For supporters of US legal reform, which should include the oil and gas industry, the general elections of Nov. 2 provided welcome news. The defeat of Sen. John Kerry (D-Mass.), who picked a former personal-injury lawyer heavily financed by the plaintiff's bar as his running mate, oozes symbolic importance, of course. But it wasn't the election's only signal that Americans have had their fill of the lawsuit juggernaut.
Sherman Joyce, president of the American Tort Reform Association (ATRA), called the election "a tremendous win for civil-justice reform." The oil and gas industry should cheer the victory. Its downstream segments last year fell victim to a siege of product-defect lawsuits when the gasoline additive methyl tertiary butyl ether appeared in drinking-water supplies—nearly always in harmless amounts. Protection against the threat of open-ended liability became an overnight political priority that helped stalemate comprehensive energy legislation (OGJ, July 12, 2004, p. 17). Beyond that, energy companies, like those in other industries, must devote too much money and managerial attention to avoiding lawsuits, which among other things can mean avoiding the employment of people.
Republican gains
Because the trial lawyers' lobby, notoriously lavish with political contributions, heavily favors Democrats, Republic gains of three seats in the House and four seats in the Senate improve prospects for change. During the current session of Congress, the House passed class-action and medical-liability reform measures that failed in the Senate. Although Republicans won't control enough Senate seats to stop a filibuster, their increased strength will bolster efforts expected in the next session to rationalize class-action, medical-liability, and asbestos litigation.
ATRA points out that five newly elected senators supported civil-justice reform while members of the House. The Senate seat vacated by defeated vice-presidential candidate John Edwards of North Carolina, like that of defeated Sen. Fritz Hollings (D-SC), a favorite of trail lawyers, went to supporters of reform. Another high-profile Democrat who consistently opposed legal reform and lost his Senate seat is Minority Leader Tom Daschle of South Dakota.
Voter motivations other than a desire to curb the excesses of tort law can explain outcomes of congressional elections, of course. In state questions directly addressing the issue, however, results in most cases went against trial lawyers.
Californians on Nov. 2 voted to end "shakedown lawsuits," which have forced businesses to settle lawsuits no one asked to be filed in cases in which no one was hurt. The new law requires that there be injury or loss due to unfair business practice before a lawsuit can be filed. In Nevada, voters approved an initiative limiting attorney fees and awards in medical-liability suits. Floridians passed an initiative limiting attorney fees in that type of litigation. And in Wyoming, voters authorized the state legislature to pass laws requiring dispute resolution or medical-panel review before lawsuits can be filed against health-care providers in cases involving injury or death.
Expressions of popular disapproval of the plaintiff's bar didn't end there. State Supreme Court elections in Illinois and West Virginia put new, reform-minded justices in charge of jurisdictions famous for enriching plaintiffs with defendants' money. Other Supreme Court votes that ATRA called "victories for civil-justice reform" occurred in Alabama, Arkansas, Michigan, Mississippi, Montana, New Mexico, Ohio, Texas, and Washington.
The costs
Apparently, Americans understand that runaway litigation and mammoth dollar judgments hurt more than unlucky defendants. Some estimates put annual costs of America's penchant for lawsuits at the equivalent of 2% of the gross domestic product. R. Glenn Hubbard, dean of the Columbia University Graduate School of Business and a visiting scholar at the American Enterprise Institute, brought the costs to a more personal level in an article for Business Week. If the burden were carried only by workers, he said, litigation costs would amount to 2.1% of wages and salaries. To those who argue that's just the cost of justice, Hubbard points out that defendants receive only 20% of the tort system's toll on the economy and that their share has fallen since the late 1980s.
Unbridled litigation diverts too much money from productive sectors of the US economy. Its avoidance distorts decision-making throughout business and politics. It enriches few at the expense of many. Voters on Nov. 2 made clear that they don't want their judicial system to work like this.
