Lawsuit Abuse: Fact or Fiction?

During the 2004 U.S. presidential campaign, President George W. Bush made the protection of corporations and physicians from "frivolous lawsuits" one of the major items of his domestic agenda. This policy became law in February of 2005 with the signing of the Class Action Fairness Act (CAFA). What does the CAFA do? Is lawsuit abuse a serious problem? Here are some brief answers to these important questions.

What does the CAFA do?

President Bush had sought tort reform in three areas: class action lawsuits, asbestos litigation, and medical malpractice litigation. The CAFA deals only with the first area. Class action lawsuits are civil lawsuits typically brought jointly by hundreds or thousands of individuals against a company for a defective or hazardous product or for violation of a contract.

The allegation of lawsuit abuse arose from the fact that class action suits - which are usually litigated on a state level - were sometimes being filed in state courts where trial lawyers expected a sympathetic jury hearing, rather than in the state where the defendant or majority of plaintiffs resided. This process is known as "forum shopping."

The CAFA prevents forum shopping by giving federal courts jurisdiction over class action suits in excess of $5 million or suits in which plaintiffs reside in a state different than the defendant, unless 2/3 of plaintiffs reside in that state.

Is lawsuit abuse a serious problem?

The phrase "frivolous lawsuits" has become common political jargon thanks to President Bush's use of it during the 2004 presidential TV debates. So is lawsuit abuse as rampant as the president claimed?

Supporters of tort reform point to infamous fast-food lawsuits and the preponderance of ob/gyn malpractice cases as proof of lawsuit abuse. However, critics reject the proposed solution of capping monetary damages as a transparent gift to corporate interests rather than a deterrent to frivolous lawsuits. A 2006 study by the Harvard School of Public Health found that the vast majority of medical malpractice suits are valid. An article in The National Law Journal explains the survey's results: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1151658318847

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