“Lawsuit Abuse Reduction Act” Passed by House of Representatives

Last month, the U.S. House of Representatives passed the “Lawsuit Abuse Reduction Act,” formally known as H.R. 2655.

The amendment applies to Rule 11(c) of the Federal Rules of Civil Procedure, and would make sanctions mandatory for any violations of this rule, as well as making it mandatory that any/all sanctions compensate the reasonable expenses of the opposing side, and permit additional monetary and non-monetary sanctions as applicable.

Before the amendment, the Court was allowed to impose sanctions (the actual language said “may,” whereas now, it reads “shall”).

So what does this mean? Well, if enacted, this bill would actually increase the cost of litigation in federal courts for both Plaintiffs and Defendants. This bill would support an attorney’s decision to file multiple sanction motions against the opposing counsel.

When a similar bill was enacted between 1983 and 1993, the Courts noticed that attorneys used this bill as a “tool of abuse” during litigation, which would likely happen once this bill is enacted.

But surely, if a bill of this magnitude were enacted, it would at least have some popularity amongst those in federal court, right? Wrong. In fact, an estimated 91% of federal trial judges are opposed to this bill and it’s mandatory sanctions requirement. The American Bar Association is also opposed to the bill.

Fortunately, our government is set up with checks and balances, so that improperly motivated bills won’t negatively impact this country. That being said, although the House has passed the bill, it likely will not be approved by the Senate, and even if it does, President Obama would likely veto the bill.

However, it’s important to note that when it comes to tort reform, this bill helps the big businesses, as well as large insurance companies, who have endless amounts of money at their disposal, and want the litigation process to be as expensive as possible, so that they can outspend their opposition.

How could Congress pass such a bill, when they know the repercussions it would cause? Shouldn’t they be reprimanded or criticized?

Feel free to comment on this blog post. For more information, contact a Gacovino Lake attorney at 1-800-246-HURT (4878).

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