Legal reform Press Conference Remarks
Good afternoon, ladies and gentlemen. I'm Tom Donohue, president and CEO of the Chamber of Commerce of the United States. I'm pleased you could be here.
Today, I'd like to call your attention to a unique opportunity facing the United States Congress, and indeed this nation.
After years of debate and negotiation, Congress is in its best position yet to pass both class action reform and a legislative solution to the asbestos litigation crisis that has already cost 70,000 American jobs and which could claim many times that number if it is not resolved.
There are lots of issues vying for the attention of lawmakers during the home stretch of the congressional session. There is likely not enough time for Congress to consider them all.
But I've talked to CEOs from every sector of the economy, and they tell me that class action reform and an asbestos litigation solution should both be addressed this year. More importantly, they're confident that both can be done this year.
I met with Senate Majority Leader Bill Frist just minutes ago, and he assured me that he would make every conceivable effort to clear space on the Senate calendar to vote on both of these important pieces of legislation before the Senate adjourns this fall.
Because both class action reform and asbestos legislation deal with the legal system, I think there is some confusion and misunderstanding about what each one would accomplish.
Some people might mistakenly think that class action reform and asbestos legislation are two peas of the same pod; by dealing with one, we lessen the importance or urgency of dealing with the other. Nothing could be further from the truth.
Each bill is essential to growing our economy, creating jobs, and improving shareholder value, but that is where the similarities end. They address different issues, and each deserves special attention.
Let me briefly explain both issues and the economic consequences of failing to act, and then I'll take your questions.
Class action Reform
With regards to class action reform, a relatively small band of class action trial lawyers – numbering only about 3,000 out of the nation's one million lawyers – have created a huge national crisis by overloading our courts with frivolous lawsuits.
Class action filings have increased tenfold in the last decade, and our nation's tort system—of which class actions constitute a significant portion—costs our economy more than $180 billion a year.
Companies spend millions of dollars each year to defend against class action lawsuits—money that should be used to expand, develop new products, and create jobs.
And high class action legal defense costs for businesses translate into higher priced goods and services for consumers.
The class action trial lawyers' strategy is simple: go after big companies with deep pockets, and name a few small companies as defendants to keep the case in a trial lawyer-friendly local court.
Then, force the defendants to settle, pocketing the lion's share of the settlement proceeds and leaving the alleged victims, in some cases, with little more than spare change or a coupon.
This is what our class action legal system has become, and without reform, our economic future is in great jeopardy.
The Class Action Fairness Act that will be considered by the Senate in the next few weeks is a moderate, well-measured bill that will ensure a simpler, fairer, and faster legal system.
It would make it easier to move complex national class action suits from state to federal courts, which are more predictable and have the resources to handle such cases.
This bill would also protect class members by preventing them from actually losing money, which, ridiculous as it seems, can occur when class action trial lawyers take all or most of settlement and jury award proceeds and then still charge the class members significant legal fees.
The House of Representatives has already passed class action reform legislation multiple times – including twice in the past two years. Only the Senate stands between us and a fairer legal system.
We're greatly encouraged by the progress being made in the Senate.
Fifty-seven senators have publicly indicated their support for the bipartisan legislation – the greatest level of support for the bill since it was first introduced five years ago.
Senators who have stalled class action reform despite majority support must know that their time is up. The opportunity to reform our legal system—and the tremendous economic benefits those reforms will produce—are simply too great to pass up.
Let me speak for a minute on the separate issue of asbestos litigation.
The extent of the damage caused by asbestos litigation is extraordinary: At least 600,000 lawsuits naming 6,000 companies nearly 70 bankruptcies, killing off some 70,000 jobs $54 billion in liability so far, with total liability expected to reach $275 billion or more at the cost of hundreds of thousands of jobs.
As more and more asbestos manufacturers and other traditional defendants have been driven into bankruptcy, class action trial lawyers have targeted "peripheral defendants"—or any company that has used, installed, sold, or distributed asbestos.
But the biggest victims of runaway asbestos litigation are not businesses—they are the people who have truly been harmed by exposure to asbestos.
Most new asbestos claimants – as much as 90%, according to some reports – are only mildly impaired or are not sick at all.
Their suits have overwhelmed the courts, shutting out the truly impaired who deserve compensation. A senior judge with oversight on federal asbestos proceedings is on record as saying that "defendants are paying those who are not really injured."
And claimants who are awarded compensation see very little of it. More than half goes to pay class action trial lawyers and court costs.
We appreciate the leadership and initiative some in the Senate—notably Senator Hatch—have shown on the asbestos crisis.
But ultimately, for asbestos legislation to advance in the Senate, the business community must come together in support of a consensus solution.
Business and organized labor alike agree that a solution is necessary, but like most legislative matters, the devil is in the details.
I am personally reaching out to CEOs and labor union leaders to work out differences. I am completely confident that we can come to an agreement if everyone focuses on the common good.
With continued leadership by Senator Hatch and his colleagues, we can get a bill done this year.
The Chamber is prepared to leverage its lobbying, grassroots and communications resources to advance a bill that compensates real victims and provides certainty and finality to a crisis that has stretched on for nearly four decades and touched nearly every sector of the economy.
Allowing this crisis to carry on would be a grave injustice to our businesses, our workers, and to the people who deserve to be compensated for their illnesses.
Ladies and gentlemen, the U.S. Chamber's top priority is to put America back to work and to get our economy performing at its full potential.
In recent weeks, there has been a great deal of political talk about jobs and the economic recovery.
The bottom line is that if members of the Senate really care about creating and preserving good American jobs, they will act on both class action and asbestos – for these issues are Exhibit A and Exhibit B in a legal system that has run amok.
It is this out-of-control system that represents a major impediment to creating more good-paying American jobs here in the U.S.
It's not one or the other. We need both bills, and we need them now. Thank you. I'll be happy to take your questions.