On March 11, 2011 the House Committee on the Judiciary, through the Subcommittee on the Constitution, held a hearing on H.R. 966, the Lawsuit Abuse Reduction Act (LARA).
See the hearing here:
You can read the bill here:
The Subcommittee Chairman, Rep. Trent Franks (R – AZ), argued in favor of LARA. He noted that the key provision of LARA is a change to Fed.R.Civ.P. 11 that makes sanctions mandatory when a court finds a litigant has violated the rule. As well, LARA eliminates the 21-day safe harbor provisions in the current rule. LARA does not change the standards used to determine if a litigant has violated Rule 11. Rep. Franks characterized this bill as a means to save jobs by helping small business avoid frivolous law suits.
Rep. Jerrod Nadler (D – NY) voiced opposition to the proposed Bill arguing that changes to Rule 11 would increase the burden on the courts because attorneys would spend more time pursuing sanctions. This so-called “satellite litigation” was the main objection of the Bill’s opponents.
House Judiciary Chairman Rep. Lamar Smith (R – TX) addressed the subcommittee in support of LARA. He used examples of young school children threatening their teachers with a lawsuit to highlight abuses he claimed would be lessened by LARA.
An array of interest group attorneys then took turns making a record in front of an empty hearing room. Elizabeth A. Milito, counsel with NFIB Small Business Legal Center, spoke in support of LARA. She spoke at length about incompetent attorneys who allegedly file many suits with no investigation or research.
Professor Lonny Hoffman, of the University Law Center, spoke in opposition. He said there was a “remarkable degree of agreement” that the proposed reform was “regressive.” He warned of satellite Rule 11 litigation that would drive up costs and delays in federal court. He also cited statistics that lower-income litigants would be disproportionately affected by the Bill.
Victor E. Schwartz, of Shook, Hardy & Bacon, L.L.P., spoke in favor of the Bill suggesting that the amended Rule 11 would be a practical deterrent. He said the current 21 day safe harbor rule was too burdensome because it forced expensive motion practice. He argued that without real sanctions payable to the party injured that reform was unlikely. Schwartz argued that satellite litigation was a necessary side effect that would subside once frivolous suits were minimized. Schwartz closed saying that in “this economy” the Bill was needed now more than ever.
No action has been taken on this Bill since the hearing on March 11, 2011.
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