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In anticipation of the hearing on the Lawsuit Abuse Reduction Act

A new, trimmed down version of the Lawsuit Abuse Reduction Act (LARA) was introduced this week, six years after Congress last considered legislation to discourage frivolous lawsuits in federal court.

Rep. Lamar Smith (R-TX),chairman of the House Judiciary Committee, and Sen. Charles Grassley (R-IA), ranking member of the Senate Judiciary Committee, announced the bill's introduction on Wednesday. A news release summarized:

The Lawsuit Abuse Reduction Act (LARA) imposes mandatory sanctions for lawyers who file meritless suits in federal court. Federal rules mandating sanctions for frivolous suits were watered down in 1993, resulting in the current crisis of widespread lawsuit abuse. LARA restores the mandatory sanctions which hold attorneys accountable for lawsuit abuse.

Specifically, the legislation:

  • Reinstates the requirement that if there is a violation of Rule 11, there are sanctions (Rule 11 of the Federal Rules of Civil Procedure was originally intended to deter frivolous lawsuits by sanctioning the offending party).
  • Requires that judges impose monetary sanctions against lawyers who file frivolous lawsuits. Those monetary sanctions will include the attorney's fees and costs incurred by the victim of the frivolous lawsuit.
  • Reverses the 1993 amendments to Rule 11 that allow parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after a motion for sanctions has been served.

The text of the House bill, H.R. 966, is available here. The Senate bill is S. 533.

Congress last debated LARA in 2005, when H.R. 420 passed the House only to disappear into the Senate. Democrats took control of Congress in the 2006 elections, which put an end to legislative efforts toward tort reform at the federal level.

The new legislation drops the state-specific language that caused political trouble last time and would likely draw the ire of federalism-minded House Republicans. As Victor Schwartz, general counsel for the American Tort Reform Association, tells us, "This new version of LARA has greater political and practical strength. It is trimmer and focuses solely on the problem: stopping frivolous claims. The President of the United States recognized this problem in his State of the Union and Congress should act now to end unnecessary and costly lawsuit abuse."

Schwartz is one of three witnesses scheduled to testify Friday before the House Judiciary Subcommittee on the Constitution's hearing on the bill. The others are Elizabeth A. Milito of National Federation of Independent Business' Professor Lonny Hoffman of the University of Houston Law Center. Hoffman is a past critic of the legislation; in 2006 he published, "The Lawsuit Abuse Reduction Act: The Legislative Bid to Regulate Lawyer Conduct," in The Review of Litigation.

We've encountered Hoffman's writings before in our reading on the predations of Milberg Weiss. Last year Hoffman and Alan F. Steinberg released, "The Ongoing Milberg Weiss Controversy," a rebuttal of an empirical study by Michael A. Perino and an apparent attempt to exonerate the law firm for rigging class-action lawsuits. In the abstract, the two authors conclude:

The big take away that Perino offers at the end of his study - that the evidence contradicts the claim that kickbacks paid to the named plaintiffs were a "victimless crime" - is not supported by the data he has collected and reported. Far from demonstrating that kickbacks allowed Milberg to obtain higher fees, his study fails to rule out the possibility that other, entirely benign reasons could explain the higher fees Milberg received, including that the fees were earned by the results obtained in settlements of the indictment cases.

Apologists for Milberg Weiss are few and far between. We'll be interested in seeing the same legal approach applied to Hoffman's opposition to the Lawsuit Abuse Reduction Act.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.