Legislative Update

NAM Wins House Vote to Reduce Frivolous Lawsuits for Manufacturers

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 yesterday.

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 These changes also created a 21-day “safe harbor,” whereby no sanctions would be imposed if the lawsuit was withdrawn.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.

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