Time For Change?
Runaway lawsuits provoke lawmakers to push for reform. Here's how their proposals will affect you.
In response to the looming Y2K crisis, Congress has been
debating how to help small businesses cope. Various bills focus not
on helping businesses get their computers ready in time but rather
on how to avoid a flood of lawsuits filed by consumers suing
businesses and businesses suing each other--all seeking
compensation for their losses. H.R. 775, for instance, the Year
2000 Readiness and Responsibility Act, seeks to require a 90-day
cooling-off period for alternative dispute resolution before a Y2K
lawsuit can be filed; eliminate joint- and several-liability; and
limit the liability of small businesses to $250,000, or three times
the amount of actual damages (whichever is greater, or, for
businesses worth less than $500,000, whichever is less.)
It's a sign of the times that in the face of a potential
crisis, the primary concern of lawmakers and business groups would
be a legal meltdown from a projected $1 trillion in legal claims.
The Y2K bug provides only the latest occasion for small-business
advocacy groups to push for tort reform and, consequently,
fundamental changes to America's civil justice system. Every
runaway jury verdict seems to spur another outcry over the need for
reform.
One recent verdict concerned an Alabama family who claimed they
were overcharged more than $1,100 for each of the two Whirlpool
satellite dishes sold door-to-door by a local retailer. Although
the Whirlpool Corp. waived the amount in dispute, the jury found
that the family had been misled about the credit agreement--and
ordered Whirlpool to pay them $975,000 for mental anguish and $581
million in punitive damages.
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Lawmakers and business advocates nationwide immediately called
for reform, claiming that the tort system has become unfair.
Meanwhile, consumer groups and attorneys argue that limiting
people's ability to recover damages denies them access to
justice.
Steven C. Bahls, dean of Capital University Law School in
Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane
Easter Bahls specializes in business and legal topics.
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