Today, after the House Judiciary Constitution Subcommittee Hearing on litigation’s effect on America’s global competitiveness, Committee Ranking Member John Conyers Jr. (D-Mich.) dismissed the fallacy that tilting the playing field in favor of corporations and leaving individual citizens without recourse in the courtroom would solve all of America’s economic woes.
“I have always argued that our legal system can and should be improved,” Conyers said. “It is appropriate for courts to sort out legitimate claims from those intended only to harass or intimidate other litigants, and there are many ways in which the system could be made more efficient and more fair for everyone involved.
“For example, we could eliminate much of the ambiguity involved in products liability law and put corporations on notice of their obligations to consumers. To this end, I have introduced H.R. 322, the Dangerous Products Warning Act, which will require businesses to warn employees and consumers of inherent dangers in their products. I have also introduced H.R. 323, the Corporate Crime Database Act, which directs the Attorney General to construct a public database on all criminal, civil, and administrative actions against corporations and corporate officers. These measures will put critical information in the hands of individual consumers—and hold corporations accountable for the social costs of their worst decisions.
“Today’s hearing, however, presents us with a false choice—between economic prosperity, on the one hand, and a vigorous legal system, on the other. Make no mistake. We can have both.”
The idea that so-called “tort reform” will solve all of our economic woes is based on the following deeply flawed assumptions.
- Despite claims to the contrary, there is no “litigation explosion.” In fact, the frequency of tort cases brought in state and federal courts has steadily decreased in recent years. The Bureau of Justice Statistics has found that the number of tort cases has decreased dramatically in the past two decades. The National Center for State Courts has shown that tort cases account for just 4.4 percent of all civil cases filed in state courts.
- Although tort plaintiffs are often portrayed as greedy individuals, corporations—not individuals— sue corporations. In most years, business-on-business litigation dwarfs the number of cases brought by individuals. The Wall Street Journal reported just two weeks ago that companies in a wide range of industries are aggressively pursuing legal action against suppliers, insurers, and utility companies—not to correct any injustice, but to generate additional income. I hope our witnesses today will address this abuse of the justice system in addition to any concerns they may have about individual plaintiffs. Punitive damages are rare and reserved for the most egregious harms. Although there are many myths to the contrary, punitive damages are awarded to less than 5 percent of prevailing plaintiffs. The median punitive damage award in these cases is $64,000. Surely, these are not the costs holding back the American economy.
- “Tort reform” could hurt the economy more than it helps. A vigorous legal system ensures that wrongdoers, not the taxpayers, are held accountable for the injuries that they cause. When those who are injured, through no fault of their own, are left without legal recourse. Taxpayers pick up the costs—through programs like Medicare, Medicaid, and Social Security. One recent study found that the social costs of just three dangerous products—Ford SUVs equipped with Firestone tires, the pharmaceutical Baycol, and three-wheeled all terrain vehicles—added up to $4.7 billion. The responsible companies should pay for most or all of these costs. But many of the proposals we have heard from the Majority this Congress would instead shield these corporations from liability, and pass the cost onto the American taxpayer.
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