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NAMIC Pleased by Passage of Tort Reform Bill

WASHINGTON (September 9, 2004)-Yesterday, the House Judiciary Committee favorably approved on an 18-10 vote H.R. 4571, the Lawsuit Abuse Reduction Act of 2004. H.R. 4571 would amend Rule 11 of the Federal Rules of Civil Procedure to penalize attorneys who file frivolous lawsuits. The legislation also limits forum shopping by restricting plaintiffs to file lawsuits only in the jurisdiction where the plaintiff was injured, where the plaintiff resides, or the jurisdiction in which the defendant's company is domiciled. The bill was introduced in June by Rep. Lamar Smith, R-TX, and currently has 24 co-sponsors.

An amendment offered by Rep. Ric Keller, R-Fla., to disbar lawyers for at least one year if they file three frivolous lawsuits in a federal court was easily approved by a vote of 20-6.

"We are very pleased by the Judiciary Committee's passage of the Lawsuit Reduction Act," said David A. Winston, NAMIC federal affairs senior vice president. "NAMIC applauds the Congress for taking small steps forward to curb abusive and meritless lawsuits. Although it is not the sweeping reform we had anticipated in the Class Action Fairness Act, it is a positive step forward. We will continue to encourage the Senate to pass legislation that is a well balanced, common-sense solution that addresses the worst abuses of the class action process and rationalizes procedures, while preserving plaintiffs' legal rights and providing additional protections for consumers," said Winston.

In July, the Senate failed to reach an agreement on so-called non-germane amendments that would have permitted the class action reform legislation, S. 2062, the Class Action Fairness Act, to be considered in the Senate. The legislation would allow for the removal of certain interstate class action lawsuits to federal court from state courts if requested by either plaintiffs or defendants.

Currently, plaintiffs and their attorneys are taking advantage of a loophole in jurisdictional rules in order to keep large, nationwide class actions out of federal courts where they belong. The class-action measure would require that most such multi-plaintiff lawsuits be filed in federal court, shifting them away from state courts, some of which have become famous for large settlements with little for class members and big fees for the trial lawyers that filed the cases.

"We realize that time is now running out, however NAMIC remains committed to passing class action reform legislation this year," said Winston.

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For further information contact:
Robert Detlefsen at rdetlefsen@namic.org
or (317) 875-5250