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May 4, 2005

New Coalition Formed to Help Stop Lawsuit Abuse

WASHINGTON, D.C. – A new coalition has been formed to support the federal Lawsuit Abuse Reduction Act of 2005 (LARA), H.R. 420. This common-sense legislation would help put an end to personal injury lawyers gaming the civil justice system by filing frivolous lawsuits and forum shopping. These abuses are a threat to American businesses and their employees.

The new Lawsuit Abuse Reform Coalition (LARC) includes more than 70 organizations that represent the broadest spectrum of American businesses. The membership list is available at www.atra.org, along with detailed information about H.R. 420 and why it is needed.

LARC was formed in partnership among ATRA, the National Association of Manufacturers (NAM), the National Association of Wholesaler-Distributors (NAW), the National Federation of Independent Business (NFIB), the National Restaurant Association (NRA), and the U.S. Chamber Institute for Legal Reform (ILR).

“Lawsuit abuse has become an increasingly serious topic nationwide,” said Tiger Joyce, LARC Chairman and ATRA President. “The coalition represents millions of small businesses that have been or are potential victims of some of the worst abuses of our civil justice system— frivolous lawsuits and forum shopping.”

Chairman Joyce also observed: “Far too often the system allows, in effect, legal extortion. The threat of costly and lengthy litigation forces businesses to settle frivolous claims that could potentially put them out of business. While it costs the plaintiff only a little more than a small filing fee to begin a lawsuit, it costs much more for a small business to defend against it.”

H.R 420 would deter the filing of frivolous lawsuits by placing the cost of defending frivolous claims on the lawyers who bring them. LARA also would put an end to forum shopping or litigation tourism by properly limiting the filing of civil tort claims to places where plaintiffs live or were hurt, or in the jurisdiction of the defendant’s principal place of business.

ATRA General Counsel Victor E. Schwartz observes that, “There is no reason for cases to be brought elsewhere unless one is seeking a biased forum for a case to be heard. Wealthy personal injury lawyers call these places ‘magic jurisdictions’ because they promise easy jackpot justice. ATRA calls these places ‘Judicial Hellholes.'”

“When it comes to issues that matter most to small business, legal reform is second only to the cost of health care,” said NFIB Executive Vice President Dan Danner. “Litigation has become a big business, and it is putting small companies out of business. A central goal of this coalition is to secure passage of legislation to better protect small business from lawsuit abuse, because they simply can’t afford to continue being preyed upon by attorneys who unfairly target small businesses.”

“The undue burden of frivolous lawsuits on small business owners threatens jobs across America—including the 12.2 million employees of the restaurant-and-foodservice industry—and creates a logjam in civil courtrooms. As a member of the Lawsuit Abuse Reduction Coalition, the National Restaurant Association is committed to addressing these costly and excessive abuses of our judicial system,” said Lee Culpepper, Senior Vice President of Government Affairs and Public Policy for NRA.

NAM Executive Vice President Michael Baroody noted his organization’s study showing that, “Small manufacturers’ ability to compete internationally is disproportionately affected by America’s relatively high cost of doing business. And lawsuit abuse accounts for a disproportionately high percentage of those costs.”

“Small business owners are footing the bill for America’s litigation explosion to the tune of $88 billion annually,” said Lisa Rickard, President of the U.S. Chamber ILR. “We are committed to passing the Lawsuit Abuse Reduction Act as it will provide much-needed relief to small businesses and curb lawsuit abuse by unscrupulous trial lawyers.”

LARA was reintroduced January 26 in the U.S. House of Representatives by Representative Lamar Smith (TX). Last year, the House passed the Lawsuit Abuse Reduction Act of 2004 (H.R. 4571) on September 14, 2004, by a bipartisan vote of 229-174. The bill was not introduced in the Senate.

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The Lawsuit Abuse Reform Coalition (LARC) was formed by a broad spectrum of organizations representing small businesses to work for enactment of the federal Lawsuit Abuse Reduction Act (LARA), H.R. 420. This common sense legislation would help put an end to personal injury lawyers gaming the civil justice system by filing frivolous lawsuits and forum shopping—abuses that threaten American businesses and their employees. The American Tort Reform Association serves as the Executive Secretariat for LARC. Information about LARC can be found at www.atra.org.

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