As Corporate Accountability Barriers Grow, Chamber Of Commerce Still Claims ‘Lawsuit Abuse’

Under both the influence of U.S. Supreme Court Chief Justice John Roberts, and corporate spending in state courts around the country, procedural wins have imposed new onerous hurdles on individuals aiming to hold businesses accountable for their wrongdoing. Two new analyses out this week point to the real costs of these losses for individuals. In one study, researchers found that dismissals of housing and employment discrimination claims spiked from 62 percent before two major Supreme Court cases made it harder to state a claim, to 71 percent afterwards. Even more noteworthy, that spike in dismissals fell largely on Republican-appointed judges, whose dismissal rate spiked from 61 percent to 74 percent in cases where defendants disputed the legitimacy of the plaintiffs’ initial filing.

In a second analysis, two antitrust lawyers point to the “scant recognition” of the costs imposed on attorneys, courts, and experts when new decisions make the requirements at each stage of litigation increasingly more onerous, meaning these new barriers and corporate-driven “tort reform” make the legal system more expensive. J. Douglas Richards and Michael Eisenkraft write:

Contrary to widely propagated but fictitious notions unlike many corporate defendants and most corporate defense counsel, plaintiffs generally want to get their case before a fact-finder as quickly and inexpensively as possible. Helping them attain this end without repetitive prior evaluations of a case’s merits would promote judicial efficiency and reduce litigation expenses for all parties as well as for the courts.

In spite of these findings and increasingly business-friendly rulings both at the Supreme Court and in the state courts, the U.S. Chamber of Commerce came out with a study finding that the U.S. “liability system” is the most expensive of 13 countries analyzed because of so-called “lawsuit abuse” in which too many claims are filed that cost too much.

While this Chamber study was painted in a Corporate Counsel report as ranking the U.S. legal system overall the most costly, its only measure is the cost of liability insurance for businesses. The study seems to acknowledge that these costs are simply “liability costs” that affect businesses. But whether the Chamber is griping about costs to the legal system or costs to businesses, recent statistics show that individuals filing tort lawsuits that the Chamber has dubbed “frivolous” in a long-running PR campaign are not to blame. Statistics from the National Center for State Courts show that between 1999 and 2008, the tort caseload decreased by 25 percent, while the number of contract cases – primarily cases between one business and another – spiked by 63 percent.

(Credit: National Center for State Courts)

As of 2008, the number of incoming contract cases was six times the number of tort cases. This means that it is actually other businesses that are filing more cases against each other, and potentially (though not necessarily) driving up their own price of liability insurance. So-called “tort reform” movements in the states that seek to limit corporate liability and cap damage amounts rely upon the assumption that frivolous civil lawsuits alleging injuries and wrongdoing flood our courts. But it is actually business-to-business cases whose numbers are growing.

There are no doubt other factors that make our legal system more expensive, as is pointed out by the Chamber’s study. The costs of our common law system, for example, in which each case is argued on the basis of precedent and lawyers are required to navigate an impenetrable web of case law and statutes, make the costs of legal counsel sometimes astronomical. And, as compared to the European countries with more robust social safety nets, Americans must turn to the court system to recover for more types of losses (for example, in countries where health care is public, private corporations do not have liability in that area).

But however expensive an increasingly onerous litigation system is for businesses, it is that much more expensive for individuals, particularly when procedural hurdles and damage caps prevent them from ever recovering their losses.