BUSINESS ANALYSIS: America's Class-Action Culture in the Dock ; Wall Street and Washington Draw Battle Lines over Reform of US Tort Liability Rules

By Cornwell, Rupert | The Independent (London, England), July 25, 2003 | Go to article overview
Save to active project

BUSINESS ANALYSIS: America's Class-Action Culture in the Dock ; Wall Street and Washington Draw Battle Lines over Reform of US Tort Liability Rules


Cornwell, Rupert, The Independent (London, England)


THE EYES of legal storms don't come much more unlikely than this prosperous little town just across the Mississippi river from St Louis. But, for corporate America, the Madison County Courthouse on Edwardsville's Main Street has become the symbol of everything it believes is wrong with America's tort liability system - the class- action lawsuits and crippling ten-zero damage awards, the rich and powerful trial lawyers and the ever- rising cost of insurance.

A "judicial hellhole" is how Tom Donohue, the President of the US Chamber of Commerce and the American Tort Reform Association, describes the place - living proof of how "even courts in a small rural county can wreak havoc on companies". Madison County has achieved this celebrity because of one simple fact - under US law, attorneys may pursue a multi-state class action wherever success seems most likely. For reasons rooted in its unhappy industrial past, Madison County is the anti-business plaintiff's heaven.

In proportion to population, more lawsuits are pending at the Edwardsville courthouse than in any other US jurisdiction: 43 on target for over 90 this year, led by a $10.1bn verdict against cigarette-maker Philip Morris,and a $250m asbestos damages award against US Steel.

But now, to the delight of the corporations - and the alarm of Eedwardsville's bars and restaurants - all this may change. The chances are higher than at any time in 30 years that Congress will enact serious reform to US tort liability laws.

If that should happen it would not be a moment too soon for Jean- Pierre Garnier, chief executive of UK-based pharmaceuticals giant GlaxoSmithKline, who recently made a scathing attack on the US system. He said that, to stop costs flying out of control, "we have to settle cases that in Europe you would call frivolous. It makes us mad."

The pharmaceutical industry has found itself particularly at the mercy of the litigious US system. Patients routinely seek redress through class actions for side-effects from drugs, even though medicine safety is highly regulated by the Food & Drug Administration. Product liability insurance is now so expensive that the biggest companies are no longer taking out cover.

The struggle to reform the legal system is both financial and political. It pits Democrats and their traditional allies and benefactors, the trial lawyers, against Republicans and their allies in boardrooms, with important implications for both Wall Street and the 2004 presidential campaign. Tort reform is a top priority for corporations desperate to control legal costs. It is also prominent in the platform on which President Bush will seek re-election. For Republicans the wind could not be set more fair.

For one thing, the party has simultaneous control of the White House and both houses of Congress for the first time since 1952, giving the Republicans power to shape the entire legislative agenda. Even more importantly, Americans are growing increasingly fed up with the vast fees garnered by lawyers in contrast with the often derisory individual payouts in class-action cases.

People also realise that while the lawyers' fees can run into the tens or hundreds of millions of dollars, the costs will almost certainly be passed back to the consumer, in the form of higher insurance and other costs.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

BUSINESS ANALYSIS: America's Class-Action Culture in the Dock ; Wall Street and Washington Draw Battle Lines over Reform of US Tort Liability Rules
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?