CONCLUSION

PUSHING BACK

Achieving Meaningful Liability Reform Is Difficult but Not Impossible

The academics and judges who transformed American tort law and civil procedure in a relatively brief period of time did not anticipate the full consequences of the changes they wrought, though they received fair warning from a few of their colleagues that some of the changes would prove calamitous.[272] Even defensible expansions of liability had the unhappy effect of creating a litigation industry that has depressed economic growth and impeded American competitiveness. As Harvard Business School professor Michael Porter has observed, the competitive advantage of U.S. companies is hampered by a tort-law system that is “extreme compared [with that of] other nations” because “[t]he risk of lawsuits is so great and the consequences so potentially disastrous.”[273]

Reforming the liability system should be a political priority, especially in a deep recession like the present one, with double-digit unemployment, but it has proved difficult, given the litigation lobby’s clout. Last fall, former Democratic National Committee chairman Howard Dean candidly admitted, “The reason why tort reform is not in the [health-care reform] bill is because the people who wrote it did not want to take on the trial lawyers.”[274] In December, the president of the trial lawyers’ lobbying group, the American Association for Justice, declared the organization’s lobbying effort on health care “a stunning victory,”[275] as well he should have: neither the House nor Senate health-care bills dared to tackle liability reform, and the version that passed the House contained provisions that, perversely, would impede liability reform (by discouraging state reforms adverse to the litigation industry’s interests)[276] and expand litigation opportunities (by empowering state attorneys general to enforce federal regulatory provisions, which could involve the hiring of private lawyers on a contingent-fee basis to help them do so).[277] (At the time this report went to print, it was unclear whether these provisions would be included in the final House-Senate bill.)

It is unsurprising that the litigation industry has evolved into such a powerful political force. Whereas trial lawyers’ interests are concentrated in the issue of liability, on which their livelihoods depend, opposing factions, like business and the medical profession, have interests that are diffuse. In the public-policy universe, doctors care about liability but are more worried about the repercussions of health-care reform and the size of Medicare reimbursements; car companies care about liability but are more anxious about cap-and-trade legislation and fuel-efficiency standards. In some instances, industries can be at cross-purposes; efforts at asbestos-liability reform, for example, were stymied in part by a conflict of interest between insurers and manufacturers.[278]

In addition to holding these systemic advantages, lawyers have shown themselves to be peculiarly capable of navigating the waters of modern political influence. Campaign finance laws that limit contributions (to $2,400 per candidate at the federal level)[279] frustrate concentrated giving in many industries, but the organized plaintiffs’ bar has proved adept at coordinating its giving, both within firms and across states.

Notwithstanding the power of the lawyer lobby, efforts at reform are not futile. Even in the current political environment, some states have been working to restore sanity to their own liability systems. In 2009, for instance, Oklahoma’s legislature passed a comprehensive package of tort reforms that included stricter evidentiary standards, caps on noneconomic damages, and limitations on a lawyer’s ability to “shop” cases to the most favorable forum.[280] Over time, states that rein in lawsuit abuse have an advantage in attracting businesses and doctors.

Furthermore, only five years ago, a differently constituted Congress did pass a major liability reform, the Class Action Fairness Act (CAFA),[281] that limited lawyers’ ability to bring large national class actions in the most favorable state courts. Barack Obama, then the junior senator from Illinois, voted for CAFA, unlike his major rivals for the Democratic presidential nomination.[282] The president has, in fact, expressed an understanding of the problems of lawsuit abuse,[283] and his large and diverse base of campaign donors has made him less dependent on Trial Lawyers, Inc. than congressional leaders such as Senators Harry Reid of Nevada and Dick Durbin of Illinois. Although the president has voiced opposition to damage caps, his rhetoric and his record suggest that, were congressional leadership to change, he might be open to the funding of state-level experiments in reform or supporting legislation that, like CAFA, tightens federal procedural rules.

Reforming America’s liability rules is not easy: the lawsuit lobby is unusually strong, and America’s system of government is structured to make change difficult. But the very reason that Trial Lawyers, Inc. devotes so many resources to its government-relations and public-relations efforts is that the political objective for which it is fighting—the maintenance of the oversized lawsuit industry—is both harmful and unpopular. In recent years, proponents of legal reform have made progress, if haltingly, and the American public does want to curb lawsuit abuse. So while the litigation industry today is aggressively leveraging its political power to advance its self-interested legislative agenda, change for the better may not be too far beyond the horizon.

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272. In 1958, Roscoe Pound, see supra page 9, worried aloud that those pushing for expansive strict product liability were “not looking squarely at all the facts” and that such a program would have “consequences beyond the law of torts.” Roscoe Pound, The Ideal Element in Law 340 (1958).
273. Michael Porter, The Competitive Advantage of Nations 525 (1990).
274. Mark Tapscott, Dean Says Obamacare Authors Don’t Want to Challenge Trial Lawyers, Wash. Examiner, Aug. 26, 2009.
275. Letter from Anthony Tarricone, president, American Association for Justice, http://images.magnetmail.net/images/clients/ATLA/attach/SENATEPASSESHISTORICHEALTHCAREREFORM.pdf (last visited Jan. 13, 2010).
276. See Affordable Health Care for America Act, H.R. 3962, 111th Cong. § 2351 (2009); see also James R. Copland, Tort-Bar Treat, N.Y. Post, Nov. 3, 2009.
277. See id. at § 257; see also Chris Rizo, House Health Care Bill Expands State AGs’ Powers, Leg. Newsline, Nov. 24, 2009, available at http://www.legalnewsline.com/news/224232-house-health-care-bill-expands-state-ags-powers.
278. See Stephen Labaton, Asbestos Bill Is Sidelined by the Senate, N.Y. Times, Feb. 15, 2006.
279. See 14 U.S.C. §§ 441a(a)(1), 441a(c) (2008).
280. See H.B. 1603, 52nd Legis., 1st Reg. Sess. (Okla. 2009) (enacted May 29, 2009).
281. S. 5, 109th Cong. (2005) (codified as 28 U.S.C. §§ 1332(d), 1453, 1711-1715 (2006)).
282. See U.S. Senate Roll Call Votes 109th Congress, 1st Session, http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=109&session=1&vote=00009 (last visited Jan. 13, 2010). Sens. Hillary Clinton (D-N.Y.) and Joe Biden (D-Del.) both opposed CAFA; Sen. Chris Dodd (D-Conn.), as well as Sen. Obama (D-Ill.), did vote for the bill. Dodd was not generally considered a “major” presidential aspirant.
283. See President Barack Obama, Address to a Joint Session of Congress on Health Care (Sept. 9, 2009), available at http://blogs.wsj.com/washwire/2009/09/09/prepared-text-of-obamas-speech-on-health-care/.