People cannot enforce their legal rights if they lack access to the courts. Tort reform places limits on the ability to seek redress in court. It has become increasingly common. Tort reform efforts include:
- limits on the right to bring a lawsuit to recover damages for wrongdoing, such as medical malpractice and deceptive sales practices;
- restrictions on who may file suits (referred to as standing);
- contractual requirements to settle disputes through binding arbitration rather than through the courts (see also pre-dispute mandatory binding arbitration);
- contractual prohibitions on participating in class actions; and
- limiting damages that may be recovered. Tort reform proposals can limit both compensatory damages (which compensate the victim for pain and suffering) and punitive damages (which punish the defendant for bad behavior).
Tort reform proposals may also limit or eliminate joint and several liability, which holds each defendant liable for all damages a plaintiff suffers. Joint and several liability protects plaintiffs when one or more companies that caused harm have gone out of business or are otherwise insolvent. Reducing or eliminating it may leave injured parties without effective remedies.
---Tort reform proponents argue that courts and legislatures can adequately protect individuals. They claim that the situations in which wrongdoers can be found liable have been broadened too far. Supporters also endorse reforms to curb what they claim are frivolous lawsuits. Defending against such lawsuits increases the costs of business.
Opponents of ---tort reform contend that some proposals jeopardize the rights of victims. They say it makes it harder for those who experience harmful or illegal practices to seek redress. Opponents also contend that penalties already exist for bringing frivolous suits and that judges can best determine whether a claim is frivolous. They say that holding defendants accountable deters future bad acts.
Some tort reforms limit damages to actual costs and lost wages caused by an injury. These proposals can harm older adults (particularly those who are retired), people with disabilities, and people with low incomes. They may receive lower damages because they have low wages, or no wages at all.
Private rights of action: A private right of action allows private parties to go to court to enforce the law. Not all laws provide for a private right of action. When one is not included in a law, only federal or state officials or regulatory bodies may enforce it. However, they may lack the willingness or financial resources to do so. That is why private rights of action are needed to ensure that policies intended to protect individuals can be enforced.
Class-action lawsuits: A class action combines the claims of all the people injured by a particular policy or practice into one lawsuit. It ensures that companies do not benefit from a violation of the law or harmful practices simply because most people will not know about or file litigation to enforce their legal rights. Sometimes the cost of pursuing an individual claim outweighs any possible remedy. In these cases, class actions are a crucial tool. They also help change unfair or abusive policies or practices that affect a large number of people. Individuals joining together in a class action can hold companies accountable. Without this ability, companies that cause only a small amount of harm to many people are likely to escape liability. And they will be free to continue harming people with their unlawful practices.
Class-action suits in state and federal courts have successfully challenged and provided significant relief for a broad range of claims. These include cases based on age discrimination in employment, sweepstakes and telemarketing fraud, unfair lending practices, access to affordable medication, and denials of contractually guaranteed pension benefits.
Critics of class actions argue that plaintiffs’ attorneys benefit more than class members. They also maintain that certain state courts are more lenient toward class actions, allowing lawsuits to proceed and awarding excessive damages to class members.
The Class Action Fairness Act requires most class actions to be litigated in federal court. The act includes cases that raise only state law claims. This may slow down the resolution of cases. Case resolution in federal court may be delayed because there are many more state judges than federal judges. Moreover, it requires federal judges to interpret and apply state laws with which they may not be familiar. The Supreme Court has also made it more difficult to obtain class certification. As a result, the availability of class actions has been limited. It has also weakened their effectiveness.
Many legal rights will never be vindicated without class actions. For instance, the legal theory that provides relief for “pattern or practice” cases requires that it apply to more than one person. Legal fees to prove and recover a single consumer overcharge or protect an individual from discrimination could far exceed the remedies provided by statute or the economic means of an individual.
A study from the Consumer Financial Protection Bureau found that class actions provide a more effective means than individual suits or arbitration for consumers to challenge questionable corporate practices. They have provided at least 160 million class members with settlements totaling $2.7 billion in cash, in-kind relief, and attorney fees and expenses over the five years studied. Furthermore, the study showed that class actions push companies to alter abusive actions.
Many contracts now prohibit consumers, employees, and patients from pursuing class actions. These contracts often also include a mandatory binding arbitration clause (see also Pre-Dispute Mandatory Binding Arbitration). As a result, many contracts require all disputes to be settled by arbitration on an individual basis. The U.S. Supreme Court has affirmed that the Federal Arbitration Act favors arbitration over litigation. It has also said that the act preempts state laws. Unless federal law changes, states cannot provide more remedies for consumers no matter how unfair the results (see also Consumer Protection Regulation).
PRIVATE ENFORCEMENT OF LEGAL RIGHTS: Policy
PRIVATE ENFORCEMENT OF LEGAL RIGHTS: Policy
Access to the legal system
Policymakers should explicitly allow private individuals to protect their rights in court. A private right of action should be included in all legislation intended to protect individual rights.
The civil justice system should be more accessible for all parties. It should also be more effective and less costly. This includes encouraging fair and non-coercive settlements, improving access for people with small claims, and streamlining the judicial process.
Courts, not legislatures, should decide whether lawsuits are frivolous. They should do so before either party incurs significant expense.
Damages in civil proceedings
Policymakers should ensure that judicial proceedings are fair. They should not enact statutory damage limitations. The judicial system, not lawmakers, should determine damage awards.
Courts and juries should determine damage awards free from all forms of age bias.
Policymakers should not restrict the ability to bring a class action. This includes measures that would limit access to remedies available under various laws, or that would postpone resolution of class-action suits.
Congress should repeal the Class Action Fairness Act.
Federal preemption of state law
Federal laws related to private enforcement of legal rights should provide a baseline for protecting individual rights. They should not preempt state laws that provide more consumer protections or remedies (see also Federal, state, and local consumer laws and rulemaking).