Aug 31, 2016 - 12:30pm

Dear 45: Strengthen Our Economy by Strengthening Our Legal System

Dear 45,

As president, you will lead a country whose strength is largely drawn from its deep commitment to the rule of law and the legal system upon which it rests. However, that system is under relentless attack from players who abuse it to the detriment of consumers and businesses alike.  

Lawsuit abuse drags down the entire economy, as businesses large and small struggle with an unpredictable litigation and regulatory climate that stifles innovation and inhibits the creation of new jobs and products. In fact, America currently has the costliest legal system in the world, with lawsuits costing the U.S. economy hundreds of billions of dollars every year.

With this in mind, we ask that you make it a priority to address these important issues.

Nowhere is this problem more evident than in the context of class action litigation. In particular, we have seen a proliferation of what are known as “no injury” class action suits, in which many unnamed members of a class join lawsuits against an allegedly defective product or service, even though those individuals haven’t suffered any actual harm or have experienced completely different harms than the class representative.  

The House of Representatives took an important step toward addressing this problem earlier this year when it passed the Fairness in Class Action Litigation Act, which would go a long way toward combatting this sort of systematic abuse. Our country would benefit greatly by seeing that bill signed into law.

There’s also a big problem in class actions brought under statutes with uncapped statutory damages, such as the Telephone Consumer Protection Act (TCPA).  The explosion in TCPA litigation has spawned a host of ills worthy of attention, including frivolous class actions filed over minor technical violations, as well as the vast disparity in consumer recoveries versus attorneys’ fees. These statutes have also given rise to serial plaintiffs, who make an entire living off of this type of abusive litigation.

Another issue ripe for new leadership and a federal solution is data breach notification. Abusive litigation over high-profile data security breaches is becoming more common. Our country needs federal legislation that preempts the current patchwork of state data breach notification laws, includes meaningful liability protections for businesses, and establishes strict liability provisions.

The next area where we will look to your new administration for leadership: Stopping federal agencies from attempting to drive an increase in class actions. First and foremost, you must pump the brakes on the CFPB’s anti-arbitration rule, which will have the practical effect of eliminating arbitration and harming the very consumers whom the agency is tasked with protecting.

Other federal agency efforts to increase class action litigation by regulation include the Department of Labor’s new  fiduciary duty rule, the National Labor Review Board’s joint employer rule, the Department of Education’s college financial aid rulemaking, and the Department of Health and Human Services’ efforts to limit arbitration in nursing home agreements. We must halt these efforts.


Meanwhile, lawsuit abuse is occurring at the enforcement level, too. Enforcement agencies are increasingly using their great weight to leverage maximum fines and penalties. Our country needs your administration to return us to commonsense enforcement policies – ones that focus on cooperation and compliance and get us back to measured prosecutorial discretion.

In some cases, executive agencies are even using settlements of enforcement actions to fund private entities whose activities further the policy (or even the personal) goals of the agency official. This allows law enforcement officials to use the weight of government power to reward their favored groups, and it violates fundamental constitutional principles as these decisions are made outside of the appropriations process. The “Stop Settlement Slush Funds Act” would help address this mounting problem.

In addition, the federal government should be looking for ways to address the problem of what we call “piling on”, with several agencies or jurisdictions launching simultaneous and coordinated lawsuits against a single company, often setting their collective crosshairs on those that offer the biggest potential payday, rather than targeting the most serious wrongdoers. In doing so, agencies contribute to a litigation climate that abuses our legal system, undermines business growth and strangles our county’s economy.

Finally, you and your administration can take great strides on an important topic that enjoys bipartisan support: criminal justice reform. Every day, Americans run the risk of violating more than 5,000 federal statutory crimes and hundreds of thousands of criminal regulations. This vast body of criminal law and the vagueness of some criminal provisions combine to give prosecutors incredible discretion and power over individual Americans and businesses of all sizes. Bipartisan efforts to strengthen our nation’s criminal justice system are already underway in both the House and Senate.

In this area, we must establish a clear intent requirement for all crimes through default mens rea legislation, and we need a more concerted effort to limit over-criminalization. More broadly, your administration should promote law enforcement leaders committed to moving away from punishment and excessive fines and toward more rational conduct aimed at detecting and deterring bad behavior.

Our Institute for Legal Reform continues to fight to make our nation's legal system faster, simpler and fairer – and it could use your help in this fight. We hope your administration will join us in thwarting those who try to abuse the system, undermine our right to due process, and in the process, stunt America’s economic growth. We look forward to working with you.


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