Obama Memo: Let the Lawsuits Flow, Jobs Flee

By May 21, 2009Briefly Legal

Wall Street Journal, “Shift Toward State Rules on Product Liability

WASHINGTON — In a sweeping order Wednesday, President Barack Obama called for a rollback of Bush administration regulations designed to protect companies from product-liability lawsuits in state courts.

The memo didn’t name specific industries but it could affect a wide range of consumer products subject to both federal and state regulation.

Companies have long complained about having to deal with 50 different state rulebooks, and the Bush administration aggressively took up the issue. It encouraged federal agencies to issue rules pre-empting state laws and declared that a single federal standard held sway.

The presidential memo is here.

The trial lawyers have long made the elimination of federal preemption a top priority, and they are delighted. From the American Association for Justice, the lawsuit lobby.

WASHINGTON, DC—“On behalf of the thousands of people whose cases have been affected by complete immunity preemption, we are heartened by the Presidential Memo released today.

The Obama Memo on regulatory preemption makes clear that the rule of law will once again prevail over the rule of politics.  The memo overturned actions taken by Bush administration bureaucrats who were influenced by powerful, well-connected corporations who wanted to re-write and re-interpret Congressional legislation, undermine the Constitutional system of checks and balances and put the public at risk and compromise laws designed to give Americans basic rights to hold wrongdoers accountable.

You have to admire the message discipline — or is it chutzpah? — developed through years of legal training and courtroom arguments: AAJ’s spokeslawyers put on the news release equivalent of a straight face and condemn corporations for promoting the “rule of politics.” This from one of the most powerful political forces and sources of campaign contributions in the nation, including contributions to the presidential candidates.

Here’s the problem. Manufactured goods are sold in national and international commerce, and federal regulations provide a measure of legal consistency and predictability. When product liability lawsuits devolve into the state courts, lawyers will soon identify the venues where juries and judges are moved not by the law or the facts, but by the desire to redistribute wealth. As the American Tort Reform Association identifies them, Judicial Hellholes.

A few plaintiffs win big, lawyers cash in, and jobs-creating manufacturers are punished for creating products demanded by the public.

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