday. Ms. Bankston has been the defendant in numerous class action suits brought against pharmaceutical companies that distributed fen-phen and other drugs, mainly because her late husband’s pharmacy provided a gateway for lawyers to file suit in Jefferson County, Mississippi — a county that has achieved no small amount of notoriety in class action circles.
Dubbed the “center for the redistribution of wealth” in honor of its notably large jury awards, the Jefferson County courthouse has become something of an ATM machine for trial lawyers around the country. In the year 2000, plaintiffs in the county, where an impressive half of the jury pool has graduated from high school, outnumbered its population of roughly 10,000.
And Jefferson County isn’t the only class action hot spot. Trial lawyers have also shown a fondness for hamlets such as Marion, Illinois, Beaumont, Texas, and other out of the way burgs. What do these places have in common? Sympathetic and/or powerless judges, easily duped and/or angered juries and laws that make it easy to certify a nationwide class.
It’s that last item that the proposed bill would tackle. Much of the forum shopping chicanery that is allowed to go on is currently permissible because of an unfortunate quirk in federal law. Article III of the U.S. Constitution created federal courts to hear cases “between Citizens of different States,” but the laws spelling out federal courts’ jurisdiction over such cases came into being long before the rise of the modern class action suit.
Currently, in order for a case to be heard in federal court it must have what is called complete diversity — meaning every plaintiff must be from a different state than every defendant. Thus, in order to prevent a case from being removed from a sympathetic county court, a clever trial lawyer need only name a strategic plaintiff from the same state as one of the defendants, or even name a straw defendant from the same state as one of the plaintiffs. H.R. 2341 would change the standard for class action suits to require minimal diversity — meaning that there would only have to be at least one plaintiff and one defendant from different states — and would allow any party to remove the case to federal court if the claims reach $2 million.
The logic of such a change in federal law is clear. Many class action suits brought today are brought against large corporations that do business all across the United States and across the world; and the suits are brought on behalf of plaintiffs from every state. These suits deal with questions of national importance that the founders of our country would never have intended to be settled in provincial courts tucked away in the hills.
And it is not without reason that national questions are supposed to be settled at the national level. Studies have clearly shown that out-of-state corporations fare particularly poorly in class action suits — especially in states where judges are elected and have a strong incentive to steer money from far away deep pockets into their constituents’ nearby pockets.
Still, tort reform is far from a done deal. The Democrats are likely to put up quite a fight. The Clinton administration blocked reform on a number of occasion and for good reason: trial lawyers give 70 percent of their federal campaign contributions to Democrats. And they’re the Beatles of campaign giving — they’re bigger than automakers, bigger than tobacco, bigger than Jesus.
H.R. 2341 will have to stop by a few more House committees, and it faces an ugly time in the trial lawyer — ahem, I mean Democrat — controlled Senate. But if it ever makes it to the President’s desk: wolves beware. Fences will be mended.
Ryan H. Sager is a freelance writer based in Washington, D.C.
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