Bill aimed at reducing lawsuits raises eyebrows
Posted May 20, 2014
Raleigh, N.C. — A bill that its sponsor says would protect North Carolina businesses from frivolous litigation is raising questions from lawmakers charged with reviewing it. They said several of the provisions, which appear to stem from model legislation drafted by national business lobbying groups, are confusing and duplicate current rules.
The measure, Senate Bill 648, will be heard again on Thursday, according to Senate Judiciary I Chairman Buck Newton, R-Wilson. A bill summary of the current measure describes five parts to the bill:
- Making contracts between the attorney general and private lawyers more transparent. It would also cap fees that could be paid to those private lawyers.
- Creating new rules for companies engaged in asbestos and silica litigation.
- Amending laws related to product liability lawsuits, especially when those suits were against the manufacturers of products given government approval.
- Prevent patent trolling. That section of the bill is similar to one reviewed by an interim committee earlier this year.
- Determining an "exclusive forum" for shareholder lawsuits.
Committee members ran out of time before they could discuss the last two sections of the bill. However, the first three sections raised questions its backers and sponsor had trouble answering.
Language in common with ALEC bills
Sen. Brent Jackson, R-Sampson, the bill's sponsor, said the first part of his bill was to ensure that lawmakers and the public knew which law firms were doing work for the Attorney General's Office. The Department of Justice sometimes hires outside counsel to handle complex or long-running litigation.
"We currently have no clue who is working for the attorney general," Jackson said.
But as committee members discussed the bill, Sen. Thom Goolsby, R-New Hanover, pointed out the measure would also limit when the state could hire lawyers on contingency basis. That is when a lawyer agrees to work for a share of any potential settlement. The bill, he said, limits lawyers to collecting a smaller portion of any settlement than is standard in private practice.
"I would hate for us to shortchange the state," Goolsby said, noting such a provision would make good lawyers hard to hire.
Julia White, an assistant attorney general, said the Department of Justice doesn't have any lawyers on contingency right now. Given that, Goolsby asked Jackson where the impetus for the measure came from. Jackson repeated that it was simply a transparency bill.
However, the measure is similar to one pushed in several states by the American Legislative Exchange Council. ALEC is a conservative-leaning group that aims to link state lawmakers with businesses interests.
Likewise, at least two other sections of the bill share similarities with language developed by ALEC.
Asked where the ideas for this and two other sections of the bill came from, Jackson said, "They came out of my own head! You don't believe me?"
When pressed on the matter, he said that the measure dealing with the attorney general and provisions on limited liability and silica lawsuits were proposed by the U.S. Chamber of Commerce and the North Carolina Chamber.
"I've had some other businesses independently contact me," he said.
Asked if any of the measures were brought to him by ALEC, Jackson said they were not.
"I've not spoken with anyone with ALEC on any of these," he said. "I don't think we've spoken with ALEC on any of our bills. We've been accused of it, though."
The U.S. Chamber of Commerce has ties to ALEC, and they have issued joint reports on legal reform. Some of the two groups' model legislation is similar.
Limiting liability suits
Another section of the bill would limit a company's liability if it developed a product under government-approved guidelines. Jackson gave the example of a drug given approval by the FDA.
Sen. Tamara Barringer, R-Wake, said the FDA instance might be a good example, but she said she believed the bill would apply to any number of products.
"I think the bill is far broader," she said.
Jackson acknowledged it was.
"We did make the bill broad to cover as many industries as possible," he said.
He argued that, if the government oversaw the development and design of a product, a company should not be held liable for abiding to those standards.
"That should grant them some type of immunity from frivolous lawsuits," Jackson said.
Barringer replied, however, that this would also limit lawsuits when there might be a product recall or some instance that the government had not authorized.
"This would also prohibit regular lawsuits – lawsuits that would be meritorious," she said.
Jackson acknowledged the bill could be read as "having that effect" and said that was why it was getting a hearing.
As with the measure affecting lawyers hired by the attorney general, the product liability measure appears to share language in common with a model bill developed by ALEC.
Silica claims limited
As with the other two sections of the bill, a measure aimed at requiring those suing to disclose more information when suing for health issues related to silica or asbestos exposure seems to share similarities with model legislation developed by ALEC.
"I'm just trying to understand why this serves any particular purpose at all," said Sen. Fletcher Hartsell, R-Cabarrus.
Hartsell said that plaintiffs already had to disclose information related to other legal actions in which they may be involved upon request.
Jackson said, in some instances, that disclosure wasn't happening, citing a case known as Garlock Sealing Technologies.
But that citation raises more questions, since the Garlock case is in federal court.
"The concern is this is widespread," said Chris Smith, the immediate past president of the North Carolina Association of Defense Attorneys. "Yes, you're required to answer under oath, but it's just not happening."
He called the Garlock case "stunning" and said the state law could give lawyers extra teeth.
But asked by Hartsell how a state law could affect federal litigation, Smith said he was not an expert on the topic.
Barringer raised a question about why there were waiting periods in the bill that would require people suing for damages related to asbestos and silica-related diseases to wait 180 days to proceed with their claims.
"Many of these people are gravely ill," she said. "Is there a reason for the 180-day wait?"
Staff attorneys who drafted the bill said they were unsure of the reason, surmising it was to allow for discovery in a case.