On March 13, the House Subcommittee on the Constitution and Civil Justice held an oversight hearing to examine “litigation abuse,” the new buzz-word for “tort reform” – which, in turn, is a euphemism for denying access to justice.
|Rep. Trent Franks (R-AZ)|
The Subcommittee focused on ways to limit so-called “forum shopping,” cy pres settlements (discussed further below), and financing civil litigation. However, Rep. Jerrold Nadler (D-NY), the ranking member, criticized the panel on its failure to recognize that in many cases, large corporate defendants are engaged in actual wrongful and negligent activity that harms individuals whose only recourse is through the courts.
First, Chairman Trent Franks (R-AZ) framed “forum shopping” as the practice by which plaintiffs-attorneys choose the most favorable jurisdiction. However, Rep. John Conyers, Jr. (D-MI) responded by highlighting the many ways corporations have been successful in “forum shopping through legislation,” such as the so-called Class Action Fairness Act of 2005 (CAFA) and through contract clauses which force plaintiffs to use a forum chosen by the very people they are suing. In other words, civil defendants force victims to sue in the courts most friendly to corporate interests.
Second, Theodore Frank, President of the Center for Class Action Fairness, raised objections to cy pres awards. These are awards given to charities when the plaintiffs are dead or unknown. Frank claimed these awards, rob victims and unjustly reward plaintiff attorneys. However, Joanne Doroshow, Executive Director for the Center for Justice and Democracy, defended the practice as a necessary tool that holds malfeasant civil defendants accountable by imposing liability where responsibility is clear but the victims are unknown or otherwise unavailable. The alternative would be a de facto reduction in the amount a defendant must pay just because victims had died or could not be found.
Third, the Republicans criticized the use of third party ligation financing (TPLF) in which lenders provide money to finance litigation and use of contingency fee lawyers by state attorneys general. However, Doroshow pushed back, arguing that TPLF enables injured victims to get a day in court rather than to be forced to take a low ball offer because they cannot afford to put food on the table.
John Beisner, a corporate attorney with Skadden Arps and the U.S. Chamber of Commerce’s Institute for Legal Reform, was hostile to the practice of state attorneys general hiring outside counsel on a contingency fee basis to represent the state in civil litigation. Beisner worried that the use of private counsel would give rise to conflicts of interest and loss of public trust. Reps. Nadler and Conyers said the practice allows under-resourced and understaffed state attorneys general offices to enforce state and federal laws at no cost to the taxpayer. Beisner also characterized these arrangements as a “pay-to-play” relationship.
Rep Ted Deutch (D-FL) exposed the hypocrisy of this argument by asking Beisner why the Chamber of Commerce heavily contributes to state judicial races while opposing plaintiff practices that finance litigation without directly affecting the justice system. Rep. Deutch pointed out that the financing agreements in no way influence the actual courts, unlike the Chamber’s practice of pouring money into state judicial races.
Wednesday’s hearing represented another thinly-veiled attempt to protect corporate defendants from taking responsibility for their wrongdoing while raising more barriers to victims’ access to justice. As Professor Doroshow pointed out, litigation abuses are a real concern – but many of the most flagrant abuses are committed by corporate defendants burying overmatched individuals in frivolous motions and procedures designed to delay and deny justice.
As we have noted elsewhere on this blog perhaps the greatest “litigation abuse” is the expanding practice of forcing Americans to sign away their right to litigate at all through forced arbitration clauses with class action waivers.