05-13-2000

LAW: Less Is More on Tort Reform

Business lobbyists pushing for curbs on civil litigation boast that a new
legislative strategy is starting to pay dividends. For more than a decade,
the lobbyists promoted a massive overhaul of product liability laws. The
bigger the bill, the theory went, the more support it would attract from
Fortune 500 corporations and Washington trade groups. But year after year,
the Association of Trial Lawyers of America and its allies in the consumer
movement managed to thwart these business efforts.


This Congress, the lobbyists have tried a different approach. Instead of
supporting one mega-bill, business groups have endorsed a series of
narrowly tailored measures. Four bills have passed the House this
Congress, despite the Republicans' narrow majority. One of the
bills-legislation that limits companies' liability for year-2000 computer
problems-became law. Senate action is expected on a few others this year,
according to lobbyists.


Many lobbyists predict that some of the legal reform bills that land on
President Clinton's desk will be vetoed. Still, the issue has gained
momentum this year, and by 2001, George W. Bush (who is no friend of trial
lawyers) could be in the White House.


"Federal tort reform is a house that has to be built one brick at a
time," said Mark A. Behrens, a partner at the law firm of Crowell
& Moring and a leading business lobbyist on legal issues. The votes
this year, he said, "will provide a very important foundation for
what's achievable in the future." The publicity generated by Capitol
Hill hearings, he added, will also help the cause. "Public education
can go a long way toward solving the problem."


ATLA officials dismiss their opponents' optimism, noting that the margins
of victory on the liability bills in the House were significantly narrower
than they were in 1995, when the newly installed GOP majority made tort
reform a priority. "They are exactly where they left off, except with
fewer votes," said Linda A. Lipsen, ATLA's senior director for public
and national affairs. Lipsen also foresees a heated battle in the Senate
over the House-passed measures.


Meanwhile, the trial lawyers are not just playing defense. Their
association supports provisions in the patients' rights legislation that
would permit participants in health care plans to sue their health
maintenance organizations. A House-Senate conference is considering the
measure.


In recent years, only narrowly focused liability bills have passed muster
on Capitol Hill. The 1996 Bill Emerson Good Samaritan Food Donation Act,
for instance, reduced the liability of those giving food to the needy. In
1997, Congress passed the Volunteer Protection Act, which shields unpaid
helpers from some lawsuits. The 1998 Biomaterials Access Assurance Act
limited liability for suppliers of materials needed to make medical
implants. Since 1994, small-airplane manufacturers, homeless shelters,
Amtrak, and cruise-ship owners have also gained protection from various
kinds of lawsuits.


"The efforts that have ultimately been successful have targeted a
particular issue area," said Sherman Joyce, the president of the
American Tort Reform Association. "Everybody really picked up on that
strategy this year."


The first bill to hit the current Congress was one limiting corporate
liability from Y2K problems. The legislation received the backing of
longtime tort reformers and the influential high-technology sector. That
lineup helped persuade Republican and Democratic lawmakers to support the
bill, which Vice President Al Gore endorsed and President Clinton signed
into law.


Between September and February, three tort reform bills passed the House.
One bill would set an 18-year limit from the date of manufacture for suits
against makers of machine tools. AMT-the Association for Manufacturing
Technology-is the prime backer of the bill. The National Association of
Manufacturers, the U.S. Chamber of Commerce, and other industry groups
have also endorsed the legislation.


Opponents, including ATLA and the AFL-CIO, maintain that the bill would
increase premiums for workers' compensation insurance and leave companies
that unknowingly used defective machinery vulnerable to lawsuits. James H.
Mack, AMT's vice president of government relations, said he is hoping for
Senate passage this year. His group has already backed changes intended to
satisfy White House concerns about the legislation.


Once a key part of product liability legislation stalled in Congress, the
bill has seen its fortunes improve this year as a stand-alone measure,
Mack said. "The more cooks there are in the kitchen, the more people
you have at the end of the day extolling the virtues of the soup,"
Mack said. "But the more cooks you have, the more difficult it is
sometimes to come up with a stew that is acceptable to
everyone."


Another House-passed bill would give federal courts greater jurisdiction
over class action lawsuits. Critics complain that plaintiff-friendly state
courts have too much leeway to approve class action suits, which often
produce multimillion-dollar judgments. ATLA contends that the legislation
would give the federal courts a role on matters traditionally left to the
states. The Justice Department and the Federal Judicial Conference have
also expressed similar reservations about the bill.


The Civil Justice Reform Group, a coalition of several dozen large
corporations, is a major backer of the class action legislation. The
group's outside lobbying team includes independent lobbyist Robert A.
McConnell and the firm of Quinn Gillespie & Associates, a shop headed
by former Clinton White House counsel John M. "Jack" Quinn and
veteran GOP lobbyist Ed Gillespie. The coalition has also retained former
Reagan White House counsel A.B. Culvahouse Jr. and veteran litigator John
H. Beisner, who are partners in the Washington office of the Los Angeles
law firm O'Melveny & Myers. The Chamber of Commerce, the National
Association of Manufacturers, and the American Council of Life Insurers
also support the bill.


The third bill pending in the Senate would help small business avoid
costly litigation. For example, the legislation would cap punitive damages
at $250,000 for businesses with 25 or fewer employees. It would also limit
small business' "joint and several" liability, which can force a
defendant responsible for only part of the problem to pay the entire
amount of the damages. The bill would exempt the sellers of dangerous
products from liability if the manufacturer of the product remains in
business. Virtually all small-business groups support the bill, as do the
National Association of Wholesaler-Distributors, the National Restaurant
Association, the Printing Industries of America, the National Retail
Federation, and the American Insurance Association.


ATLA, the Consumer Federation of America, Consumers Union, Handgun
Control, and the National Conference of State Legislatures are fighting
the measures. ATLA's Lipsen rejected the notion that the small-business
measure is a narrow bill that would help only mom-and-pop stores. Small
business accounts for 80 percent of the nation's manufacturers. A
company's size should not protect guilty parties, she added.


Business lobbyists said that these bills passed the House partly because
ATLA and consumer groups were forced to engage in multiple legislative
battles, instead of being able to mount one monster fight.


"As big as ATLA is, we've made the trial lawyers pick and choose what
they're going after," added Nelson Litterest, a lobbyist with the
National Federation of Independent Business. "It's kind of like Star
Wars. We all used to be in the mother ship, but now all the fighters have
come out to attack the [ATLA] death star."


ATLA's Lipsen scoffs at the notion that trial lawyers and consumer groups
can't wage a lobbying fight on several fronts. According to Lipsen, the
proliferation of liability bills has more to do with lobbyists' greed than
with corporate strategy. "All the lobby firms are promoting tort
reform, and they demand to be fed."


Not every liability bill has made progress this year. Senate Majority
Leader Trent Lott, R-Miss., announced recently that the Senate would not
take up legislation that would limit asbestos producers' financial
liability by limiting punitive damages and establishing medical criteria
for injury awards. The bill would also establish a federal agency to
evaluate asbestos injury claims. GAF Materials Corp., a New Jersey-based
company facing substantial liability costs for asbestos illnesses, has
pushed for the bill, which is also pending in the House. Senate Democrats
and the White House strongly oppose the measure.


Another liability bill is also bogged down in Congress. It would shield
car rental and leasing companies from liability if an uninsured driver
damages their vehicles and the company has not been negligent. The bill,
which passed the House Commerce Committee, is backed by a phalanx of
automobile and truck associations, as well as by Avis Rent A Car and Hertz
Corp., said Gregory M. Scott, an associate with the law firm of Collier
Shannon Scott who represents the American Car Rental Association.


All bets are off as to which-if any-of the House-passed bills will make it
through the Senate before the end of the year. Senate leaders and their
aides are reluctant to discuss strategy. But some of the bills may be
offered directly on the floor or attached to other legislation, lobbyists
said. The backers of each bill are confident that their legislation merits
Senate consideration. But one business lobbyist noted that it is crunch
time. "We've come to a narrow bridge, and there's only going to be a
few bills that will pass over it," he said.


Louis Jacobson

National Journal