On Tuesday November 2, ATRA General Counsel Victor Schwartz will testify before the Senate Committee on The Judiciary about the trend of "Regulation through litigation". Resisting this trend, and reasserting the prerogative of the legislature to establish public policy is an ATRA priority. A summary of Victor’s testimony follows:

SUMMARY OF TESTIMONY OF VICTOR E. SCHWARTZ, ESQ.

ON BEHALF OF THE AMERICAN TORT REFORM ASSOCIATION

BEFORE THE SENATE

COMMITTEE ON THE JUDICIARY

NOVEMBER 2, 1999

The new judicial trend of regulation and taxation through litigation intrudes on the separation of powers, reflects unsound public policy, and raises concerns that the bedrock principle of "equal justice under the law" might be set aside when the defendant is unpopular.

In the recent state attorneys general tobacco cases, some courts subverted 200 year-old legal principles and permitted government plaintiffs (in partnership with private personal injury contingency fee lawyers) to crown themselves "super plaintiffs" with greater legal rights to recover indirect economic losses than any ordinary citizen would have that actually suffered a direct physical injury. New cases filed by cities against gun manufacturers also may create new principles of law that give those cities greater legal rights than injured persons. There is little doubt that an engine behind these new principles is the popularity of the defendants.

Liability law, however, should be neutral. Its principles should apply in the same way to all defendants. A key public policy question that Congress should consider is whether our Nation should have neutral tort law or outlaw tort law.

Former Secretary of Labor Robert Reich concisely characterized the new trend of governments bringing their powerful resources to bear against lawful, private industries when he observed, "The era of big government may be over, but the era of regulation through litigation has just begun." The new judge-made path toward regulation and taxation through litigation has been blazed by unpopular defendants -- tobacco, guns, and lead paint. On the horizon, reports have suggested that targets could include HMOs, manufacturers of latex products, automobiles, chemicals, alcoholic beverages, and pharmaceuticals, the gaming industry, "Hollywood" and the entertainment industry, internet providers, and even the dairy and fast food industries.

The greatest argument of Robert Reich is that legislatures simply will not act on things that he and those who share his values believe are appropriate for legislative action. But, it touches upon a bedrock principle of our Government to give up on the legislature because you cannot get your way. It has been shown that legislatures are politically responsive to the wishes of the general public. As Senator Everett Dirksen of Illinois once said, "When they feel the heat, they will see the light." Legislators do act when the public consistently wants them to do so. Moreover, if legislators are not responsive to the public, voters have a direct remedy at the polls. The judiciary, on the other hand, is the least politically accountable branch of government.

Mr. Reich’s vision of the world violates the bedrock principle of separation of powers upon which our entire system of government is based. Article I § 1 of the United States Constitution provides that "All legislative Powers herein granted shall be vested in a Congress of the United States." Article III § 2 provides that the job of courts is to decide cases and controversies - to interpret the law, not make it.

The Constitution provides a sound structure for balanced decisionmaking. When courts "legislate" they upset this structure. Furthermore, courts lack the vital tools that legislators use in formulating public policy.

First, judge-made law is retroactive. If the Congress made law in the same way, it would be an unconstitutional ex post facto law. Second, judges do not have the information that legislatures gather through the hearing process. That process helps legislative lawmakers appreciate the full public policy implications of their decisions. While two lawyers before an appellate court presenting their points of view are a source of good information, they are not a substitute for the legislative or regulatory fact-gathering process. Third, lawyers in court argue and focus on narrow rules of law, not major changes in public policy. If lawyers were allowed to focus on public issues far beyond the instant case they are arguing, courts would abandon the fundamental principle that judges must only resolve actual cases and controversies. Consideration of issues that go beyond a particular case or controversy is properly the job of legislatures.

Those that have advocated that courts should make law where legislatures have refused to do so ought to think about the full implications of their new approach.

Legislation introduced by Senators McConnell and Hatch, S.1269, the Litigation Fairness Act, preserves the principle that an injured person’s right to sue should be paramount over the government’s rights when that injury is at the heart of the government’s claim. It restores equal justice under law and neutrality within our tort system.

At the state level, the American Legislative Exchange Council (ALEC), a group of over 3,000 state legislators, has developed a proposal to address the potential problems that can develop from "backroom deals" involving contingency fee contracts in "Big Government" lawsuits. ALEC’s model bill, "The Private Attorney Retention Sunshine Act," was recently enacted in Texas and North Dakota. The Act would require such contracts to be made public and open for competitive bidding so that the public know it is getting the best legal representation at the best price.

The American Tort Reform Association ("ATRA"), founded in 1986 and based in Washington, D.C., is a broad-based coalition of more than 300 businesses, corporations, municipalities, associations, and professional firms who have pooled their resources to promote reform of the civil justice system with the goal of ensuring fairness, balance, and predictability in civil litigation.

Victor Schwartz, a Senior Partner at the law firm of Crowell & Moring LLP, can be reached at (202) 624-2540, or vschwartz@cromor.com.