WASHINGTON - Congress took its first big step yesterday to implement President Bush's plan to overhaul the nation's legal system, approving a measure long sought by business to impose new restrictions on class-action lawsuits.
Republicans hailed the lopsided vote - the bill was passed 72-26 - as an important legislative victory in their campaign against what they call "lawsuit abuse."
The legislation has strong support in the House of Representatives, which is expected to pass it next week.
"The class-action bill is a strong step forward in our efforts to reform the litigation system and keep America the best place in the world to do business," Bush said in a statement after the vote. "I applaud the strong bipartisan majority in the Senate for passing this bill, and I call on the House to act promptly so that I can sign it into law."
Republican leaders said they hoped that approval of the bill - the president's first legislative victory of his second term - would build momentum for subsequent measures on the GOP agenda, including new curbs on bankruptcy, asbestos litigation and medical malpractice.
"It's obviously a big victory, because it was our No. 1 legislative priority," said Stanton Anderson, chief legal officer for the U.S. Chamber of Commerce.
Class-action suits allow plaintiffs with claims against the same defendant to combine their cases into one lawsuit. Under the legislation passed yesterday, large multistate lawsuits - such as the state governments' lawsuit against tobacco companies, which ended in a $246 billion settlement - would be moved from state to federal court, where judges tend to be more favorable to business and less likely to approve large damage awards.
Class-action lawsuits could be heard in state court only if the damages sought were less than $5 million and more than two-thirds of the plaintiffs were from the same state.
Proponents said the bill was necessary to curb abuses of the system, including "forum shopping," in which lawyers file large lawsuits in obscure local courts believed to be favorable to plaintiffs, and settlements that grant huge fees to lawyers and little to claimants.
"All citizens should have the right to band together and settle grievances with bigger companies," said Sen. Tom Carper, a Delaware Democrat, who voted for the bill. "But that system is broken and it needs fixing. There are too many instances where consumers are getting very little or nothing from their settlements, while companies are not being forced to change the way they do business."
The bill divided Democrats, with 18 of the chamber's 44 Democrats favoring it and 26 opposing it. Maryland Sens. Paul S. Sarbanes and Barbara A. Mikulski voted against the legislation. California's two senators were divided, with Sen. Dianne Feinstein voting for the measure and Sen. Barbara Boxer voting against it.
The Senate's sole independent, James M. Jeffords of Vermont, voted in favor of the bill, as did 53 Republicans. Two Republicans did not vote.
Senate Democratic leader Harry Reid of Nevada was one of the staunchest opponents, labeling the measure "one of the most unfair, anti-consumer pieces of legislation to come before the Senate in a long time.
"It slams the courthouse doors on a wide range of injured plaintiffs," he said before the vote. "It turns federalism upside down by preventing state courts from hearing state law claims, and it limits responsibility at a time of rampant corporate scandals. Instead of turning up the heat on corporate shenanigans, this bill lets corporate wrongdoers off the hook."
Republican strategists say one aim of the bill is to curb the influence of trial lawyers, who are important financial backers of many Democrats.
"Every American's legal rights are diminished by this anti-consumer legislation, which establishes greater procedural hurdles for consumers, workers, homeowners and shareholders," Todd Smith, president of the Association of Trial Lawyers of America, said in a statement after the vote.
The bill was heavily promoted by business, especially the U.S. Chamber of Commerce.
In remarks before the vote, Reid decried the influence of corporate lobbyists - many of them located in downtown Washington - in promoting the bill.
"I could say this without any question: The downtown beat us. No question on that," he said.
According to financial disclosure documents compiled by Public Citizen, the consumer watchdog group founded by Ralph Nader, the U.S. Chamber of Commerce spent more than $100 million from 2000 to 2003 to fund its Institute for Legal Reform, which promotes changes in the legal system. Spending information for 2004 is not yet available.
"They've got hundreds of lobbyists working this legislation. The consumer side has maybe 15," said Frank Clemente, director of Public Citizen's Congress Watch. "Our side was outnumbered 20 to one, just on the numbers of lobbyists."
Anderson, who oversees the Chamber's legal programs, described the Public Citizen numbers as wildly inflated. He declined to provide specifics, but said only one-third of the institute's budget is spent on Washington lobbying, and only one-third of that was aimed at the class-action bill.
The Los Angeles Times is a Tribune Publishing newspaper.
About the bill
What it will do: Limit many class-action suits to federal courts, which have been much less sympathetic to such claims than state courts.
Supporters say: The bill is needed because greedy lawyers have taken advantage of the state system by filing frivolous lawsuits in courts where they know they can get big verdicts.
Opponents say: The bill will help businesses escape proper judgments for their wrongdoing and limit remedies for consumers.