The American Coatings Association (ACA), representing the needs of the paint and coatings industry and the more than 250,000 people who work in it, believes today’s justice system is being misused. When it functions properly, America’s justice system benefits every citizen in two ways. First, it assigns liability for damage and the cost associated with it to the person responsible. Second, it deters careless behavior by placing people at financial risk for their wrongdoing. Today, valuable products and services become more costly or even unavailable, as unwarranted lawsuits make it too costly for industry to provide them. In addition, courts are so choked with frivolous lawsuits that it can take years to get a fair hearing on a valid claim. The 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.
The costs to industry often effectively stifle new product research and development, as well as the offering of products already developed. The cost of liability insurance — when and if a manufacturer can get coverage — is prohibitive when compared to the speculative benefits of introducing new products and product lines. This reluctance transcends the product manufacturer, affecting suppliers and distributors as well. Fear of unwarranted liability, denial of insurance coverage, and astronomical legal defense costs impedes valuable and potentially lifesaving products from ever being introduced into the marketplace.
To make the judicial system more fair and predictable, ACA supports federal legislation that would:
- 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.
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. 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.