Republicans Abandon Broad Legal Reform

In a major concession, House Republicans on Wednesday abandoned a central element of their “contract with America,” forsaking a broad legal reform bill for a much narrower Senate measure that would restrict consumer lawsuits over defective products.

Consumer groups responded by denouncing the compromise, arguing that it would restrict consumer access to the courthouse and, by limiting punitive damages, would remove deterrents to irresponsible corporate behavior.

The compromise was another defeat for the House GOP majority, which has seen many other elements of its vaunted “contract” either blocked by a moderate Senate or vetoed by President Clinton.

Senate and House Republicans have been negotiating for nearly a year over their competing measures, since each chamber had passed its own version of legal reform.

The breakthrough agreement--limited to product liability cases--was announced late Wednesday by Sen. Slade Gorton (R-Wash.) and Rep. Henry J. Hyde (R-Ill.), the two chief negotiators who have been meeting off and on since May.

The compromise would free manufacturers from a variety of legal considerations and impediments that will lead to lower-priced and improved consumer products, according to Gorton and Sen. John D. “Jay” Rockefeller IV (D-W.Va.), who have worked on product liability reform together for the better part of a decade.

They said the House agreed to embrace the Senate bill, virtually without change.

Rockefeller, a close White House ally, said he is certain Clinton will sign the bill. Democratic sources said later, however, that signals from the White House have been less than clear.

Despite the House concession, the new bill would bring significant changes to a controversial field of litigation known as product liability, in which plaintiffs’ attorneys typically take the cases on contingency--meaning their clients pay nothing if they lose, but must fork over as much as 30% or more of any winnings to the lawyers.

While such arrangements have broadened public access to the courthouse, especially for those who can ill-afford to pay high-priced lawyers by the hour, they also have led to accusations that trial lawyers have been milking the system largely to line their own pockets.

The legislation would limit the legal liability of sellers of defective products and curb damages to plaintiffs if their injuries resulted from misuse or alteration of the product in question.

In addition, punitive damages would be capped at either $250,000 or twice the amount of economic damages awarded, whichever is larger. Small businesses with fewer than 25 employees would only have to pay the lesser of the two amounts.

“This bill won’t make American trial lawyers happy, but it will help people who need and deserve access to a legal system that is fair and efficient,” Gorton said.

Perhaps the most controversial element in the measure--set for floor action this spring--is a provision that would permit judges to assess additional punitive damages “in egregious cases.” The bill was still being put in final form Wednesday night and no specific examples of “egregious cases” were given.

Among other important provisions in the legislation is one that would allow consumers two years to file a product liability lawsuit from the time an injury and its cause are discovered. Another provision would limit to 15 years the legal liability of makers of most durable goods in the workplace.

The earlier House bill would have capped punitive damages in all civil cases, including medical malpractice lawsuits, and barred punitive damages in cases involving medical devices approved by the federal Food and Drug Administration.

Among the other “contract” items that have failed to become reality, usually because of House GOP members’ refusal to give ground, are the balanced budget constitutional amendment, regulatory reform, a tax cut, congressional term-limits and welfare reform.

Given that record, Gorton said of his House counterparts: “They are more interested this year, I think, in making certain steps forward than they are in stating their case.” Gorton said that he has been assured by the House leadership that the conference report he and Hyde negotiated will win House approval.

Hyde conceded that the conference report “doesn’t go as far” as House Republicans would have liked, but he indicated that they will press on with the fight to enact broader tort reforms. Hyde called the new bill “a solid down payment on long-needed reform of our current out-of-control legal system.”

Rockefeller said that the bill would “help deter wasteful lawsuits and discipline reckless business practices and should not generate unnecessary legal costs for either business or consumers.”