American Coatings Association

House Passes Tort Reform Legislation


On Jan. 8, The U.S. House of Representatives passed H.R. 1927, the Fairness in Class Action Litigation Act (FICALA), by a vote of 211-188. The legislation incorporates the Furthering Asbestos Claims Transparency Act (FACT Act), and seeks to restrict class actions and dishonest asbestos bankruptcy trust claims. FICALA was approved by the House Judiciary Committee in June. The bill heads to the Senate, where action is expected to halt.

The class action legislation would require courts to analyze the evidence to determine that each member of the class action bore the “same type and scope of injury” as class representative named in the suit, before it could be certified a class under federal civil procedure rules.

ACA supports the measure as part of its federal advocacy efforts focused on tort reform. In its statement on civil justice reform, ACA maintains that “rapid growth of class action suits, product liability claims, and punitive damage awards threaten the nation’s economy, and the very businesses that drive its growth and our livelihoods.”

To make the judicial system more fair and predictable, ACA supports federal legislation that would:

  • Provide access to federal court for out-of-state defendants sued by in-state party to guarantee impartial treatment;
  • Authorize federal courts to hear class actions when they have a significant interstate character;
  • Limit attorneys’ fees to a reasonable percentage of actual damages and plaintiffs’ costs;
  • Impose mandatory sanctions against attorneys for filing frivolous lawsuits;
  • Establish clear conditions under which a manufacturer or retailer is liable for defective products; and
  • Disallow the repeated sanction of punitive damages against the same corporate defendants in different cases.

ACA believes that reform is needed to restore balance, fairness, and predictability. “A uniform national solution is necessary because individual states are powerless to provide a comprehensive remedy — one state cannot dictate judicial or legislative policies to another state.” ACA contends that Congressional action on tort reform would protect the due process rights of corporate defendants without infringing upon the rights of injured plaintiffs to be compensated.

ACA also supports the FACT Act, and has cited as a paradigm of abuse in the asbestos bankruptcy trust system the trial case In re Garlock Sealing Technologies LLC., et al., involving a maker of sealers and gaskets, where Judge Hodges found that plaintiffs’ lawyers routinely withhold evidence in state courts of asbestos exposure related to bankrupt companies, in order to pin a greater share of liability on solvent companies.

Relying on Garlock’s experience in the state tort system, the plain­tiffs’ lawyers in this case estimated Garlock would owe $1- $1.3 billion to current and future claimants; however, Judge Hodges, es­chewing the less rigorous standards of the state-based tort system, estimated Garlock’s asbestos liabilities to be $125,000,000 — a spread of $875,000,000 to almost $1.2 billion.

The FACT Act contains a disclosure requirement that would deter fraudulent and abusive asbestos claims, which ACA supports.

Contact ACA’s Tom Graves for more information.