NAM Wins House Vote to Reduce Frivolous Lawsuits for
A Message from John Engler, President & CEO,
National Association of Manufacturers
I have more good news to report from Capitol Hill, where today the House
passed H.R 420, the Lawsuit Abuse Reduction Act. This marks the third approval
in two weeks of vital legislation aimed at boosting manufacturers’ bottom line
by curbing lawsuit abuses that endanger all of American business.
H.R. 420 joins last week’s NAM-backed wins on H.R. 554, the Personal
Responsibility in Food Consumption Act; and S. 397, the Protection of Lawful
Commerce in Arms Act. The fate of H.R. 420 and H.R. 554 will be up to the
Senate, where passage of legal reform measures is more difficult because of the
requirement of a supermajority (60 votes) to end debate on controversial
legislation. The NAM will do everything it can to ensure that both bills are
successful in the Senate. S. 397 was signed into law by President Bush
All told, the bills give momentum to the NAM’s work in Congress to help
control abuses that work against American competitiveness. Tort litigation cost
the U.S. economy $246 billion in 2003, which amounts to more than 2 percent of
our country’s GDP – double the average of other industrialized countries.
H.R. 420 targets frivolous lawsuits, which are often brought for the purpose
of trying to coerce a settlement. Meaningful sanctions need to be imposed
against attorneys who bring these suits. In addition, some jurisdictions have
opened their courthouse doors to lawsuits that have no relationship to the
locale. These venues typically favor plaintiffs over out-of-state corporations.
In 1993, rules governing frivolous lawsuits were changed to make sanctions
for filing such litigation discretionary. These changes also created a 21-day
“safe harbor,” whereby no sanctions would be imposed if the lawsuit was
withdrawn. H.R. 420 eliminates the “safe harbor,” makes sanctions mandatory and
allows for the reimbursement of defense costs. It would also discourage “forum
shopping” by requiring lawsuits to have a relationship with the jurisdiction in
which they are filed.
I thank you for your assistance in advocating for all three of these
pro-manufacturing bills. I look forward to your continued support as this
legislation moves to the Senate.