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Regulations Limiting Liability in U.S.

Posted February. 12, 2007 07:41,   


According to the American Tort Reform Association (ATRA), the state assembly of Mississippi has already passed bills abolishing joint liability for compensation, limiting medical lawsuits, and setting limits on compensation amounts. Vermont and Texas have limited the damages for noneconomic losses to $250,000, and Michigan prohibits lawsuits against pharmaceutical companies.

"The days of dramatic lawsuits are over." This is an often-discussed issue among American enterprises.

The 1990s were called the "age of class action lawsuits." Judges continuously ruled in favor of the plaintiff in lawsuits that consumers and citizens filed against businesses, causing the survival of certain companies, which had to pay huge amounts in liabilities, to become an issue. The most frequently cited case is the story an elderly woman who was burned by hot coffee from McDonald`s filed a suit and won $2.9 million in compensation.

However, the recent appearance of regulations limiting lawsuits is turning the situation around. Up to now, six states have banned asbestos lawsuits, and 23 prohibit lawsuits that request compensation from fast-food companies for childhood obesity. Legislative movements to limit the amount of punitive damage, which imposes additional damage in order to prevent the repetition of malicious acts, are underway as well.

Last month`s Newsweek reported this change, saying, "Business has started winning in the ‘lawsuit battle’ against lawyers." As class action lawsuits, which had provided considerable profit, become less common, the profits of lawyers have begun to drop steeply.

Government officials speaking out for the need of lawsuit reform are also helping to bring about this change. Mayor Michael Bloomberg of New York City and Senator Charles Schumer of New York State mentioned this issue while jointly giving a report on economics. They pointed out, "The scale of initial public offerings (IPO) in the American stock market has dropped from 50 percent to five percent in the last five years. Excessive lawsuit expenses and regulations are causing global enterprises to leave the United States."

The U.S. business world is rebelling against the U.S. Court of Appeals for the Federal Circuit`s ruling last week that acknowledged a sexual discrimination lawsuit filed by six female Wal-Mart associates against the company as a class action lawsuit. They intend to take countermeasures, saying, "Under the circumstances where each store is managed separately, expanding a suit filed by six people into a class action suit filed by 1.6 million people is unreasonable." Interest is growing regarding the final ruling.