House Vote on Curbing Class Action Lawsuits

This partial transcript of Special Report with Brit Hume, March 12, 2002 was provided by the Federal Document Clearing House. Click here to order the complete transcript.

Other guests and topics for March 12, 2002 included:
• Bret Baier: Pentagon officials are being more cautious than Afghan commanders about the potential end of the fighting in Gardez
• Jim Angle: President Bush meets with Russian Defense Minister Sergei Ivanov today to cut a deal on their offensive nuclear weapons
• Catherine Herridge: Homeland Security Director Tom Ridge unveils his color-coded five-tier terrorist attack alert system
• James Rosen: Vice President Dick Cheney begins his 11-nation Middle Eastern tour
• Jennifer Griffin: Israel invaded the West Bank town of Ramallah in its largest military operation since Lebanon in 1982
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BRIT HUME, HOST: The House will vote tomorrow on a measure intended to curb so-called class action lawsuits. Critics say the current system allows greedy lawyers to round up clients for such suits and then shop the country's thousands of local and state courthouses for friendly judges, sometimes filing the same case in several places. The result, say critics, is fast settlements, most of which go to the lawyers.

Proposed reform is to get such cases into federal courts. The lawyers who bring such cases say that will just slow things down, and worse, make it easier for corporations and others to get away with abuses. One person who thinks such a reform is a good idea is lawyer John Beisner, who has defended such cases and written a paper on the issue. And he joins me now.

All right, the cases are filed in state courts. Why do they even end up in state courts?

JOHN BEISNER, ATTORNEY, O'MELVENY AND MYERS LLP: Often, they're filed in state courts because the lawyers bring them are looking for courts that they think will deal with them favorably. They're basically looking for — small county courts is where they're often filed, even though these cases have national implications and seem to represent millions of people nationwide.

HUME: All right, now why would getting them into federal courts help? Why wouldn't they be able to find friendly judges in federal courts?

BEISNER: Well, first of all, in federal court, you don't get to choose your judge. You file your lawsuit. There are usually many federal judges in the jurisdiction where you file.

HUME: You get the luck of the draw.

BEISNER: You get the luck of the draw.

HUME: You don't get the luck of the draw in county or state courts?

BEISNER: In county courts, many of them there is one judge there. You file the lawsuit there. There is no surprise about who the judge is going to be if it's the one judge who sits there.

HUME: And so you look for a friendly judge?

BEISNER: Absolutely.

HUME: And why — how is it that national cases can be filed in local courthouses? How do you — why is a big pharmaceutical company, for example, eligible to be sued in some remote courthouse?

BEISNER: Class action lawsuits are a strange animal because they really can be filed in any of the 3,000 county courts nationwide as well as in federal courts. And that is because if you're a national company, you sell the product all over the country. So you're vulnerable to lawsuits anywhere you sold.

HUME: Anywhere.

BEISNER: Absolutely.

HUME: Now, tell me why I should be believe as an ordinary person that these suits are not worthwhile curb against abuse and the plaintiffs who deserve it — I mean the defendants — plaintiffs, excuse me — who deserve it don't get what they deserve. And why is it such an abuse?

BEISNER: It's an abuse because lawyers who bring these lawsuits don't have to get the permission of anybody to bring the lawsuit. You're probably a plaintiff right now in five or six lawsuits. Did anybody ever ask your permission? No.

HUME: My name is listed on the paper?

BEISNER: Your name isn't listed on the paper. But the lawyers in court saying that he or she represents your interests.

HUME: Well, how does he get to do that?

BEISNER: Because in a class action lawsuit, it's the one sort of lawsuit where I as a lawyer can walk in and say I represent millions of people, even though I don't have their permission. I don't even know who they are.

HUME: Who are users of this product.

BEISNER: A product or a service, whatever it may be. If I decide I want to file a lawsuit...

HUME: You have to have some, don't you? You have to have a few.

BEISNER: You have to have one or two. But in many of these lawsuits...

HUME: And then you get qualified by the judge as a class action lawsuit...

BEISNER: Correct.

HUME: ... and you become the attorney for many.

BEISNER: That's correct. But in many of the lawsuits, all do you is go find another lawyer in your office, secretary in your office, and you name them as a plaintiff. That frequently happens in these lawsuits.

HUME: All right. Now, OK. But why — all right, that sounds unfair. But why — what are the outcomes that are such a problem?

BEISNER: The studies on this indicate that particularly in state courts when these cases are settled...

HUME: As they often are...

BEISNER: ... as they often are...

HUME: ... because the costs of litigation are so high that companies settle them.

BEISNER: ... that's correct — that a majority of the money that is paid in the settlement goes to the lawyers.

HUME: Not 40 percent, not 30 percent, but more than half?

BEISNER: More than half. And that is dramatic when you consider...

HUME: The judges allow that?

BEISNER: The judges allow that.

HUME: And there are no rules barring that, no regulations barring that?

BEISNER: The problem is that many of the settlements end up being settlements that the consumers aren't interested in dealing with. They're coupon settlements. For example, there is a settlement pending right now in Texas in which people who supposed paid excess rental fees for their home videos are going to get coupons.

HUME: Why don't the lawyers get coupons?

BEISNER: Well, that's a good question. And that is often the mail that the court gets, saying why in that particular case are the lawyers going to get $9.5 million when the public gets coupons? Why not give them coupons too?

But that's how this happens. And no one uses the coupons.

HUME: Now, that is a settlement, though.

BEISNER: That is a settlement. That's correct.

HUME: And so the lawyers are able to negotiate that with the video company, or the chain. And the chain agrees to pay the lawyers in cash and pay the clients in coupons.

BEISNER: And that goes back to the root cause I talked about initially.

HUME: And why would this not happen in federal court?

BEISNER: The studies indicate the federal courts are far more inquisitive about the settlements. They supervise this far better. And a study done a couple of years ago indicates that this simply doesn't happen in federal court. They police the situation much better.

HUME: Now, obviously, the trial bar is dead set against this.

BEISNER: Absolutely.

HUME: This is, however, expected to pass the House.

BEISNER: It is expected to pass the House. And because we believe that with many different groups supporting the legislation now that it's being...

HUME: What about the Senate?

BEISNER: The Senate I think is a tougher issue. But with a lot of institutions that normally are not particularly in favor of legal reform such as this, such as the "Washington Post," which has now running editorials endorsing this twice, we think that some people will see the light that this is proper legislation.

HUME: Well, that is well put. You don't sound all that optimistic.


BEISNER: I think that if we have the opportunity to make the case, people will see this is the right thing to do.

HUME: Mr. Beisner, thank you for coming.

BEISNER: Thank you.

HUME: It's nice to have you.

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