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Washington Examiner
May 2, 2005

Curbs on trial lawyers overdue

Did you buy high-end cosmetics at a swanky department store between 1994 and 2003? If so, you may be a "winning" plaintiff in a class action lawsuit you never heard of.

Six years ago, several major department stores and cosmetics manufacturers were accused of conniving to fix prices on eye shadow and lipstick, among other beauty products. In March, a California federal judge approved a settlement. The defendants, who admit no wrongdoing, agreed to give away $175 million worth of cosmetics to aggrieved shoppers.

But before you dash to the mall, read the fine print. If you qualify as a class member, your share of the $175 million might be a few teaspoonfuls of perfume or a tube of body lotion. As long as the price is between $18 and $25, that's the booty Lady Justice is dishing out. A happy few who bought products manufactured by all nine defendants could cart off as much as $225 worth of tubes, vials and compacts.

The lawyers who filed the suit came out smelling a bit better. They're collecting $24 million in legal fees — in cash, not cosmetics. They reached that magic number by charging up to $650 an hour in attorney fees and $190 an hour for file clerks and paralegals. That rate for clerks works out to $380,000 a year. Not bad.

Shakedowns like this have become standard practice in class action lawsuits. A favorite tactic of trial lawyers in these cases is venue shopping. They drag defendants into select backwater jurisdictions where judges and juries cast dewy eyes on plaintiffs.

The trial bar's current Mecca is Madison County, Ill., dubbed "Judicial Hellhole #1" for 2004 by the American Tort Reform Association. ATRA says that during just one week last year, 20 national corporations were defending against lawsuits in Madison County. Cracker Barrel has been turned on the Madison spit 19 times in recent years.

But venue shopping in "magnet" state courts was stymied in February when President Bush signed the Class Action Fairness Act. Now, if class actions involve more than $5 million or if parties come from different states, they must be filed in federal courts. The new law also cracks down on "coupon settlements" in which plaintiffs receive chicken feed while lawyers rake in fortunes.

CAFA is a good start toward shutting down the extortion racket trial lawyers are running in the name of civil law. But it's only a start. There's much more to be done, and the Bush administration has a few other worthy targets on its reform agenda.

Asbestos litigation: About 2,000 people each year develop mesothelioma, a form of cancer caused mainly by exposure to asbestos. Victims deserve compensation, and that's a long-term and very large problem. By turning it into another gold rush, unscrupulous trial lawyers have made a disgrace of traditional court remedies.

Congress is now forging a political remedy — a $140 billion trust fund set up by insurers and other companies to compensate asbestos victims in lieu of lawsuits. Although more than $50 billion has already been paid out through court judgments, more than half went for legal fees and other process costs. Nearly six dozen corporations have gone bankrupt in the process. This is a meltdown that is shortchanging sick people and damaging the economy to boot. The trust fund solution, though complex and controversial, is about the best remedy anyone can reasonably expect.

Medical malpractice claims: Frivolous lawsuits and excessive awards have driven malpractice insurance premiums out of sight, forcing doctors to move where costs are lower or refuse to perform high-risk procedures. Two proposals by the Bush administration are especially noteworthy: capping awards for non-economic "pain and suffering" damages, and proportioning liability to the degree defendants are at fault to stop predatory "deep pockets" litigation.

Let's hope that CAFA is the first of many steps to restrain a plaintiffs' bar that has run riot in civil law. We'll keep you posted. Stay tuned.

This editorial is the first in an occasional series covering legal reforms in Washington and the states.

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