True Legal Reform Begins With Judicial Reform

Progressively, for several decades, opportunistic plaintiffs’ attorneys, motivated more by personal profit than any quest for justice, have hijacked the federal courts by filing case after case in search of the next big payday.  From automobiles to fast food as their latest targets, trial lawyers are not only getting more inventive with their legal contortions, but they are also pressing more of them with unwavering relentlessness and baffling success.  Left in the wake is a judiciary stretched far beyond its limits and a legal system desperate for reform. 

Despite explicit pleas from the federal courts, including the U.S. Supreme Court, a bitterly divided Congress -- besieged by the trial lobby and anti-business special interest groups -- has been unable to enact substantive legislation to restore reason and balance to our runaway legal system.  As partisanship continues to escalate, prospects for meaningful legal reform through legislation significantly diminish. 

As a result, America must now look to the federal judiciary itself for much needed solutions to the ongoing legal crisis.  Not only must sitting judges renew their commitment to sound legal principles, including judicial restraint and respect for the rule of law, but the President must nominate and the Senate must confirm judges who will uphold the law, rather than make it from the bench.  Only when filled with principled jurists will our courts be able to restore common sense to a legal system run amok.

Waging War on American Business

When a reporter asked 1930s-era outlaw Willie Sutton why he robbed banks, Sutton coolly responded, “Because that’s where the money is.”  This philosophy has been adopted by the nation’s trial lawyers as they wage their litigation war against Corporate America.  The evidence is in the numbers.

Last year alone, federal product liability filings increased nearly 200 percent from 12,755 in the year ending March 31, 2001, to an astonishing 31,068 in the year ending March 31, 2002, according to the Administrative Office of the U.S. Courts.  Such a dramatic increase nearly wiped out the decrease in personal injury-related tort filings between 1997 and 2000. 

Asbestos continues to be the target of choice, as asbestos filings almost quadrupled from the previous year, adding 22,076 new cases to the federal docket.  In total, more than 200,000 asbestos claims are now pending in federal and state courts, with an estimated 8,400 companies named as defendants.  These companies have already paid out more than $54 billion in claims, settlements and legal costs, and, with future payments, costs are estimated to exceed $200 billion.  At least 60 companies bombarded with asbestos litigation have filed for Chapter 11 bankruptcy protection, displacing more than 60,000 workers.  Even more astonishing, as U.S. Supreme Court Justice Stephen Breyer has pointed out, “[U]p to half of asbestos claims are now being filed by people who have little or no physical impairment.”   As money-hungry trial lawyers continue to file hundreds of thousands of questionable suits, less and less money is available to compensate those who are truly ill from asbestos exposure.   In fact, one large trust set up to compensate the injured -- the Manville Trust -- can now only pay out five cents on the dollar to legitimate claimants.

Class action filings, a favorite of plaintiffs’ attorneys who can often reap millions of dollars in fees from a single verdict or settlement, rose nearly 30 percent from 2000 to 2001.  In fact, the number of new federal class action filings has nearly quadrupled in the past decade, with no end in sight. 

The search for deep pockets to pick has led trial lawyers also to zero in on securities class actions, which presently account for more than half of all class action lawsuits filed in federal court.  According to statistics released by the Administrative Office of the U.S. Courts, 1,571 new securities class actions were filed in the year ending September 30, 2001, more than doubling the number filed the previous year.  The latest statistics for 2002, which are not yet available, will likely show those numbers have skyrocketed, as plaintiffs’ attorneys have sought to exploit corporate accounting scandals and the stock market’s meltdown.

A Crippling Effect on the Economy and the Law

The drastic increase in tort liability and class action filings, many of which are suspect in both law and fact, has resulted in a system that costs American businesses, shareholders, employees and consumers tens of billions of dollars per year. 

According to an April 2002 report by the President's Council of Economic Advisers, direct costs of tort liability lawsuits are conservatively estimated at $180 billion annually, or 1.8 percent of gross domestic product, distinguishing the U.S. tort-liability system as the most expensive in the world -- more than twice as expensive as that of any other industrialized nation.  Direct costs include awards for economic and non-economic damages, administration, claimants' attorney fees and the costs of defense.  In real terms, tort liability claims cost every U.S. citizen at least $650 per year.  This massive cost is significantly understated as it does not include significant factors, specifically increased insurance premiums, costs associated with attempts to avoid lawsuits, significant reductions in corporate innovation and post-September 11 uncertainties.

The figure is more troubling considering that only 20 cents of each dollar actually goes to claimants for real economic damages, such as lost wages or medical expenses.  And, according to a 2002 study conducted by the actuarial firm Tillinghast-Towers Perrin, only an additional 22 cents goes toward non-economic damages.  “[T]he remaining 58 [cents] of tort costs go to pay for administration, claimants’ attorney fees, and defense costs,” the report states.

The trial bar’s manipulative war on American business is also one being waged on the law itself.  Questionable legal theories advanced by plaintiffs’ attorneys and accepted by some courts during this litigation explosion have enabled the trial bar to break down long-standing culpability limits on corporate liability, making it easier for claimants to profit regardless of their own recklessness or irresponsibility. 

In the health care arena, the result has been a dismantling of virtually every law governing medical liability, plus the invention of a number of new legal duties and new theories of recovery.  Not to mention skyrocketing insurance premiums that have forced many doctors out of business and into the streets in desperation.

Traditional restraints on product liability are also being eroded, creating such an uncertain environment that defendants are often compelled to seek settlement of an otherwise unworthy claim rather than risk a protracted lawsuit or unjust judgment. 

Finally, the litigation explosion has led to an outrageous backlog on federal dockets, leaving litigants waiting 20 plus months, on average, from the time initial complaints are filed to trial. 

With the federal judiciary stretched to the extreme, time and resources available to devote to each case decrease significantly, despite the lengthy wait.  Undoubtedly, overburdened judges have less time to review and understand the issues brought before them, many of which have become increasingly more complex both in the new legal theories advanced and innovative subject matter disputed.  This continues to result in decisions that are less than well-reasoned, which, in turn, further erodes consumer and corporate confidence in a fair judicial system.

Indeed, the hidden damages to the economy include companies deciding not to conduct research or bring new products to consumers for fear of massive, unwarranted lawsuits and rash judgments.  

True Legal Reform Must Begin with Judicial Reform

Simply put, the system is broken.  And, given the extreme partisan animus infecting the legal reform debate, it is unlikely that the legislative branch will substantively rectify America’s growing legal crisis any time soon.  In such a climate, there is little chance for passage of a bill in the U.S. Senate that would cap punitive and non-economic damages in medical liability lawsuits.  Likewise, the odds are stacked against meaningful legislation that would extend federal district court jurisdiction to a vast majority of class action filings involving parties from multiple states.  The prospects for consensus on asbestos litigation reform are discouraging, at best.   

As a result, not only must sitting judges take the lead in curbing creative legal filings and limiting excessive financial windfalls that result, but equally as important is the need to fill longstanding vacancies on the federal bench with judges committed to the rule of law and who understand and respect the limited role of the federal judiciary in our constitutional system of government.  The latter must be initiated by first addressing the hobbled judicial confirmation process in the U.S. Senate.

President George W. Bush has nominated many qualified men and women to fill the vacancies plaguing the federal courts, all of whom pledge to resist judicial activism.  Yet, a significant number of these nominees have been the victims of well-funded campaigns, defined by character assassination and downright lies centering on ideological differences rather than legal competence, which have prevented their confirmations from moving to an up or down vote in the Senate.   Many nominees have been held in partisan limbo for nearly two years, despite receiving unanimous “well-qualified” ratings from the American Bar Association -- a rating once heralded as the objective “gold standard” for confirmation by the very partisans who now obstruct.

The coalition of extreme special interest groups formed to defeat the President’s nominees, led by Alliance for Justice and People for the American Way, reportedly has $15 to $30 million on hand allocated solely to its efforts on judicial confirmations. This war chest has enabled the coalition to successfully redefine, both substantively and procedurally, the standards by which federal judges are confirmed.  The ongoing filibuster against Miguel Estrada, the highly-publicized nominee to the U.S. Court of Appeals for the D.C. Circuit, has effectively rewritten the Senate’s constitutional role in the confirmation process, as 60 votes are now, and hereafter could be, needed to confirm a federal judge, instead of the simple majority prescribed by the Constitution.  Such is already the case for Fifth Circuit nominee Priscilla Owen, whose confirmation woes mark the first time in history that the minority party in the Senate has sustained simultaneous filibusters against judicial nominees.

More filibusters and additional parliamentary tactics are already being considered or used against other nominees.  As of the beginning of May, the confirmations of 12 of the 23 courts of appeal candidates the President has nominated in the 108th Congress are being blocked by one or more Senators, despite all the nominees having more than the necessary simple majority support in the full Senate.  In addition to Miguel Estrada and Priscilla Owen, one is being threatened with a filibuster.  Three nominees are awaiting floor votes as the Minority leadership has refused to allot any time for debate on their nominations.  Five are being held up by the destructive blue-slip process.  And, one nominee, whose confirmation appears to be moving forward, faces stiff opposition from her home state Senator, Barbara Boxer (D-CA).  Four of the remaining six nominees are new and have not yet been fully evaluated.  A mere five have been confirmed. 

Conclusion

Unless and until a concerted effort is made to restore the constitutional integrity of the judicial confirmation process and to fill vacancies in the federal judiciary with judges who are committed to principles that will increase the efficiency of the U.S. judicial system, aid in the predictability of procedure and outcomes and ensure the soundness of verdicts, the crisis in our courts will only degrade and the impact on the U.S. economy will continue to multiply exponentially.