Industry Basks In Class-Action Victory

Congress finally limits venue-shopping, but frivolous suit bill hits dead end

For eight long years, the insurance industry battled on Capitol Hill to put a lid on what they considered to be an out-of-control tort system. With Republicans firmly in control of both houses of Congress and the White House, they finally were able to see at least one of their dream bills passed.

Insurers were positively giddy when President George W. Bush signed the Class Action Fairness Act of 2005 into law. After all, the law moves a lot more cases into the more predictable federal courts, limits “venue shopping” by trial lawyers seeking friendly jurisdictions (called “judicial hellholes” by the industry), and places limits on state class actions.

However, the jury is still out as to the law’s long-term impact. For one, many lobbyists warned that the law’s constitutionality might be challenged (although that might be less of a threat with the Supreme Court’s recent turnover). Other analysts said it would take time to see how the law actually played out in the often surreal world of judicial interpretation—federal courts might not deliver the level of relief expected, for example.

In addition, insurers were pleased to see Washington limit the liability of gun manufacturers with passage of the “Protection Of Lawful Commerce In Arms Act.” However, other federal tort reform efforts have stalled.

In October, the House approved two bills—the “Personal Responsibility In Food Consumption Act” (which would end suits against those selling foods plaintiffs claim promote obesity), along with the “Lawsuit Abuse Reduction Act” (which would impose sanctions against those filing “frivolous” suits).

However, both bills hit a dead end in the Senate, where getting the 60 votes required to avoid a potential filibuster by Democrats proved impossible. Insurers—as Brooklyn Dodger fans used to lament—will have to “wait ‘till next year!”

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