The Magazine

Bush Versus the Trial Lawyers

Not all tort reforms are created equal.

Jan 17, 2005, Vol. 10, No. 17 • By WILLIAM TUCKER
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PRESIDENT BUSH WENT TO MADISON County, Illinois, last week to kick off his campaign for tort reform. "Junk lawsuits change the way doctors do medicine," said the president, surrounded by a phalanx of doctors from southern Illinois. "Instead of taking care of patients, they're worried about lawsuits."

Madison County--named the nation's worst "judicial hellhole" by the American Tort Reform Association--is a good place to start. "I've had to change doctors four times in the last two years," says Jim Thompson, a 62-year-old retired electronics worker in rural Godfrey, Illinois. "They're all leaving because of the trial lawyers."

But the event also illustrates the dilemma the Bush administration faces in pushing tort reform through Congress. "Medical malpractice is the best issue to lead with because it's something people get excited about," says Governor Haley Barbour, of Mississippi, who pushed a complete package through his state's legislature last year. Yet medical malpractice is the issue probably least susceptible to a national solution. Far more pressing are class-action reform and a resolution of long-running asbestos litigation. Unfortunately, these issues generate much less public excitement. The trick for the administration will be keeping all three balls in the air as it tries to guide a package through Congress.

CURRENTLY GATHERING the most support in Congress is class-action reform. Were it not for Tom Daschle, Senate Bill 2062 would probably be law right now. The 2004 version had 62 supporters--more than enough for cloture--yet it died when the minority leader attached non-germane amendments concerning the minimum wage and global warming on the Senate floor. Daschle is now planning to continue his opposition from South Dakota.

Class-action reform aims to rein in the trial lawyers' favorite racket of bundling tens of thousands of petty claims for things like phone bills and credit card charges and then bringing them before a sympathetic local judge who certifies what is, for all intents and purposes, a national class action. Madison County--where judges are entertaining nearly 200 such lawsuits--became a "judicial hellhole" because of class actions, not medical malpractice.

In a typical case, a Madison County resident spent the night at a Wyndham hotel in Chicago in 2001, then filed a class action in Edwardsville (the county seat) over a $2.67 "energy surcharge" he had been forced to pay. A trivial matter? Not when combined with tens of thousands of identical claims from the "national class" of aggrieved hotel guests. Yet because none of the individual claims exceeded $75,000--and because at least one Madison County resident was involved--state judges are allowed to certify the class action. The usual outcome is that plaintiffs get a $2.67 coupon for their next visit to a Wyndham, while the lawyers collect their contingency fees in cash.

Two Illinois firms--the Lakin Law Firm and Freed & Weiss--pioneered the territory, but their success has now attracted a swarm of national firms to this rural backwater. Just to celebrate their success, trial lawyers raised $140,000 for three Madison County judges' reelection campaigns in 2002--a race in which all three ran unopposed.

"Trying a case involving thousands of claims from around the country against a national chain [Wyndham has no hotels in Madison County] before a single state judge obviously violates the spirit of the 'diversity' clause in the Constitution," says Sherman Joyce, president of the American Tort Reform Association. "Dealing with cases involving parties from diverse states is one of the reasons the federal courts were created in the first place."

The Class Action Reform Act would do three things: It would (1) allow class actions involving plaintiffs and defendants predominantly from different states to be removed to federal court if one party so requests; (2) outlaw "coupon" settlements, where the class members get non-monetary awards while the lawyers collect cash; and (3) prevent settlements where some class members actually lose money or where members from the local jurisdiction receive better treatment than members from other states--both not infrequent outcomes.

Opponents argue the reform would swamp the federal courts. "The bill is very much weighted toward business and opposed to consumer and civil rights," complains Edward Sherman, of Tulane Law School, who chaired an American Bar Association task force on the legislation. "It's quite a change in our notion of federalism. There are many cases that should be kept in the state courts."

The last three Democratic senators to come on board last year secured a concession that specified class actions will stay in the state courts if two-thirds of the primary plaintiffs and defendants are from the same state. Other details will have to be ironed out before passage.