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Put Brakes on Frivolous Lawsuits

From Senator Charles Grassley –
Against a staggering national debt that’s surged by $5 trillion in just the last three years, voters will decide in November who will take the reins of Washington’s runaway spending.  In the meantime, the fragile economic recovery is struggling to gain traction.  Job creators in the private sector are vulnerable to rising gas prices, expiring pro-growth tax laws and swelling health care costs that influence hiring, investing and spending decisions.

Consumer confidence is a primary factor that affects the U.S. economic outlook.  Paying $4 (or more) for a gallon of gas will arguably cause more households to pull back on spending money at their local restaurants, hair salons, retailers and charities.  Higher shipping costs also eat into the profit margins for Main Street businesses, leaving less money for hiring workers.

While rising gas prices capture the spotlight in an election year, there’s another burden on the American economy.  The costs of frivolous lawsuits are invisible price tags that add up to higher prices for consumers and another burden for businesses struggling to stay above water.

In an era when America is looking for economic growth to take root, billions of dollars are wasted on frivolous lawsuits that siphon money away from job creation.  Frivolous claims also clog an already burdened legal system and delay the resolution of lawsuits that have merit.

Attorneys who file frivolous lawsuits today can do so without much fear of any consequence.  These claims force innocent individuals and businesses to choose between years of litigation, court costs and attorneys’ fees, or paying a settlement.  It’s a waste of time, money and resources.

A culture of suing at the drop of a hat is an albatross for start-ups and small businesses operating on tight margins.  Small businesses rank the cost and availability of liability insurance as second only to the cost of health care as their top concerns.  While it’s no secret that small businesses are the number one job creators in America, it’s not so well known how frivolous lawsuits block their road to prosperity and their ability to create jobs.

The U.S. legal system relies on Rule 11 of the Federal Rules of Civil Procedure to curb frivolous filings.  Unfortunately, Rule 11 was watered down in 1993.

As the Ranking Member of the U.S. Senate Judiciary Committee, I’ve introduced legislation that would help put the brakes on frivolous lawsuits by restoring the strength behind Rule 11.  My bill, the Lawsuit Abuse Reduction Act, would install three reforms to bring more accountability to the U.S. tort system.

First, my bill would reinstate mandatory sanctions to deter the offending party from filing a frivolous claim.  Currently, when a judge finds that a lawsuit is frivolous, it’s in the judge’s discretion whether to impose sanctions.

Second, my bill would require judges to impose financial sanctions against lawyers who file frivolous lawsuits, including attorneys’ fees and costs incurred by the defendant.

Third, my bill would reverse a rule that allows attorneys to avoid sanctions for making a frivolous claim by withdrawing them within 21 days after a motion for sanctions has been served.

Law-abiding Americans with a legitimate legal grievance are entitled to their day in court.  But unscrupulous attorneys who litigate for jackpot justice stand in the way of that.  Frivolous lawsuits need to be weeded out of the system.  Putting the brakes on frivolous lawsuits that damage the economy and clog the legal system will go a long ways towards balancing the scales of justice, upholding the rule of law, and improving the public good.

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