Cross-posted from The Tortellini
Last month's election may have signaled a hiatus in the tort wars for a while, but that doesn't mean we've seen the end of business attacks on the legal system. There are far too many lobbyists whose livelihoods depend on a constant stream of new initiatives (especially those that generate big fights but never pass).
A major target in the new year is likely to be the tattered shreds of state consumer protection laws.
These are laws like deceptive trade practices acts that empower attorneys general to sue on behalf of regular folks who've been been ripped off by shady car dealers or subprime mortgage companies. The laws also allow private citizens to sue when they've been defrauded as well. They create incentives for this private enforcement by allowing plaintiffs to collect legal fees and often triple damages if they win, to make small cases viable enough for an attorney to prosecute. They also allow for the dreaded class action.
Big companies hate these laws because entrepreneurial plaintiff's lawyers have been trying, with limited but potential success, to use them against the booze industry, fast-food chains and the tobacco industry for such things as making the bogus claims that "light" cigarettes are better for you than regular ones.
Right now, the "free market" American Legislative Exchange Council and the American Tort Reform Association are pushing "model legislation" that will supposedly rein in "abusive" private consumer lawsuits. Among other things, the legislation would:
--require plaintiffs to prove that a defendant willfully deceived the public before winning treble damages (usually a nearly impossible standard)
--abolish punitive and exemplary damages in consumer protection actions, supposedly to avoid "double punishment" of a defendant.
--abolish "statutory" damages in class action, i.e., the guarantee of a minimum recovery even in cases with small financial losses
--abolish provisions that allow plaintiffs to recover legal fees except in those rare cases where they can prove that the defendant's conduct was "willful"
--impose a loser pays fee-shifting system
--bar consumer lawsuits over practices that are authorized or approved by government regulatory agencies, like smoking.
As with so many things that come off the desk of ATRA general counsel and longtime tobacco industry lawyer Victor Schwartz, the proposals sound sooo reasonable on their face. They're the sort of things that sensible people can all agree on, right? Of course, most of these proposals would all but eliminate most consumer protection lawsuits. Without the possibility of recovering legal costs or special damages, most consumer ripoffs are too small to ever be financially viable in the courthouse.
States in the cross-hairs for this new campaign include Massachusetts, Illinois, Maryland, Kansas, New Jersey, and right here in the nation's capital....