10.27.05

Schiff Offers Frivolous Lawsuit Abuse Amendment

Mr. Chairman, I yield myself such time as I may consume.

I rise today to offer an amendment in the nature of a substitute to H.R. 420, the Lawsuit Abuse Reduction Act of 2005, with the gentleman from Wisconsin (Mr. Kind).

I thank the Rules Committee for affording us this opportunity to offer and debate our substitute amendment on the floor today.

Mr. Chairman, the base bill certainly has an important and worthy stated goal of cracking down on the filing of frivolous lawsuits. As a former Federal prosecutor and a member of the bar, I strongly support this meritorious goal, as any responsible attorney should.

However, I am forced to oppose the legislation in its current form as it contains a number of serious deficiencies which I believe the substitute amendment will remedy. First, the legislation would revert to a failed regime that has been soundly criticized by those best equipped to comment on the proposed changes, the Federal judiciary.

Second, the legislation would inappropriately involve the States in the application of the Federal Rules of Civil Procedure. And, third, the legislation's forum-shopping provisions drastically change State venue laws to benefit foreign corporations over domestic corporations and victims, to say nothing of doing a great deal to damage States' rights.

Finally, the legislation would harm those seeking relief from civil rights violations. Instead, I ask my colleagues to support the Schiff-Kind substitute amendment, a proposal that would crack down vigorously on frivolous lawsuits. Members on both sides of the aisle agree that our laws and rules of procedure must prohibit frivolous litigation.

Our substitute amendment has a strong three-strikes-and-you-are-out provision for attorneys who file frivolous lawsuits. Unlike the base bill, these frivolous proceedings and pleadings could have been filed in any court. The mandatory sanctions begin after the very first violation; but after the third, the attorney shall be found in contempt of court and referred to the appropriate State bar associations for disciplinary proceedings, including suspension.

Unlike the base bill, the third sanction can also include disbarment.

Our substitute amendment also has strong three-strikes-and-you-are-out provisions for attorneys who engage in frivolous conduct during discovery, including causing unnecessary delay or needless increases in the costs of litigation. Again, mandatory sanctions begin after the first violation, and a third violation in any Federal court can include suspension and even disbarment.

Our substitute also limits the ability of wrongdoers to conceal any conduct harmful to the public welfare by requiring that such court records not be sealed unless the court finds that a sealing is justified. This important provision will help ensure that information on dangerous products and actions is made available to the public.

The Schiff-Kind substitute also includes tough enhanced sanctions for document destruction by parties punishable by mandatory sanctions under Rule 11 and referral to the appropriate State bars for disciplinary proceedings, including disbarment. We also include strong language to provide a presumption of a Rule 11 violation for repeatedly relitigating the same issue.

I am pleased that some of these important provisions have recently been added to the base bill. The venue provisions, however, in section 4 of the base bill would recast State and Federal court jurisdiction and venue in personal injury cases.

This section would actually operate to provide a litigation and financial windfall to foreign corporations at the expense of their domestic competitors. Instead of permitting claims to be filed wherever a corporation does business or has minimum contacts, as most State long-arm jurisdiction statutes provide, section 4 only permits the suit to be brought where the defendant's principal place of business is located.

This means that it would be far more difficult to pursue a personal injury or product liability action against a foreign corporation in the United States. In fact, this section could operate to make it impossible to sue a foreign corporation in this country, only further promoting the disturbing process of corporations in our country relocating their headquarters overseas to avoid U.S. taxes.

This is bad policy. And our substitute amendment includes language to ensure that jurisdiction for such legal actions is not limited in this manner.

Finally, by requiring a mandatory sanctions regime that would apply to civil rights cases, the base bill will chill many legitimate and important civil rights actions. This is due to the fact that much, if not most, of the impetus for the 1993 changes stemmed from abuses by defendants in civil rights cases, namely, the civil rights defendants were choosing to harass civil rights plaintiffs by filing a series of Rule 11 motions intended to slow down and impede meritorious civil rights cases.

A 1991 Federal judicial study found that the incidence of Rule 11 sanctions or sua sponte orders is higher in civil rights cases than in some other types of cases. Another study found that there is ample evidence to suggest that plaintiffs in civil rights cases, plaintiffs in particular, were far more likely than defendants to be the target of Rule 11 motions and the recipient of sanctions.

While the base bill purports to encourage that the provisions not be applied to civil rights cases, the fact of the matter is it does not explicitly exempt civil rights cases as our substitute does.

Mr. Chairman, this is a commonsense substitute. It cracks down on frivolous lawsuits in a tough fashion, but without jeopardizing civil rights claims or providing unnecessary shields to foreign corporations. It is a better bill, and I urge the House to adopt the substitute rather than the base proposal. 

Mr. Chairman, I reserve the balance of my time.