Grassely

After years of fruitless efforts to pass legislation to revise the rules for class-action lawsuits, Congress is on the brink of taking the first step in overhauling the civil liability system. Some industry sources claim the tort reforms could help types of businesses that are subject to frequent suits, including design and construction firms.

The Senate opened debate Feb. 7 on a measure that, if enacted, will shift the majority of class-action lawsuits to federal courts from state jurisdiction. "The process for getting a class action certified in federal court is more rigorous, which is why plaintiffs’ attorneys like state courts," says Steve Hall, the American Council of Engineering Companies’ vice president for government affairs.

ACEC supports the Senate plan, believing it "will have beneficial impact over the long haul." The group would like other changes enacted, including some to medical liability, which affects insurance premiums that its members pay. "But this is a good first step," says Hall.

This is not the first time lawmakers have considered tort reform. But the mood in Congress, particularly in the Senate, has shifted this year. Six of the nine newly elected senators had favorable voting records on tort reform, from industry’s point of view, when they served in the House. The case for change was further strengthened in a plea from President Bush in his Feb. 2 State of the Union address. "I urge Congress to pass legal reforms this year," Bush said. "Justice is distorted and our economy is held back by irresponsible class actions and frivolous asbestos claims."

The Senate bill, introduced by Iowa’s Chuck Grassley (R) on Jan. 25, was quickly approved by the Judiciary Committee on Feb. 3. The proposal had 31 co-sponsors, including seven Democrats, when it reached the Senate floor and it seemed on a fast track to passage. "We need to put an end to the frivolous litigation tax that everyone ends up paying," Grassley says.

The American Tort Reform Association supports the Senate bill. "When national class-action lawsuits are concentrated in state courts, local judges are allowed to set national polices," says Sherman Joyce, ATRA president. Those policies can conflict with the laws of other states and subject companies to being held liable for conduct that is permissible, and in some instances required, by state law or regulation, Joyce adds.

The bill’s opponents worry that federal courts may refuse to hear class actions. Senate leaders are pushing for a bill free from amendments, something House GOP leaders view as a key. But some senators are expected to offer a compromise to ensure that federal courts take class-action cases.

Separately, senators are moving forward on another tort reform bill, a plan to create a $140-billion trust fund to pay damages in asbestos injury cases and remove them from the courts.