GOP Vows Legal Reform To Curb `Windfall' Awards

THE stories are a staple of outrage journalism: ``Woman Gets $2.9 Million Over Spilled Coffee,'' ``California Couple Gets $12 Million For Crack in Kitchen Floor.''

Windfall jury awards that grab headlines by appearing to defy common sense have shaped the common perception that the United States legal system is a litigation machine gone haywire.

Republicans hope to inject a measure of ``common sense'' into the system which, according to one expert, adds $350 to the yearly cost of insuring every car in the nation.

Big promise

As a part of their ``Contract With America,'' House Republicans have promised to vote on legal reforms in the first 100 days of the new Congress.

But, while a poll commissioned by Republicans found 65-70 percent of Americans supporting legal reform, Congress' challenge is to realign the system so it filters out frivolous suits yet still compensates the injured.

Joan Claybrook, president of Ralph Nader's Washington-based Public Citizen, warns that the reforms are ``a one-way street toward taking away individual rights,'' because ``the current system is the only source of rebuke and punishment'' for corporate misdeeds. In 1985, Marlo Mahne was riding in a 1967 Ford Mustang that was struck from behind. The car burst into flames and Ms. Mahne was disfigured and blinded in one eye.

Upon discovering that Ford Motor Company had allegedly refused to correct a design flaw that often caused fuel tanks to explode on impact, Mahne sued. Ford settled the suit for an undisclosed amount. Says Mahne, ``I have a lot of money now, but I would rather be in the situation I was in before the accident.''

Although legal reform bills have been floating around Congress for decades, Senate filibusters and strong House committee chairmen have blocked passage.

``One of the major obstacles to this legislation is gone: Jack Brooks is back in Texas,'' said a Republican staff member. Mr. Brooks, the former House Judiciary Committee chairman, was voted out on Nov. 8.

Opponents of reform remain optimistic, but one lobbyist, whose organization opposes the plan, admits, ``its going to be tough, because we lost some of our friends in Congress.''

In the quest for balance between frivolity and justice, one element of the Republican plan is the ``loser-pays rule,'' under which the losing parties in federal court pay the attorneys' fees of the winners, thereby deterring weak or unfounded suits.

Critics warn that the prospect of paying a deep-pocketed corporation's legal bills would discourage most people from ever entering the court room, even if their case were strong.

Says Ms. Claybrook, ``Sometimes these cases can take a turn that you can't expect,'' - such as a dismissal on a small technicality -

leaving the plaintiff with corporate-sized legal bills. Supporters counter that the proposal addresses this concern by limiting the loser's share of the winner's fees to only as much as the losers paid their own attorneys.

End runs possible

But some are skeptical about the measure's ultimate effectiveness. This country's ``entrepreneurial bar,'' says Marc Galanter, director of the Institute for Legal Studies at the University of Wisconsin, could create ``some kind of revolving fund'' to which prosperous winners would contribute and newly indebted losers could draw from, thereby circumventing the provision.

To keep jury awards down one proposal in the Republican plan would limit punitive damages - fines for corporate decisions contrary to consumers' interest or safety - to three times the amount of the plaintiff's economic damages - lost wages, medical bills, etc. But ``it defies the logic of punitive damages to link them to [economic] damages,'' says Mr. Galanter. This because of a difference in scale: To sufficiently deter a multimillion dollar company from misdeeds requires more than an individual's weekly wage or medical bills.

Another proposal in the Republicans' plan would abolish ``joint liability'' laws. Currently, if a consumer sues many parties - a manufacturer, a buyer, a shipper, and a merchant - and only one company is still solvent, it alone will be liable for the entire award. The Republicans would make each party responsible only for ``the portion of damages directly attributable to it.''

While the ``loser- pays rule'' and ``product liability'' reform are the most popularly proclaimed antidotes to headline-grabbing verdicts, Michael Horowitz, director of the Washington-based Hudson Institute's Project on Civil Justice Reform, sees other provisions of the Republican package as less controversial and more effective at bringing down the legal system's costs without endangering individual rights.

The Republican plan, for example, combats ``junk science'' - scientists or doctors willing to say anything on the witness stand for a fee - by requiring ``scientifically valid reasoning'' from experts whose fees can not be contingent on the success of their testimony.

But the most glaring problem of all, says Walter Olson, author of ``The Litigation Explosion,'' is that ``litigation is used as a weapon to browbeat people.''