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Congress should address forum shopping to even the playing field
Yesterday, a Senate Judiciary subcommittee held a hearing on the bankruptcy process which focused on the treatment of litigation in these proceedings.
During the Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights hearing, “Abusing Chapter 11: Corporate Efforts to Side-Step Accountability Through Bankruptcy,” Senator Sheldon Whitehouse (D-Rhode Island) identified “forum shopping” and venue issues as a central concern, stating “Outcomes in court should not be determined by strategic forum shopping.”
“Senator Whitehouse expressed significant concern about businesses having the opportunity to choose the jurisdictions in which they pursue bankruptcy protection due to litigation costs,” American Tort Reform Association President Tiger Joyce said. “Senator Whitehouse and his colleagues should address the issue he raises and the broader issue of ‘venue’ reform to combat some of the most urgent problems in the civil justice system.
“Plaintiffs’ lawyers utilize what we consider to be inappropriate “forum shopping” to bring their cases in plaintiff-friendly jurisdictions where high-dollar awards, low evidentiary standards, and low barriers of entry are the norm. Congress should tackle these abuses that too often leave companies with little or no alternative to bankruptcy. The priority should be taking the steps necessary to keep companies out of these proceedings in the first place,” Joyce said.
ATRA believes that the most egregious abuses of the civil justice system have occurred when plaintiffs’ lawyers have been allowed to forum shop and bring their cases in plaintiff-friendly courts that have no real connection to the case at hand, especially in jurisdictions it calls “Judicial Hellholes®”:
“Doing business with third parties should not automatically subject an out-of-state business to personal jurisdiction in a given jurisdiction unless there is a specific connection between the forum and the injury,” Joyce said. “Congress should address forum shopping to even the playing field. Lawmakers can use their oversight and legislative authority, as they did when they reformed class actions, to crack down on plaintiffs’ forum shopping.”
ATRA’s Tiger Joyce also penned an op-ed in October 2021, when Congress held its first hearing on the bankruptcy process, detailing the need for Congress to prioritize national interests over the profit motives of plaintiffs’ lawyers and address the real issues driving the bankruptcy process.
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