Tort Reform and the Recent Class Action Fairness Act

spotlight from the Michael Jackson trial, something much more important has been going on in the legal world: the federal government has entered the tort reform battle. The first piece of President Bush's campaign to amend the civil justice system, the Class Action Fairness Act of 2005 (CAFA), was passed in hopes of reigning in our overly litigious society. While this particular legislation is new, it would be remiss to label tort reform as a recent event; it has been the subject of contentious debate among lawyers and lawmakers for more than a decade. First things first though, what exactly is tort law, and why the need for reform? Tort law deals with personal injury, both intentional and accidental in nature (most cases of intentional injury understandably end up as criminal matters). The previous sentence may have brought to mind all the poorly produced "personal injury attorney" commercials you've been subjected to over the years. That's right, we're talking about those lawyers critics would call "ambulance chasers". To be fair, many lawyers representing victims in civil cases are likely interested only in pursuing fair and legitimate legal remedies. Either way, money is the central issue here, and there is a lot at stake. A Tillinghast Towers-Perrin study revealed that the U.S. tort system cost $205 billion in 2001. To put that into perspective, that amount annually could ensure the social security system's health indefinitely.

Proponents of reform point to some particularly egregious examples of unjust suits: the McDonalds hot coffee case ($2.9 million), the six trial lawyers in the big tobacco settlement who netted $5 billion for their firms, or the more recent case of an elderly woman successfully suing her neighbors for leaving homemade cookies on her doorstep (she was frightened). The American Tort Reform Association's website maintains an often comical list of the most offensive cases (atra.org).

The biggest opponent of reform is the American Trial Lawyers' Bar. This group represents those lawyers whose livelihood depends on big settlements. They counter that on the whole the system is functioning properly; the handful of examples reformers focus on are not representative of the majority of cases. Furthermore, they contend that reformers are merely seeking to enrich corporations and doctors by giving them a carte blanche to behave negligently. A recent book, Distorting the Law, by Michael McCann and William Haltom, claims that "tort tales" are embellished or even created by eager reformers and hardly reflect reality.

Thus far, most tort reform has occurred at the state level and its biggest weapon has been limiting the size of awards. Reformers in Mississippi recently pushed through legislation which caps non-economic damages related to businesses at one million dollars and in medical cases at half that. By "non-economic", legislators mean those damages above and beyond merely compensating the injured for medical expenses, legal fees, and lost wages. Before the passage of this act, a number of "accommodating" Mississippi judges and aggressive lawyers created what reformers dubbed a veritable tort industry.

The fact that a state like Mississippi can pass such reforms is only half the battle, and reformers are losing the other half. In more than a dozen states, such reforms have been struck down as unconstitutional. The Illinois Civil Justice Reform Act of 1995 (quickly dubbed the "wrong-doer protection act" by its opponents) is one such example. The act's limit on non-economic awards was found to restrict victims' constitutional right to a unique trial; the idea being that if a plaintiff's settlement has been limited before the case even begins, then his or her circumstances are not being given a fair hearing.

The limited success of reform at the state level sets the stage for decisive federal action and brings us back to CAFA. This act uses some different and less constitutionally questionable tactics than the monetary limits many states have tried. One of CAFA's most important provisions is that it allows defendants in cases with high stakes and out-of-state plaintiffs to move the case to federal court. Under the old rules, a case involving plaintiffs from Alabama suing a New York corporation would be tried in Alabama state court, something the corporation would feel is unfair. Another provision allows judges to review the fees being received by the plaintiff's attorneys, preventing lawyers from making the case more about their gain than the victim's recompense.

I feel CAFA is a step in the right direction. It closes a sort of loophole that gave many plaintiffs home field advantage when the turf should be neutral. That said, just because CAFA is a sensible piece of law, future installments in Bush's civil justice reform campaign may not be as fair and measured. The challenge will be to strike the appropriate balance between plaintiffs' access to just legal remedies and protecting businesses and medical practices from unreasonable liability burdens. All citizens have a stake in tort reform. The steady rise in health care expenses is due in part due to the increased price of malpractice insurance for doctors; like most cases, the cost of excessive damages finds its way back to common people.