The House Judiciary Subcommittee on the Constitution has begun its hearing on the Lawsuit Abuse Reduction Act, legislation to amend the Rule 11 of the Federal Rules of Civil Procedure. (See our earlier reports at Shopfloor and Point of Law.)

Testifying in support of the bills, H.R. 966 (text) and  S. 533, is Victor Schwartz of Shook, Hardy and Bacon, with whom the National Association of Manufacturers often works.

Schwartz is also general counsel for the American Tort Reform Association, which issued a news release before the hearing, “Schwartz calls frivolous lawsuits ‘death by a thousand cuts’“:

Schwartz illustrated the problem with the story of a pub that was targeted with a lawsuit by an individual involved in a drunken car crash who later alleged he had been served at the pub. Even though the individual had not included the pub on his list, provided to authorities investigating the crash, of establishments he’d imbibed at that night, pub owners incurred “several thousand dollars” in legal expenses before they managed to get this frivolous lawsuit dismissed.

But rather than incur such expenses and risk larger losses by fighting frivolous lawsuits, Schwartz went on to say that small business defendants and their insurers more often settle these claims out of court. Such “legal extortion,” he said, is possible in part because Rule 11 of the Federal Rules of Civil Procedure was weakened in 1993 and no longer deters frivolous claims as it once did.

“It encourages participants to game the federal civil justice system . . . [b]ecause there is currently no swift and sound sanction against frivolous claims,” Schwartz said. With many states’ civil justice rules reflecting federal rules, “The result over time is potentially hundreds of millions of dollars of unnecessary costs to small businesses and our nation’s economy.”

Schwartz’s prepared testimony is here. Also testifying in support of the bill is Elizabeth A. Milito of the National Federation of Independent Business (statement). The witness in opposition is Professor Lonny Hoffman of the University of Houston Law Center. (Testimony)

Rep. Lamar Smith (R-TX), the chairman of the House Judiciary Committee, and Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Judiciary Committee, today introduced an important piece of civil justice reform, the Lawsuit Reduction Abuse Act.

The House bill is H.R. 966 (text).

From the joint news release:

The Lawsuit Abuse Reduction Act (LARA) imposes mandatory sanctions for lawyers who file meritless suits in federal court. Federal rules mandating sanctions for frivolous suits were watered down in 1993, resulting in the current crisis of widespread lawsuit abuse. LARA restores the mandatory sanctions which hold attorneys accountable for lawsuit abuse.

Specifically, the legislation:

• Reinstates the requirement that if there is a violation of Rule 11, there are sanctions (Rule 11 of the Federal Rules of Civil Procedure was originally intended to deter frivolous lawsuits by sanctioning the offending party).
• Requires that judges impose monetary sanctions against lawyers who file frivolous lawsuits. Those monetary sanctions will include the attorney’s fees and costs incurred by the victim of the frivolous lawsuit.
• Reverses the 1993 amendments to Rule 11 that allow parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after a motion for sanctions has been served.

The House Judiciary Subcommittee on the Courts has a hearing scheduled on the bill at 10 a.m. Friday, March 11. Victor Schwartz, general counsel for the American Tort Reform Association, will be one of the witnesses, ATRA reports.

The House Judiciary Subcommittee on the Constitution holds a hearing this Friday on the major piece of civil justice reform legislation this Congress, the Lawsuit Abuse Reduction Act, which will amend the Federal Rules of Civil Procedure to discourage the filing of frivolous lawsuits. We have more on the legislation at Point of Law.

Bill McCollum, the former attorney general of Florida, argues in The Wall Street Journal for more transparency when state attorneys general hire outside legal counsel on contingency to sue people (mostly businesses) on behalf of the state. From “States and Lawyers’ Fees: Transparency Needed“:

Since the 2007 financial crisis, state attorneys general have stepped up consumer-protection enforcement and are well on their way to displacing federal authorities as the nation’s chief consumer-protection watchdogs.

As the former attorney general of Florida, I understand both the power and potential pitfalls of the job. This increased role and the increased visibility that comes with it mean that attorneys general must (and should) work that much harder to maintain public confidence in the integrity of their office.

The Supreme Court this week denied to hear the Competitive Enterprise Institute’s challenge to the 1998 tobacco settlement based on Congress’ failure to approve the deal as required by the Constitution’s compact clause. From CEI’s news release, “Supreme Court Declines to Hear Case Challenging Tobacco Settlement“:

“We regret the court’s decision not to take up a case of major constitutional and policy importance,” said Sam Kazman, CEI General Counsel. “The tobacco settlement imposed a massive national sales tax on cigarettes, without a single elected legislator at any level of government voting for it. This was a major power grab by state attorneys general at the expense of both citizens and our structure of government.”

Former Sen. Fred Thompson (R-TN) is lobbying for the Tennessee Justice Association against Gov. Bill Haslam’s legislative tort reform proposals. In the cover story for the Tennessee publication, CityView Magazine, he explains his reasoning and argues against damage caps in medical malpractice suits. We appreciated his comments about the misuse of the word “reform”:

I don’t know that there is a rush for tort reform but tort reform has kind of taken on an air of its own and you’re either for it or against it. There is no such thing as finance reform, there is no such thing as health care reform, there is no such thing as tort reform; it is only what is in the bill. It may be reform or it may just be change and not really reform. So everybody thinks all Republicans ought be for tort reform, and that if you’re not a Republican, than you should be against tort reform. I think both of those are fallacious. We ought to look at what’s being proposed.

And two interviews well worth reading …

• American Lawyer, “A Conversation With Class Action Objector Ted Frank,” about his Center for Class Action Fairness.
• The Daily Caller, “10 questions with ‘Schools for Misrule’ author Walter Olson,” on Walter’s new book, “ Schools for Misrule: Legal Academia and an Overlawyered America .”