Is there anything more infuriating than a greedy lawyer dragging
some innocent small business into court? Take the case in Long
Island, New York, where a drunk driver hit a drunk jaywalker on her
way to another watering hole. The pedestrian suffered a brain
injury and sued the car rental company, a small business, which
settled for $8.5 million.
That's one example offered by Sen. Spencer Abraham (R-MI) in
support of his Small Business Liability Reform Act (S.1185),
co-sponsored by Sen. Joseph Lieberman (D-CT). "Small
businesses are particularly vulnerable to lawsuit abuse and find it
difficult to bear the cost of defending themselves against unfair
litigation," says Abraham, who is a member of the Senate
Judiciary Committee, where the bill has been referred.
So far, Lieberman is the only Democratic sponsor of S.1185. A
House companion bill has not been introduced because no Democratic
co-sponsor has been found on that side of the Capitol.
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The bill, which is divided into two sections, covers companies
with fewer than 25 employees. A plaintiff could collect punitive
damages from these companies only if he or she could show harm due
to the small business's "conscious, flagrant indifference
to the rights and safety of the claimant," says Abraham. If
that is proved, the small business's liability would be limited
to $250,000 or two times the compensatory damages, whichever was
less. This provision would not apply to violent crimes, hate
crimes, sexual offenses, natural resource damage, civil rights
violations or damages that occurred while the defendant was under
the influence of drugs or alcohol.
The second part of the bill prohibits lawsuits, period, in both
federal and state court, unless the plaintiff can prove the company
that sold the product was responsible for the harm that came to the
buyer. This is meant to stop lawsuits against auto rental
companies, to name one sector, such as the one cited by Abraham. If
the small business were to some extent culpable, its share of the
noneconomic damages would have to be proportionate to its
responsibility for causing the harm. In other words, a plaintiff
couldn't sue a minimally responsible small company for maximum
noneconomic damages such as back wages and medical care.
No one wants to see the honest, careful owner of, say, a
dry-cleaning business or restaurant taken to the cleaners by a
profiteering lawyer. If the Abraham bill passes, only companies
with dirty laundry will get hung out to dry.
Stephen Barlas is a freelance business reporter who covers
the Washington beat for 15 magazines.