Senate OKs Class-Action Suit Limits

Congress took its first big step Thursday to implement President Bush’s plan to overhaul the nation’s legal system, approving a measure long sought by business to impose new restrictions on class-action lawsuits.

Republicans hailed the lopsided vote in the Senate -- the bill passed 72-26 -- as an important legislative victory in their campaign against what they call “lawsuit abuse.” The legislation has strong support in the House, which is expected to pass it next week.

“The class-action bill is a strong step forward in our efforts to reform the litigation system and keep America the best place in the world to do business,” Bush said in a statement after the vote. “I applaud the strong bipartisan majority in the Senate for passing this bill, and I call on the House to act promptly so that I can sign it into law.”

Republican leaders said they hoped that approval of the bill -- the president’s first legislative victory of his second term -- would build momentum for subsequent measures on the GOP agenda, including new curbs on bankruptcy, asbestos litigation and medical malpractice.

“It’s obviously a big victory because it was our No. 1 legislative priority,” said Stanton D. Anderson, chief legal officer for the U.S. Chamber of Commerce.

Class-action suits allow plaintiffs with claims against the same defendant to combine their cases into one lawsuit. Under the legislation passed Thursday, large multistate lawsuits -- such as the state governments’ suit against tobacco companies, which ended in a $246-billion settlement -- would be moved from state to federal court, where judges tend to be more favorable to business and less likely to approve large damages.

Class-action suits could be heard in state court only if the damages sought were less than $5 million and more than two-thirds of the plaintiffs were from the same state.

Proponents said the bill was necessary to curb abuses of the system, including “forum shopping,” in which lawyers file large suits in obscure local courts believed favorable to plaintiffs, and settlements that grant huge fees to lawyers and little to claimants.

“All citizens should have the right to band together and settle grievances with bigger companies,” said Sen. Tom Carper (D-Del.), who voted for the bill. “But that system is broken and it needs fixing. There are too many instances where consumers are getting very little or nothing from their settlements, while companies are not being forced to change the way they do business.”

The bill divided Democrats, with 18 of the chamber’s 44 favoring it and 26 opposing it. California’s two senators also were divided; Sen. Dianne Feinstein voted for it and Sen. Barbara Boxer against it.

The Senate’s sole independent, James M. Jeffords of Vermont, voted in favor of the bill, as did 53 Republicans. Two Republicans did not vote.

Senate Democratic leader Harry Reid of Nevada was one of the staunchest opponents, labeling the measure “one of the most unfair, anti-consumer pieces of legislation to come before the Senate in a long time.”

“It slams the courthouse doors on a wide range of injured plaintiffs,” he said before the vote. “It turns federalism upside down by preventing state courts from hearing state law claims, and it limits responsibility at a time of rampant corporate scandals. Instead of turning up the heat on corporate shenanigans, this bill lets corporate wrongdoers off the hook.”

Republican strategists say one aim of the bill is to curb the influence of trial lawyers, who are important financial backers of many Democrats.

“Every American’s legal rights are diminished by this anti-consumer legislation, which establishes greater procedural hurdles for consumers, workers, homeowners and shareholders,” Todd A. Smith, president of the Assn. of Trial Lawyers of America, said in a statement after the vote.

The bill was heavily promoted by business, especially the U.S. Chamber of Commerce.

In his remarks before the vote, Reid decried the influence of corporate lobbyists -- many of them located in downtown Washington -- in promoting the bill.

“I could say this without any question: The downtown beat us. No question on that,” he said.

According to disclosure documents compiled by Public Citizen, the consumer watchdog group founded by Ralph Nader, the U.S. Chamber of Commerce spent more than $100 million from 2000 to 2003 to fund its Institute for Legal Reform, which promotes changes in the legal system. Spending information for 2004 is not yet available.

“They’ve got hundreds of lobbyists working this legislation. The consumer side has maybe 15,” said Frank Clemente, director of Public Citizen’s Congress Watch.

Anderson, who oversees the Chamber’s legal programs, described the Public Citizen numbers as wildly inflated. He declined to provide specifics but said only one-third of the institute’s budget is spent on Washington lobbying, and only one-third of that was aimed at the class-action bill.

Republican leaders said they put the class-action bill at the top of the agenda because it had the most support among Democrats. The next piece of legal legislation before the Senate is a bill that would make it harder for companies and individuals to escape debts by declaring bankruptcy.

Under the proposal, debtors would have to pass a “means test.” If their income is greater than the country’s median income, they could not seek bankruptcy protection.

“The vast majority of people believe that individuals who file for bankruptcy should be required to pay back some of their debts if they have the means to do so,” the bill’s author, Sen. Charles E. Grassley (R-Iowa), said at a hearing to debate provisions of the legislation. “This is precisely what the bankruptcy reform legislation does.”

The issue has been under consideration for years, but legislation has been stymied by a provision, introduced by Sen. Charles D. Schumer (D-N.Y.), that would prevent antiabortion activists from declaring bankruptcy to avoid paying damages when a court fines them for violence or other disruptions at abortion clinics.