Legal Reform Summit: Tort reform is a global issue

WASHINGTON, D.C. (Legal Newsline) — Perhaps we’re not that different after all.

That was one of the messages to come out of the U.S. Chamber Institute for Legal Reform’s 14th annual Legal Reform Summit, which took place Wednesday. (Legal Newsline and the Southeast Texas Record are owned by the U.S. Chamber ILR.)

Ricardo Rios Ferrer, president-elect of the Mexican Bar Association, spoke about the prevalence — and legality — of third-party financing and the use of contingency fees in civil litigation in his country, two issues of particular interest to tort reform advocates in the United States. 

And the European Union has experienced “quite a dramatic transformation” in recent time with respect to what some call problematic litigation trends previously thought to be an inherently American problem, said Ken Daly, a partner in the U.K. office of Sidley Austin.

Moira Saville, a partner with King & Wood Mallesons in Australia, rounded out the panel of guests representing the international legal community, addressing what she called the “big uptick” of class action litigation to hit her country during the past few years.

Expanding Australia’s tort system to include large class action-type cases is what Saville called an outgrowth of third party financing, although the attorney, who traveled from a half-world away to participate in the summit, said the rationale for changes to the system was to create “access to justice.”

Australia only requires seven or more members for a class to be certified, and while the courts have the power to stop such cases in their tracks, they rarely do, Seville told a crowd of attorneys and business leaders gathered at the Institute for Legal Reform.

Daly, who works for an American-based law firm in the United Kingdom, said the European Union has been drifting toward a U.S. style litigation culture for the past number of years.

Like Australia, it has been done under the guise of increasing individuals’ ability to get access to the civil justice system.

And in the U.K., the use of contingency fees is being allowed for the first time.

“This is not just a U.S. issue,” Daly said. “There is over-spillage into other jurisdictions.”

Tort reform advocates at the ILR say here in America, measures such as the Class Action Fairness Act have helped tamp down on frivolous lawsuits in recent time, but more needs to be done to protect businesses from having to defend against pocket-draining litigation.

The ILR contends that plaintiffs’ lawyers, for example, are exploiting loopholes in CAFA, what tort reformers say is a result of judicial and legislative departures from the statute’s original intent.

Past progress is good, reformers say, but more needs to be done to ensure an even playing field.

“Staying healthy is not a single, one-time event,” ILR President Lisa Rickard said in her opening remarks, referencing the title of the day’s event: Healing the U.S. Lawsuit System. “It’s not enough to treat the symptoms and hope that they don’t return.”

Rickard noted that the ILR started at a time of “out of control class action lawsuits” and what she called “jackpot” judicial jurisdictions.

Many of the jurisdictions that have been dubbed “Judicial Hellholes” by the ILR in its annual report have made positive strides toward reform – Rickard singled out Philadelphia and San Francisco in particular – but others, such as Madison County, Illinois, continue to be attractive to plaintiffs’ lawyers, signaling the need for continued reform.

Last year alone, Rickard pointed out, there were 1,563 asbestos mass tort claims filed in Madison County, a jurisdiction that represents just 0.008 percent of the U.S. population, but one that accounts for one-quarter of all asbestos claims filed in the United States.

And only one in 10 such suits are filed by plaintiffs who have either lived or worked in that jurisdiction, Rickard stated.

The court system in Madison County, she said, makes a mockery of the U.S. civil justice system.

“If turning up the heat doesn’t work, we need to turn these judges out,” Rickard told the crowd.

During the summit, speakers touched on everything from problems with the False Claims Act to emerging litigation trends, including wage and hour lawsuits and theories of liability in cases involving no real injury to a party.

“A fair, impartial court system is not a luxury,” Rickard said.

Noting that the federal government took in $4.5 billion under False Claims Act cases last year alone, Rickard said that the country needs a government that accepts the “proper limits on its power.

“We cannot allow the [federal] agencies to live unchecked,” she said.

If history has anything to say about it, reform is possible.

Just 15 years ago, people were certain that something like the Class Action Fairness Act couldn’t be passed, Rickard said.

But it was, and it’s crucial that groups such as hers continue to put the heat on “obstructionist [state] legislatures” and “out of control courts,” she said, to ensure fairness in the justice system.

One panelist, John Beisner, a partner with Skadden, Arps, Slate, Meagher & Flom, said CAFA has by and large exceeded expectations, and another guest speaker, Victor E. Schwartz, a partner with Shook, Hardy & Bacon, noted that dire predictions, such as Democrats’ threatened repeal effort of the statute, has yet to come to fruition.

As for suggested areas of possible future reform, Schwartz brought up what he called the “weak” fraudulent joinder rules, which are often used by plaintiffs’ attorneys in order to keep their cases in state courts, some of which are the very “hellhole” jurisdictions mentioned by tort reform advocates.

“It is an area where small change can help,” Schwartz said of the potential for reforming fraudulent joinder rules.

Another speaker, Partnership for America Chairman James Wooton, talked about the Access to Court Initiative, which is designed to return to what he termed the original intent of the U.S. civil justice system.

It’s Wooten’s belief that much of what’s wrong with the tort system can be traced to judicial bias.

In fact, one of the primary goals of the Class Action Fairness Act, Wooten said, is to return to this original design idea.

The “loopholes” exploited by the plaintiffs’ bar whereas CAFA is concerned, he said, are a result of judicial and legislative departures from original design.

During another panel, titled “Diagnosing the Disease: Emerging Litigation Trends,” Connie Lewis Lensing, senior vice president of litigation and employment at FedEx Express, addressed wage and hour litigation.

Such suits, she said, make up the most number of employment cases out of all class actions.

More than 7,700 such cases were filed in federal court in the first four months of this year alone, Lensing stated, more than all such complaints of its kind filed during all of 2012.

Employers, she said, paid about $2.2 billion to settle wage and hour complaints from 2007 to 2011.

The average settlement in 2007 was $21 million.

Since that time, however, such settlements seem to have been on the decline.

Lensing said that most wage and hour lawsuits are filed in California, followed by New York, Illinois and Texas.

The summit also included remarks by Robert J. Levy, counsel of Civil Justice Reform and Law Technology at ExxonMobil Corp., who spoke about reform with regard to discovery procedural rules.

The current problem, he said, is excessive and unnecessary discovery with regard to preservation of data.

This could be traced in part, he said, to the world of mobile technology and the like.

There are currently no civil procedural rules that address what needs to be preserved by companies when it comes to discovery in litigation, he said.