Runaway Lawsuits Are Costing American Jobs

March 16, 2004

WASHINGTON (Reuters) - U.S. Treasury Secretary John Snow on Tuesday said that runaway lawsuits were costing American jobs and urged an overhaul of rules that permit personal injury lawyers to launch huge legal cases. "Lawsuit abuse is the ultimate disincentive for hiring new people," Snow said in prepared remarks to a closed session of the American Tort Reform Association. "The cost of doing business is substantially increased by a litigious environment."

Draft notes for Snow's speech obtained by Reuters outlined one of the Bush administration's sharpest calls for tort reform, a topic the treasury secretary frequently raises as an area of economic concern during trips around the country. He called for Congress to take steps to rein in personal injury lawyers and likened the current situation in which he said lawyers were taking in billions of dollars in profits annually to recent abuses by some corporate leaders. "The lack of personal ethics and responsibility, the excesses of greed, is similar to what we saw when corporate scandals erupted two years ago," Snow said. He said the Bush administration was urging Congress to pass a class action reform bill to end the "grotesque" practice of personal injury lawyers "shopping" for state jurisdictions that are likely to make large awards. "We're sick and tired of seeing that type of personal injury lawyer bring class-action lawsuits in these judicial hellholes," Snow said.

The Class Action Fairness Act before Congress would let defendants move such suits from state to federal courts when a substantial number of plaintiffs were not residents of the state where the suit was filed. Snow said small businesses were especially hard hit by fear of "frivolous, unnecessary lawsuits" and put a damper on one of the wellsprings of new jobs. "Small businesses are the engines of job creation and the engines cannot work effectively when they are slowed by the headwinds of frivolous litigation," he said.