White House Plans Reforms to Litigation
To ease impact on business competitiveness, Quayle will announce proposals to limit damage awards, shift costs
TODAY, the White House is throwing some of its weight behind cutting the cost to business of American litigiousness.In a speech to the American Bar Association, Vice President Dan Quayle plans to make a series of proposals for trimming the number of lawsuits and what they cost defendants. Lawsuits, according to the vice president, add a heavy cost to doing business in the United States, hobbling American competitiveness. Just what the cost amounts to is highly debatable, but it is far higher in the US than in competing countries. A study in the Duke Law Journal in 1987 reported that claims filed against companies for product liability were 100 times as high, per person, in the US as in Britain. The US has one lawyer for every 335 people, according to Quayle, while Japan has one for every 9,000. In 1988, 17 million new suits were filed in state courts, one for every 15 Americans. "Obviously, the cost of these disputes has had an enormous negative impact on our economy - and on America's performance in the global marketplace," Quayle said in a speech in May. The White House proposals will include the following: * Limiting punitive damages awarded in civil suits to no more than the award for compensatory damages. Currently, although punitive damages are not often awarded at all, they can run far higher than the amount determined to compensate the suing party for injury and losses. * Shifting the burden of paying court costs, in certain cases, onto the losing party. Currently each party usually pays its own court costs, regardless of the outcome. * Raising the standard of proof for levying of punitive damages. This might require proving that a manufacturer, for example, had a conscious, flagrant disregard in marketing a dangerous product before he can be forced to pay punitive damages. * Adding incentives for using alternative dispute resolution to avoid courtroom litigation. This often takes the form of arbitration by retired judges working outside the courts, by agreement of both parties. The vice president will likely announce reforms for narrowing the use of "discovery where parties to a lawsuit request massive amounts of information from each other to build their cases. In suits between businesses, discovery can cost millions of dollars and cause long delays. Quayle is also expected to propose some shifts in the incentives for using expert witnesses. Either side in a lawsuit can typically find and hire experts to testify on behalf of its viewpoint. Sometimes the expert is even paid a contingency fee, meaning he is paid more if his side wins. The expert thus becomes far from an impartial witness. These proposals have been developed by a working group run by US Solicitor General Kenneth Starr. The working group, in turn, is part of the Competitiveness Council, a White House policy forum chaired by the vice president. One critic of the American system of litigation that has developed in the past two decades, Walter K. Olson of the Manhattan Institute, welcomes the Quayle proposals, especially the shifting of court costs onto the losers. The risk of paying all court costs may discourage the filing of long-shot cases, he says. This also makes an important symbolic point that the justice system is willing to exact a price for making spurious accusations, says Mr. Olson, author of the recently published "Litigation Explosion: What happened when America unleashed the lawsuit." He says, "Our system seems designed to coax forward long shots." Pamela Gilbert, legislative director for Congress Watch, an arm of the Ralph Nader-founded Public Citizen, agrees only that a losers-pay rule on court costs will discourage lawsuits - even those that ought to be filed. For a consumer to risk having to pay the court costs of a major corporation, for example, would virtually rule out such suits, she says. "It's not a crime to sue somebody and be wrong." Ms. Gilbert disputes the picture of a society where suing is easy, verdicts are unpredictable, and lawyers eagerly launch long potshots on the chance of a multi-million-dollar contingency fee. Suing remains arduous, and the people who undertake such legal action have usually suffered severe injuries or losses and seek just redress, Gilbert says. The Quayle proposals, she says, will only "relieve these wrongdoers." Andrew Popper, assistant dean of the law school at George Washington University, scoffs at the argument that liability-damage awards burden the economy. "The idea that we need to relax our standards to be more competitive in world markets presumes a world market for defective goods," says Mr. Popper.