The Civil Justice Reform War and Its Impact upon Business and Individual Rights

By Wander, Lawrence A. | Review of Business, Fall 2003 | Go to article overview

The Civil Justice Reform War and Its Impact upon Business and Individual Rights


Wander, Lawrence A., Review of Business


There is a political war raging between the business coalition and the consumer/ legal lobby. Tort reform is making significant strides at state levels, and the time seems ripe for federal tort reform measures. This article discusses various areas of enacted and pending tort statutes both on a state and federal basis and their economic impact upon business and individual rights.

Introduction

Civil justice reform, known as tort reform, has become a war between certain powerful coalitions over the past several decades. This struggle is aimed at influencing the U.S. Congress and state legislatures. A coalition of corporations and their insurance companies (including giants in the pharmaceutical, tobacco, automobile, oil, chemical and health care industries) is pitted against consumer groups, unions and lawyers. The underlying issue of this war is whether to limit the business entity's (the alleged wrongdoer's) liability to pay damages to victims by limiting their right to sue [19]. This paper discusses various areas of enacted and pending tort statutes both on a state and federal basis and the economic impact upon business and individual rights.

Tort Law

Torts are civil wrongs, which in the United States are compensable through the award of money damages for economic and noneconomic losses. These laws permit persons to recover damages for harms or injuries caused by the wrongful actions of others. Economic losses would include out-of-pocket losses (such as lost wages) and non-economic losses such as pain and suffering. Noneconomic damages often make up the bulk of awards to non-wage earners such as children, homemakers and the elderly [1,4]. The purpose of tort laws is to provide compensation or remedies for the invasion of protected interests such as one's personal safety, property, privacy, family relations, reputation and dignity. Society compensates those who have suffered injury as a result of the wrongful conduct of others [6]. The numbers of fact patterns upon which corporations and businesses can be sued in tort are infinite. "They include, but are not limited to, defective consumer products, assault and battery, invasion of privacy, negligence, defamation, unsafe work environment, interference with business rights, unfair competition, false imprisonment, infliction of emotional distress, environmental harm, appropriation, fraud, conversion, trespass and strict liability [6].

The risk of liability in tort is a crucial consideration in business planning and risk management. American tort lawsuits and actions in other countries can and do have significant economic international ramifications. Foreign corporations are often sued in U.S. Courts for product liability and other types of tort actions. In the current global business economy, businesses conduct transactions, involving goods and services, internationally. It is imperative that business managers be aware of the tort laws of other nations, the application of which may vary among the other nations of the world. For example, the European Union has a product liability directive (law), which holds producers liable for damages caused by defective products [6,14,17]. Product liability laws are emerging hi countries such as Japan, Australia and the Philippines and have been proposed in Malaysia. Other Asian countries grant rights under contract and tort law, as well as a developing body of consumer law. Businesses manufacturing, importing or exporting, on an international scale, must become aware of the changing laws in the Asian Pacific region [14].

Tort Reform or Tort Abolition

Tort reform proponents allege that the American civil justice system is out of control. They claim that this has been caused by lawsuit abuse, which raises file costs of consumer goods and services, lowers the quality of healthcare, decreases the availability of affordable insurance, eliminates jobs and discourages new technology [9,24]. …

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