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President Bush Signs Class Action Reform Into Law.

WILLisms.com noted yesterday that class action reform passed the U.S. House of Representatives.

Today, President Bush wasted no time in signing it into law.

First, President Bush commented on how class-action lawsuits are useful:

"Class-actions can serve a valuable purpose in our legal system. They allow numerous victims of the same wrong-doing to merge their claims into a single lawsuit. When used properly, class-actions make the legal system more efficient and help guarantee that injured people receive proper compensation. That is an important principle of justice. So the bill I sign today maintains every victim's right to seek justice, and ensures that wrong-doers are held to account."

But their misuse has also contributed to the overly litigious nature of American society:

"Class-actions can also be manipulated for personal gain. Lawyers who represent plaintiffs from multiple states can shop around for the state court where they expect to win the most money. A few weeks ago, I visited Madison County, Illinois, where juries have earned a reputation for awarding large verdicts. The number of class-actions filed in Madison County has gone from two in 1998 to 82 in 2004 -- even though the vast majority of the defendants named in those suits are not from Madison County. Trial lawyers have already filed 24 class-actions in Madison County this year. We're in February. (Laughter.) Including 20 in the past week -- after Congress made it clear their chance to exploit the class-action system would soon be gone.

Before today, trial lawyers were able to drag defendants from all over the country into sympathetic local courts, even if those businesses have done nothing wrong. Many businesses decided it was cheaper to settle the lawsuits, rather than risk a massive jury award. In many cases, lawyers went home with huge pay-outs, while the plaintiffs ended up with coupons worth only a few dollars. By the time the settlement in at least one case was finished, plaintiffs actually owed their lawyers money.

A newspaper editorial called the class-action system 'an extortion racket that only Congress can fix.' This bill helps fix the system. Congress has done its duty, and I'm proud to sign it into law."

The most important reason for tort reform is this:

"Overall, junk lawsuits have driven the total cost of America's tort system to more than $240 billion a year, greater than any other major industrialized nation. It creates a needless disadvantage for America's workers and businesses in a global economy, imposes unfair costs on job creators, and raises prices to consumers."

Indeed, the steps the United States takes now will determine how effective America can remain in the increasingly-integrated global economy over the long-term. If America is not a good place to do business, could you blame companies for wanting to move overseas?

This law will help the U.S. bring down the burdensome cost of litigation in this country. Next up, medical liability reform and asbestos reform.

Posted by Will Franklin · 18 February 2005 01:35 PM

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