Businessweek Archives

Putting Brakes On The Litigation Machine


Editorials

Putting Brakes on the Litigation Machine

There are few issues that are more politicized in America than tort reform. Democrats fight it in the name of consumer rights, while accepting big contributions from plaintiff lawyers. Republicans demand it in the name of economic efficiency, while accepting large contributions from the business community. But strip the partisanship away and the facts themselves reveal that a new form of automated assembly-line, tort litigation is costing the nation nearly 2% of gross domestic product annually--twice as much as Europe (page 114).

The litigation machine is generating an increasing number of spurious cases that compensate consumers for injuries they don't suffer, fix social problems no one complains about, or avenge trivial misdeeds. Last year, lawyers filed a class action against Procter & Gamble, Johnson & Johnson, and Colgate-Palmolive, arguing that their toothbrushes were dangerous when used improperly. Toothbrushes? The corporations were faced with a $1 billion jury judgment. Fortunately, the Illinois state court judge kicked the case.

Make no mistake. Class actions can be a powerful force for the social good. Consumers and the public in general have benefited from suits against companies that fixed prices on vitamins. Hemophiliacs received compensation from companies that sold them HIV-tainted blood. And employees who endured racial discrimination received millions of dollars in just compensation from their employers.

But some plaintiff lawyers treat class actions as business ventures rather than vehicles for helping people. They first come up with the idea for a suit and then use the Internet to find potential clients. There are now easy-to-use litigation packets on the Net to facilitate lawsuits, and Websites to find experts to testify. There is even a central warehouse, available only to plaintiff lawyers and not the public, that stores internal corporate documents uncovered in product-liability cases. The David and Goliath battles between plaintiff lawyers and corporate defense attorneys is over. Today, the fight is between two Goliaths.

The Bush Administration is rightly making tort reform a priority. It should, however, target abusive lawsuits, not all of them. One proposal, to have losers in class actions pay all the litigation costs of the corporations being sued, is too onerous. It would effectively strip most consumers of their right to participate in any class action. A better Administration idea is to shift the venue of class actions away from state to federal courts. Campaign contributions by plaintiff lawyers play an increasing role in getting sympathetic judges elected at the state level.

It is the judges themselves who can play the most effective role in cutting down frivolous litigation by using their power to dismiss. Under heavy pressure to clear dockets, judges now encourage parties to settle. They then issue protective orders to keep evidence from the public, further encouraging class action settlements. This just keeps the game going. This abuse in the name of tidiness has got to end. If a case appears frivolous, it should be dismissed quickly. A legal mechanism for protecting the weak is being exploited for ill gain. It's time for sensible tort reform.


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus