PJ Media

Republicans Go After Lawsuit Abuse

WASHINGTON – Congressional Republicans are taking steps to punish lawyers who file what they characterize as “frivolous” lawsuits, maintaining the practice wastes billions of dollars and forces individuals and businesses to unnecessarily spend thousands of dollars on litigation.

The House Judiciary Committee in a 17-10 vote along party lines passed and sent to the floor the Lawsuit Abuse Reduction Act, sponsored by Rep. Lamar Smith (R-Texas), which among other things imposes mandatory sanctions on lawyers who file meritless suits in federal court.

Generally speaking, a frivolous lawsuit is defined as one that clearly is intended to merely harass, delay or embarrass the opposition. The presiding judge, usually upon the motion of the opposing party, determines whether a court action meets that standard.

“Lawsuit abuse is common in America because the lawyers who bring these frivolous cases have everything to gain and nothing to lose,” Smith said. “Lawyers can file meritless lawsuits, and defendants are faced with the choice of years of litigation, high court costs and attorneys’ fees or a settlement out of court. This is legalized extortion.”

The legislation, Smith said, “restores accountability to our legal system” and will force attorneys to “think twice before filing frivolous lawsuits.” Nuisance lawsuits, he said, costs jobs and damage the economy because money that could be spent on adding employees or investing in new businesses is instead directed toward legal fees.

Smith’s legislation would require federal judges to impose monetary sanctions against lawyers who file frivolous lawsuits, directing that the money be dedicated toward the defendant’s attorney fees and costs. The court, if it deems necessary, could impose sanctions beyond what the rule calls for and would eliminate the so-called “safe harbor” provision, which establishes a 21-day period for parties to avoid sanctions by withdrawing claims.

The Lawsuit Abuse Reduction Act revolves around Rule 11 of the Federal Rules of Civil Procedure. In 1983, Congress amended Rule 11 to require monetary sanctions to “discourage dilatory or abusive tactics and to streamline the litigation process by lessening the amount of frivolous matters brought before the federal courts.”

In 1993 the Conference of Senior Circuit Judges, the principal policy-making body concerned with the administration of the U.S. Courts, moved to make Rule 11 more lenient than the 1983 version by providing presiding judges with the discretion to determine what sanctions, if any, should be imposed. The changes were adopted after a flood of litigation revolving around Rule 11 claims inundated the legal system, eating up court resources and time.

The 1993 changes included adoption of the safe harbor provision. Tort reform activists have since pressed for a stricter rule.

Smith’s measure has drawn sharp criticism. In a letter to Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary Committee, Thomas M. Susman, director of the Governmental Affairs Office for the American Bar Association, noted that the proposal circumvents congressional procedures for amending the Federal Rules of Civil Procedure. He further argued that there exists no evidence that the existing Rule 11 is inadequate, adding that the changes would impede the administration of justice by encouraging additional litigation and increasing court costs and delays.

“Even if frivolous lawsuits have increased in recent years – a proposition for which we do not find empirical support –there is no evidence that the proposed changes to Rule 11 would deter the filing of non-meritorious lawsuits,” Susman wrote. “In fact, past experience strongly suggests that the proposed changes would encourage new litigation over sanction motions and would thus increase, not reduce, court costs and delay.”

Christine Hines, consumer and civil justice counsel for Public Citizen, a nonprofit dedicated to providing a “countervailing force to corporate power,” said Smith’s bill will slow the litigation process and increase costs by encouraging additional legal maneuvers that require unnecessary court orders.

“In practice, this legislation would harm ordinary people with valid and important claims,” Hines said. “It is just another backdoor tactic employed by corporate lobbyists and their allies in Congress to make it difficult for consumers and employees to hold corporations accountable.”

In the past, Hines said, corporate defendants used Rule 11 to prolong litigation, distract from the real claims in lawsuits and increase costs, thus impairing important consumer and civil rights litigation.

“This bill would re-create a problem that was fixed years ago because it was found to unfairly penalize consumers and burden the judiciary,” she said.

Goodlatte countered by asserting that the Lawsuit Abuse Reduction Act “is an important step in reducing unnecessary and abusive litigation in America’s judicial system. Attorneys should not be rewarded for filing baseless lawsuits and LARA provides sanctions against such abuse.”

The Smith bill is likely to pass the Republican-controlled House but could encounter a roadblock in a Senate controlled by Democrats who generally have acted in the interests of the trial bar in the past. Congressional Democrats, for instance, have consistently opposed and stopped legislation to place caps on punitive damages in lawsuits.

Rep. Trent Franks (R-Ariz.), another supporter of the bill, asserted that under current rules an attorney who fails to comply with Rule 11 doesn’t necessarily face sanctions.

“The fact that litigants can violate Rule 11 without penalty significantly reduces the deterrent effect of Rule 11,” he said. “This harms the integrity of the federal courts and leads to both plaintiffs and defendants being forced to respond to frivolous claims and arguments. The Lawsuit Abuse Reduction Act corrects this law by requiring that federal district court judges impose sanctions when Rule 11 is violated.”

Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, has offered companion legislation to the Smith proposal in the upper chamber.