Citizens organize to stop lawsuit abuse.
Jury awards are one of many things that come in large packages in Texas. In 1990, two workers sued a sugar mill in the Rio Grande valley for being included in seasonal layoffs. They won $2.5 million. The award would have bankrupted the company, costing the jobs of 683 workers in a small town. Fortunately, the company was later able to settle out of court for less.
The potential disaster led Bill Summers, president of the local Chamber of Commerce, to form Citizens Against Lawsuit Abuse. Its message is simple: You don't have to be the target of a frivolous lawsuit to be a victim.
Since 1990, 10 more grass-roots anti-lawsuit abuse groups have formed in Texas. And the idea has spread to other states, including New Jersey, Mississippi, Louisiana, and California. "The core problem is social greed," says John Opelt of the Houston CALA. "People are trying to get rich instead of be made whole," echoes Bill Bloomfield, who founded the Los Angeles chapter early this year.
The problem is exacerbated by the contingency-fee system, Bloomfield says. People can file lawsuits at no cost to themselves, and lawyers get to keep as much as a third of any award. Everyone is encouraged to play the lawsuit lottery.
Bloomfield's billboard and television ads have already attracted more than 1,200 members. A look at the employment costs of lawsuit abuse helps to explain the positive response. A RAND Corporation study estimates that wrongful termination suits alone have reduced California's hiring levels by as many as 650,000 jobs, causing expenses equivalent to a 10 percent across-the-board pay raise. The 70,000 product liability suits filed annually in the United States are also job killers. The small-aircraft industry has all but disappeared, losing 18,000 jobs since 1980 because of liability suits, even though a National Transportation Safety Board study couldn't find one crash caused by manufacturing or design error.
Possible legislative reforms include forcing the loser to pay court costs and capping punitive damages. But reform efforts have been frustrated for years by the lobbying efforts of the American Trial Lawyers Association, which donated $2.4 million to candidates in the 1992 election cycle. This year, although a bill specific to the small-aircraft industry was passed, comprehensive reform bills were never allowed to come to a vote in either house of Congress. Pressure from the ATLA even caused Sen. Larry Pressler (R-S.D.) to defect from a bill he had co-sponsored.
But these obstacles don't faze CALA's Bloomfield, whose emphasis is on values rather than wonkish legislative solutions. "Through education, we can effect change even if nothing happens in Washington or Sacramento," he says. Opelt likens CALA's strategy to that of Mothers Against Drunk Driving, where "public outrage and indignation resulted in a change in attitude and behavior."
He and Bloomfield aim to create a social stigma against frivolous lawsuits and encourage such private alternatives as mediation and arbitration. CALA doesn't seek to restrict the ability of legitimate victims to sue. But as Bloomfield puts it, "A legal problem needs to be viewed as a problem, not an opportunity."