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Lawsuit Lotto Hurting Economy

Several years ago, while shopping at my local supermarket, I slipped on a wet spot on the floor. My hip ached for days.

More than one fellow shopper asked if I were OK and then added, sotto voce, that I might consider suing the chain. “They shouldn’t have water on the floor,” said one, shaking her head.

I’m not particularly accident-prone; I lead a normal life. And yet, I’ve been encouraged to sue someone at least a dozen times - for injuries, for sexual harassment, for malpractice and more.

And I know I am not alone. Looking for someone to sue seems to have replaced baseball as the national pastime.

But listening to the Democrats in the House of Representatives debate tort reform, you would get no inkling that the avalanche of lawsuits is hurting either our economic competitiveness or our national character. Instead, the Democrats characterize the issue as the “little guy” against big bad corporations. People must have the right to sue when they have been injured, the Democrats argue, or the concept of equal justice under law is nothing but a sham.

In the first place, the bill offered by the Republican majority does not deny anyone his “right” (if that is the proper word) to sue. What the bill does attempt is simply to apply a rule of reason to the awards being offered by juries. The court system has become like a lottery, with punitive damages in particular going far beyond what is wise or just.

Former Supreme Court Justice Lewis Powell, in a draft 1986 opinion reprinted in The Wall Street Journal, spoke of the injustice inherent in permitting limitless punitive damages in civil cases.

“In each case,” he wrote, “the amount of punitive damages is fixed independently, without reference to any statutory limit or the punishment applied in any other case. … The jurors who pass sentence on tort defendants according to these procedures probably never have decided a punitive damages case before. … This grant of standardless discretion to punish has no parallel in our system of justice. In the federal system and in most states, criminal fines are imposed by judges subject to statutory limitations. Where juries are authorized to fix a criminal defendant’s sentence, they do so pursuant to instructions that limit their discretion and subject to searching review by the trial and appellate courts.”

The Republican reform would limit punitive damages to $250,000 or three times the amount of economic damages, whichever is greater. The maxim in civil law is that if the defendant is found guilty - of negligence or bad faith or malfeasance - he will be required to make the plaintiff “whole” again. Keeping punitive damages from reaching absurd heights is hardly the kind of reform that will deny people justice.

Nor will the much-decried “loser pays” rule deny people justice. This provision, which would apply only to diversity jurisdiction cases in the federal courts - a limited segment of cases - will require that the loser pay the winner’s legal fees up to the amount the loser spent. If Joe Plaintiff spent $1,500 suing Defendant Co. and lost, he would have to pay $1,500 of Defendant Co.’s legal fees, even if the defendant had spent tens of thousands defending the claim.

The point is to make frivolous claimants stop and think before suing - particularly because many personal injury lawyers work on a contingency basis. On the other hand, most of those with strong claims will not be deterred.

More than the damage awards themselves, what hurts the U.S. economy is the fear of lawsuits. Money that could be spent on product development or business expansion goes instead to lawyers. Doctors and hospitals must raise their rates to compensate for exorbitant malpractice insurance. The cost of every bicycle, ladder, soda can and lawn mower we buy reflects the bonus for lawyers and insurance companies.

The best argument for legal reform really is about character. The rapid resort to the lawsuit is not the sign of a mature, self-sufficient people. Rather, it is the mark of greedy game players, seeking to turn every courthouse in America into a casino.