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For Immediate Release
Contact: Kelly Klass 609-713-4243
or [email protected]
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NFIB told a key House Subcommittee the problems small business face when
being dragged into legal battles for the purpose of jurisdictional preference
Washington, DC (September
29, 2015) –The National Federation
of Independent Business (NFIB) today encouraged an important House subcommittee to
pass legislation aimed at preventing trial
attorneys from dragging small businesses into lawsuits merely to ensure a
friendlier court and potentially bigger awards.
“Small businesses that have only a marginal connection to
the facts of the case shouldn’t be hauled into court just so the plaintiffs’
lawyers can have home field advantage,” said Elizabeth Milito, Sr. Legal Counsel for the NFIB Small Business Legal
Center. “One lawsuit can destroy a small business and this practice has
much less to do with real justice and more to do with stacking the deck in the
lawyer’s favor.”
The House Committee on the Judiciary Subcommittee on the
Constitution and Civil Justice held a hearing at 11:30 this morning on the Fraudulent
Joinder Prevention Act of 2015. The
measure would eliminate the incentive for plaintiffs’ attorneys to drag
non-diverse defendants, or defendants from the same state as the plaintiff, into
claims in order to cherry pick the most favorable jurisdiction. It would
require a federal court to determine whether the plaintiffs’ allegation against
the defendant is legitimate. The court would also consider whether the
plaintiff has good intentions for prosecuting the action or seeking judgment
against defendant. Plaintiffs’ attorneys
know that suits are much more likely to be dismissed in federal court so they
have an incentive to find a defendant in the plaintiff’s home state. For instance, a plaintiffs’ attorney would
sue a local pharmacy rather than a pharmaceutical company if that meant the
case would be heard by a state court.
“We should
aim to create strong disincentives against naming a small business as a
defendant in a case where the claim against the business is particularly weak,
especially where the plaintiff’s apparent motive is to use the defendant as ‘body-shield’
against invocation of federal jurisdiction,” said Milito. “This bill is
straightforward and offers a simple and commonsense fix for a problem that has
generated much confusion and unnecessary litigation in federal courts at the
expense of small business.
We must work together to find and implement solutions that
will stop this wasteful trend. We
believe that The Fraudulent Joinder Prevention Act strikes the appropriate
balance to protect those who are truly harmed and the many unreported victims
of our nation’s civil justice system – America’s small businesses.”
Milito testified
before the House Subcommittee and her full testimony can be found here.
