User:TedFrank/tort reform sandbox

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A tort reform or civil justice reform is a change in the civil justice system intended to improve its efficiency or accuracy or to reduce litigation's adverse effects on the economy.

While the phrase "tort reform" might imply any change in tort law or procedure, the commonly understood use in political and academic arenas describes a movement to curb tort litigation and damages. It usually does not include reforms that would expand liability, such as laws that create new causes of action or that increase damage awards.

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[edit] Tort reform advocates' agenda

Reformers argue that the legal system costs the U.S. economy as much as $865 billion every year,[1] and argue that reform is necessary to reduce the adverse impact of litigation on the economy. They argue that while the Anglo-American tort system was originally intended to deter wrongful conduct, liability has expanded such that many productive activities, such as medical practice or product or pharmaceutical manufacturing, are being deterred. Critics of the status quo argue that the current tort system is too expensive and inefficient. Even when non-economic "pain and suffering" awards are included, it has been estimated that only 46 percent of the total cost of the tort system ultimately ends up in claimants' pockets,[2] and less than a quarter of the total cost of the tort system is for economic damages.[citation needed]

Changes commonly advocated in the United States include: caps on non-economic damages (e.g., monetary compensation for pain and suffering), punitive damages, and sometimes even economic damages (e.g., medical expenses, lost income, etc.); sanctions by courts against those who have filed baseless lawsuits; eliminating joint and several liability; enforcement of arbitration clauses and other contractual waivers; stricter statutes of limitations and statutes of repose; eliminating causes of action that reformers argue are counterproductive; and granting immunity to some types of defendants in certain circumstances, such as immunity from claims of alleged violations of state common law for actions that were required by or comply with federal regulation. Other proposals are procedural in nature, such as venue restrictions; higher standards for the filing of a complaint; limits on the admissibility of expert witness testimony; the establishment of procedures for the regular use of neutral, court-appointed, expert witnesses; changes in other evidentiary rules, such as permitting the admission of evidence that a plaintiff was not wearing a seatbelt; eliminating the popular election of judges, which exists in some American states and localities; changing appeal bond requirements to permit defendants to file appeals when faced with potentially bankrupting judgments; improvements to jury selection and voir dire; making discovery obligations less burdensome; adopting the "English rule" of "loser pays"; limits on attorney's fees; due process protection for defendants and unnamed plaintiffs in class action litigation; or ensuring that class actions with a nationwide class of plaintiffs are tried in federal courts, rather than state courts. Some have even argued for the creation of administrative health courts to replace medical malpractice tort litigation.

Many of these measures tend to benefit defendants; others, such as the English rule, sanctions for delay, changes in evidentiary rules, and early-offer settlement requirements, could have benefits to plaintiffs in some cases.

Not all tort reform supporters support all proposed tort reforms. For example, there is a split over whether the collateral source doctrine should be abolished, and there is a healthy debate over whether it would be beneficial to further restrict the ability of attorneys to charge contingent fees.[3],[4]

One aspect of "tort reform" is reflected in advocates' contention that there are too many frivolous civil suits. Under some interpretations of the law, a frivolous lawsuit is one that cannot reasonably be supported under existing legal precedent or under a good-faith argument for a change in the law. However, the term has a broader rhetorical definition; in political debates, "frivolous" is also used to describe tort lawsuits where there is only a remote link between the conduct of the defendant and the injuries alleged by the plaintiff or where the damages sought by the injured plaintiff are perceived to be too high for the injuries sustained. Tort reform advocates also complain about lawsuits that are brought based on purely hypothetical damages where the plaintiffs have suffered no tangible harm whatsoever, or where the harm caused could be traced to elements of excessive neglience or irresponsibility on the part of the claimant. [5].

Advocates of tort reform also complain of regulation through litigation, the idea that litigation is being used to achieve regulatory ends that advocates would not be able to achieve through the democratic process. For example, Rep. Rick Boucher (D-VA) argued in support of a 2005 federal tort reform that gave immunity to gun manufacturers in certain lawsuits because such lawsuits were "nothing more than thinly veiled attempts to circumvent the legislative process and achieve gun control through litigation"; reform supporters complained that (and the Pentagon supported the bill on the grounds that) the plaintiffs were trying to "sue [gun manufacturers] out of existence" by forcing them to incur $250 million in legal defense expenses, while gun control supporters argued that the legislation took "away the right of victims to be able to have their day in court," that the bill gave unprecedented immunity to a single industry, and that the law was unconstitutional.[6]

[edit] The tort reform debate

Critics of tort reform contend that real purpose of the proposed changes is to shield businesses, especially large corporations, from having to pay just compensation to consumers, patients and clients for damages incurred from fraud, negligence, medical malpractice or other legitimate tort claims. They contend that limitations on punitive damages and other restrictions on plaintiff's traditional rights will reduce corporate accountability. Because corporations typically engage in a cost-benefit analysis before considering whether to stop a wrongful action (such as polluting or not enacting proper measures for safety), they contend that corporations will decide that the cost of changing a wrongful practice would be greater than the cost of continuing it, unless there is the chance that the cost of continuing will be made greater by a successful lawsuit. In this view, the prospect of paying a small damage award would have little or no effect in correcting the wrongdoing, and would essentially allow the corporation to continue an unsafe practice unless state or federal regulators interceded.

Tort reform supporters argue that this precisely describes the problem: lawsuits over socially beneficial practices increase the costs of those practices, and thus improperly deter innovation and other economically desirable activity. They further suggest that small businesses are hurt worse by the threat of litigation than large corporations are, because the legal expenses from a single lawsuit can bankrupt a small businessperson.

[edit] Theoretical issues

[edit] How would tort reform affect safety?

Opponents of tort reform contend that supporters exaggerate the costs and ignore the benefits of the current tort system.[7] For example, opponents of tort reform contend that lawsuits encourage corporations to produce safer products, discourage them from selling dangerous products such as asbestos, and encourage more safe and effective medical practices.[8] Beginning in the early 1980s, Professor Stephen Teret and other faculty at The Johns Hopkins University School of Public Health argued that tort litigation was an important tool for the prevention of injuries. [9] While Teret acknowledged that the primary purpose of tort lawsuits usually is to recover money damages for the injured persons, as compensation for their medical and other costs, he identified several ways that litigation can also enhance safety for everyone, including: "1) to avoid paying future damages, the creators of dangerous products or conditions may voluntarily make them safer; 2) where conduct is particularly egregious, courts may award punitive damages to deter that conduct in the future; 3) the process of gathering information prior to trial – called 'discovery' – can bring information to light that can be used by policy-makers to create new laws or regulations."

In contrast, a 2006 study by Emory University professors Paul Rubin and Joanna Shepherd argued that tort reform actually saved tens of thousands of lives because "lower expected liability costs result in lower prices, enabling consumers to buy more risk-reducing products such as medicines, safety equipment, and medical services, and as consumers take additional precautions to avoid accidents."[10]

Tort reform advocates cite a 1990 study of auto safety improvements by Harvard University professor John D. Graham for a conference at the Brookings Institution found that

"The case studies provide little evidence that expanded product liability risk was necessary to achieve the safety improvements that have been made. In the absence of liability risk, the combined effects of consumer demand, regulation, and professional responsibility would have been sufficient to achieve improved safety. In some cases, however, liability seemed to cause safety improvements to occur more quickly than they would have in the absence of liability."

Graham further notes that "there is no evidence that expanded liability for design choices has been a significant cause of the passenger safety improvements witnessed since World War II." Graham concludes by endorsing reform, noting that case studies of the current product liability system "suggest that manufacturers may be inclined to delay design improvements when they fear that improvements will be used against them [in court]." Another presenter at the conference, Murray Mackey of the University of Birmingham, came to a similar conclusion:

"[S]trict liability has had a negative influence on innovation. It has held back new designs, consumed resources that might otherwise have been directed at design improvement, and added on costs to the consumer. ... [I]n Western European countries ... liability risks are low and the marketplace pays a premium for innovative technology in safety as well as other areas. As a result, most safety-related advances in recent years have come from European manufacturers and, more recently, from the Japanese. ...

"Perhaps the most obvious test is to reverse the argument. If there were a positive effect of strict liability on [safety] innovation, then surely those companies most exposed to liability verdicts would be the most innovative. But no evidence for that exists at all. Ford, General Motors, and Chrysler have the biggest exposure to litigation for alleged product defects. Those companies devote most resources to defending their current product designs; they are also the most cautious about their new products. It must follow that the product liability doctrine has had a negative influence on innovation in the car industry."

Tort reform advocates, including Paul Offit, also argue that litigation has driven from the U.S. marketplace many useful and safe medical advances, including Bendectin (the withdrawal of which has led to a doubling of hospital admissions for morning sickness) and vaccines for Lyme disease and Group B Streptococcal disease, which kills 100 infants a year.[11]

[edit] Controversy over job loss claims

Some opponents of tort reform dispute claims that the current tort system causes job losses, is an economic drag or has any significant impact on national or global economies. The Economic Policy Institute reports that: "In an April 2002 paper, the CEA (President Bush's Council of Economic Advisors) examined the economic impacts of the tort system in somewhat greater depth. But that paper, too, failed to demonstrate any employment effects of the tort system and made no prediction about the impact of tort law change." [12] During the 1990's, a period in which tort reform on a national level made little progress, a record number of jobs were added to the economy.

Some supporters of tort reform posit that reforms can significantly reduce the costs of doing business, thus benefiting consumers and the public in the long run. Tort reform supporters point to a study by Nobel Prize winner Joseph Stiglitz that shows that bankruptcies from asbestos litigation alone has cost the economy over 52,000 jobs.[13] A study by Harvard Business School professor Michael E. Porter on U.S. competitiveness, The Competitive Advantage of Nations ISBN 0684841479, found that "product liability is so extreme and uncertain as to retard innovation. The legal and regulatory climate places firms in constant jeopardy of costly and … lengthy product suits. The existing approach goes beyond any reasonable need to protect consumers, as other nations have demonstrated through more pragmatic approaches."[14]

[edit] Dispute over "litigation explosion" claims

Opponents of tort reform deny claims of tort reform advocates that there is "litigation explosion" or "liability crisis", and they contend that the changes proposed by tort reform advocates are unjustified. They point to records maintained by the National Center for State Courts which show that population-adjusted tort filings declined from 1992 to 2001. The average change in tort filings was a 15% decrease.[15] The Bureau of Justice Statistics, a division of the Department of Justice (DOJ), found that the number of civil trials dropped by 47% between 1992 and 2001.[16]. The DOJ also found that the median inflation-adjusted award in all tort cases dropped 56.3% between 1992 and 2001 to $28,000.

Tort reform supporters argue that these numbers are misleading. Supporters note that most liability costs come from pre-trial settlements caused by the threat of trial, so the number of trials is irrelevant. Supporters further note that the number of "filings" is a misleading statistic, because modern filings are much more likely to be class actions with many more joined claims than the cases of decades ago. They also note that the choice of the 1992 start date is misleading, because the largest increase in the number of tort cases occurred between 1970 and 1992. They also argue that the use of the median, rather than the mean, is a misleading statistic for measuring the magnitude of the litigation problem. Supporters point to a study by Tillinghast/Towers Perrin, a major consultant to the insurance industry, that claims the cost of liability litigation is outpacing the rate of inflation consistently over the last half century, representing 2.2% of GDP in 2004 vs. just 0.6% in 1950 and 1.3% in 1970.[17] Tort reform opponents dispute these numbers, which have been controversial; tort reform supporters note that the Towers Perrin numbers are underestimates in many ways.[18], [19]

[edit] Corporate lawsuit abuse

Some tort reform opponents argue that corporations and insurance companies are the worst abusers of the litigation system. In particular, they contend, corporations often use their enormous resources to unfairly delay trial, pursue frivolous appeals, and contest claims in which liability is clear. In response, a number of tort reform supporters argue that that criticism is not a reason to oppose tort reform; such abuse would be deterred by proposed tort reforms such as "loser pays," which would prevent large corporations from using litigation as a cudgel against individuals and small businesses who cannot afford to defend themselves in court by providing an incentive for law firms to provide contingent defense. Opponents of tort reform contend that most private citizens would be afraid to sue wealthy corporations or insurers if they could be bankrupted by an award of the defendant's legal fees if they lost.

[edit] Debates over individual reforms

[edit] Non-economic damages caps

Main article: Non-economic damages caps

Proposals to cap non-economic damages are one of the most frequently proposed tort reforms, and have generated controversy over their fairness, efficacy, and constitutionality.

[edit] Joint and several liability

Main article: Joint and several liability

Tort reformers have had the most legislative success in limiting the common law rule of joint and several liability, often replacing it with a rule of proportionate liability. Of the forty-six states that had a joint and several liability rule, thirty-three states have abolished or limited the rule.[20] Opponents of tort reform contend that the elimination of the rule would undercompensate people who had the misfortune to be hurt by more than one person, if at least one of the defendants does not have the financial means to pay his or her share of proportionate liability.

[edit] Loser pays

Nearly every Western democracy follows the "English rule," which requires the loser of a civil suit to compensate the winner for his or her attorney's fees.[21] For example, after authors Michael Baigent and Richard Leigh lost their the plagiarism litigation over The Da Vinci Code in a British court, they were ordered to pay the defendants' $1.75 million in attorneys' fees.

The "American rule" differs; in most cases, each party bears its own expense of litigation. Supporters of tort reform argue that loser-pays rules are fairer, would compensate winners of lawsuits against the costs of litigation, would deter marginal lawsuits and tactical litigation, and would create proper incentives for litigation, and argue for reforms that would require compensation of winning defendants some or all the time.[22] In federal courts, debate has focused on the scope of Federal Rule of Civil Procedure Rule 11, which sanctions attorneys in some situations for making frivolous filings.

Opponents argue that such rules would have had a chilling effect on civil rights litigation. Proposals to limit frivolous lawsuits have been criticized on the grounds that the restrictions could be used to impede individuals attempting to enforce civil rights laws, according to The Federal Judicial Center's Study of Rule 11. Robert L. Carter, United States District Court Judge for the Southern District of New York, and Rep. Sheila Jackson Lee have both argued that Brown v. Board of Education would have been called frivolous.[23], [24] In response, reform supporters note that victorious civil rights litigation could hardly be deemed "frivolous"; that desegregation was accomplished through legislative, rather than judicial action; and that reform opponents overstate the importance of litigation in the civil rights movement.

[edit] Tort reform in American politics

Tort reform is controversial. George W. Bush made tort reform a centerpiece of his successful run for Texas governor and of his second-term domestic policy agenda. This has led to the issue becoming more of a major rift between the Republicans and Democrats. In the 2004 presidential election, Democratic vice presidential nominee John Edwards, a successful plaintiffs' lawyer, was criticized by tort reform advocates for lawsuits that he brought against obstetricians on behalf of children who suffered severe birth injuries; reformers criticized the suits as relying on junk science, while Edwards denied the allegation.[25]

Grover Norquist, a leading Republican operative, has suggested a politically partisan motivation for tort reform, writing in the American Spectator magazine that "Modest tort reform, much of which has been actively considered by committees in both houses, would defund the trial lawyers, now second only to the unions, and this is debatable, as the funding source of the Left in America." Controversial trial lawyers such as Frederick Baron have become major funders and fundraisers of the Democratic Party, and some have argued that the party is merely carrying water for the special interest of the plaintiffs' bar. For example, Democratic Senate Minority Leader Harry Reid proposed that Bush name one of four fervently pro-life Republican senators—Lindsey Graham of South Carolina, Mike DeWine of Ohio, Mel Martinez of Florida and Mike Crapo of Idaho—to fill the seat on the Supreme Court vacated by Sandra Day O'Connor; because the first three of those senators are former plaintiffs' attorneys, writer and tort reform proponent Walter Olson suggested that Reid was "ready to sell out the interests of his party's social-liberal faction in order to protect the interests of its organized-lawyer faction."[26]

The debate over tort reform was not always a Democrats vs. Republicans or liberals vs. conservatives affair. In the 2000 presidential election, the Democrats' vice presidential nominee, Senator Joe Lieberman, was a leading supporter of tort reform; former New Republic and Slate editor Michael Kinsley has often criticized products liability law.[27] And the conservative pro-life group Center for a Just Society opposes many tort reform measures, arguing that litigation can be used to keep RU-486 off the market.

The United States Supreme Court sometimes weighs in on tort reform debates, but here too, the Justices don't always vote according to their predicted ideological stereotypes. In the seminal case of BMW v. Gore[28], the Court voted 5-4 that the Constitution placed limits on punitive damages, with Justices Stephen Breyer and John Paul Stevens in the majority, and Justices William Rehnquist, Antonin Scalia, and Clarence Thomas, dissenting. It has been suggested that a Supreme Court under a Chief Justice John Roberts would be more likely to take cases that could resolve tort reform debates.[29]

[edit] Who advocates and opposes tort reform

The tort reform movement and opposition in the United States is mostly funded by large insurance companies; manufacturers, the tobacco industry, and other industries; the Chamber of Commerce and National Association of Manufacturers. ; doctors; attorneys; and other people and organizations that have a financial interest in the litigation system.[30], [31], [32] A number of philanthropists have given money in support of tort reform; for example, Bernie Marcus, the retired co-founder of Home Depot, has donated millions to tort reform because he's "concerned for the next generation of entrepreneurs whose creativity, risk-taking and innovation are stifled by the current legal and regulatory climate."[33]

A number of industry- and conservative-foundation-funded think tanks such as the American Enterprise Institute, the Cato Institute, the Heritage Foundation and the Manhattan Institute have pursued tort reform campaigns.

On the other side, the plaintiffs' bar has funded a number of law professors, think tanks, and public interest groups in opposition to tort reform.

Both sides are accused of operating front groups. The American Tort Reform Association (ATRA) a national group, is "a coalition of more than 300 major corporations and trade associations"; according to a study called "The CALA Files," published by the anti-tort-reform group Center for Justice and Democracy. ATRA helps coordinate the activities of numerous state groups such as "Citizens Against Lawsuit Abuse" (CALA) that are alleged to be sham front groups, rather than real citizens' groups. And according to tort reform supporter Walter Olson, "the trial bar was pioneering techniques of 'Astroturf'—the simulation of grassroots support—long before most interest groups got into the act. The grand-sounding Alliance for Consumer Rights, for example, turns out to operate from the offices of the New York State Trial Lawyers Association. ATLA has an entire nonprofit arm, the Civil Justice Foundation, whose quiet function is to dispense grants to consumer advocacy groups."[34]

[edit] Expenditures on the tort reform debate

Because of the magnitude of tort litigation in the United States, billions of dollars are at stake for both sides. The Manhattan Institute, which supports tort reform, alleges that the plaintiffs bar made $40 billion in fees in 2001, more than twice the revenues of Coca-Cola,[35] while many corporations support tort reform because of the potential improved profitability. In various referenda campaigns and judicial elections, both sides have spent millions of dollars. For example, in the 2004 Illinois Supreme Court election between Lloyd Karmeier and Gordon Maag, in a district with under one million eligible voters, over eight million dollars was spent by both sides and outside groups; trial lawyers spent $4.2 million in support of Maag, almost matching the $4.3 million total Karmeier raised from business, doctors, and the Republican Party.[36] In 2002, the Association of Trial Lawyers of America (ATLA) became the single largest contributor to federal candidates and the Democratic Party.[37] ATLA has succeeded in forcing filibusters of most federal tort reform legislative efforts; the only major tort reform to pass in the last few years was the Class Action Fairness Act of 2005, which had bipartisan support. Fred Baron, a recent ATLA president, told a seminar in 2002 that he objected to an editorial in the Wall Street Journal claiming that "the plaintiffs bar is all but running the Senate." He pointed to the editorial and said, "Now I really, strongly disagree with that. Particularly the 'all but.'"[38]

In October 2000, ATLA published on its web site an article claiming that its members were, in fact, "being outspent by a factor of at least 10-to-1" in federal political giving. However, this figure was reached by counting every non-lawyer and non-union donation as a "pro-tort-reform" donation. "Thus, if a Hollywood producer contributes to someone's campaign, even if it's the same politician the trial lawyers are backing, it counts toward the total of 'Communications/Entertainment industry' donations; every psychiatrist or birth control clinic operator gets counted as 'Health industry'; every farmer in 'Agribusiness'; and so forth. Yet it should be clear enough that a donation from a wheat farmer worried about the future of price supports and export subsidy programs in no way serves as a counterweight to the trial lawyers' agenda."[39] A study by the Institute on Money in State Politics found that when medical malpractice reform is considered by the voters, lawyers are consistently able to outspend doctors and insurers.[40]

[edit] Federalism debate

Republicans traditionally voice support for states' rights and say they oppose an excessive role for the federal government. Many of them, however, support federal tort reform legislation that would override state decisions. The supporters argue that this is not inconsistent for such matters as class actions and products liability, because they believe state courts should not be deciding cases that effectively regulate the nationwide economy and that Federalist No. 80 explicitly contemplated the use of federal courts to resolve interstate claims. Concerns about federalism have resulted in modification of proposed federal medical malpractice reform to allow state legislatures to override the caps that the bill creates by default;[41] still, some conservatives make a distinction regarding the appropriate federal role in different types of reform, arguing that medical malpractice is inherently a state-law function.[42].

[edit] See also

[edit] References

[edit] External links

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