Bush Signs Class-Action Lawsuit Reform Into Law

By Randy Hall | July 7, 2008 | 8:05 PM EDT

(CNSNews.com) - President Bush on Friday signed a bill that "marks a critical step toward ending the lawsuit culture in our country" by transferring most large multi-state lawsuits against companies to federal court.

During his first bill-signing ceremony of the year, Bush called the Class-Action Fairness Act of 2005 "a model of effective, bipartisan legislation. By working together over several years, we have agreed on a practical way to begin restoring common sense and balance to America's legal system."

While speaking in the East Room of the White House, the president said the measure "marks a critical step toward ending the lawsuit culture in our country" by easing "the needless burden of litigation on every American worker, business and family."

Bush noted that class-action lawsuits "can serve a valuable purpose in our legal system. They allow numerous victims of the same wrong-doing to merge their claims into a single lawsuit."

He added that the new law, which was approved by the Senate last week and passed by the U.S. House of Representatives on Thursday by a vote of 279-149, "maintains every victim's right to seek justice and ensures that wrong-doers are held to account."

However, the president said that these lawsuits "can also be manipulated for personal gain. Before today, trial lawyers were able to drag defendants from all over the country into sympathetic local courts, even if those businesses have done nothing wrong.

"Many businesses decided it was cheaper to settle the lawsuits rather than risk a massive jury award," he stated. "In many cases, lawyers went home with huge payouts while the plaintiffs ended up with coupons worth only a few dollars."

Bush described the plight of several persons who have been served poorly by the current system, including Alita Ditkowsky, who was part of a class-action lawsuit against a company that made faulty televisions.

"When the case was settled in Madison County, Ill.," the president said, "Alita's lawyer took home a big check while she got a $50 rebate on another TV built by the same company that had ruined the first TV. Here's what she said: 'I'm still left with a broken TV. He got $22 million. Where's the justice in this?'"

'Essential reforms'

While those attending the signing ceremony included both Republicans and Democrats, not everyone was happy with the new law.

"The House of Representatives joined the Senate in sending a clear message to the nation: The rights of large corporations that take advantage of seniors, low-wage workers and local communities are more important than the rights of average American citizens," Helen Gonzales of USAction, a liberal, pro-consumer activist group, told ABC News.

Nevertheless, Bush hailed the new law as providing "two essential reforms." The first change is to move most large, interstate class-actions into federal courts, preventing trial lawyers from shopping around for friendly local venues.

"The bill will keep out-of-state businesses, workers and shareholders from being dragged before unfriendly local juries or forced into unfair settlements," he said. "That's good for our system, and it's good for our economy."

Second, the law provides new safeguards to ensure that plaintiffs and class-action lawsuits are treated fairly. "The bill requires judges to consider the real monetary value of coupons and discounts so that victims can count on true compensation for their injuries," Bush noted. "It demands settlements and rulings to be explained in plain English so that class members understand their full rights."

The president also said that "junk lawsuits" have driven the total cost of America's tort system to more than $240 billion a year, greater than any other major industrialized nation. "It creates a needless disadvantage for America's workers and businesses in a global economy, imposes unfair costs on job creators and raises prices to consumers," he stated.

"We have a responsibility to confront frivolous litigation head-on," Bush said. "I will continue working with Congress to pass meaningful legal reforms, starting with reform in our asbestos and medical liability systems."

In conclusion, the president said that class-action reform "will help keep America the best place in the world to do business. It will help ensure justice for our citizens, and I'm confident that this bill will be the first of many bipartisan achievements in the year 2005."

See Earlier Story:
Congress Approves Class-Action Lawsuit Reform
(Feb. 17, 2005)

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