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Frivolous Lawsuits

Background

Frivolous lawsuits create a climate of fear for America’s small businesses. While some claims are legitimate, a large percentage are completely without merit. However, individuals and entities that are sued still have to defend themselves, and this defense is often costly to both business and consumers. Individuals and attorneys who file baseless claims and victimize innocent people should be held accountable for their actions.  

Since 1993, Rule 11 of the Federal Rules of Civil Procedure, which helped to prevent frivolous filings, has been hamstrung by changes that loosened its effectiveness. Because of the changes, parties and their counsel are allowed to avoid sanctions simply by withdrawing their frivolous claims within 21 days. This change has removed real incentives for attorneys to avoid frivolous filings.

Main Points of Concern

NFIB supports mandatory sanctions for lawyers who bring frivolous lawsuits.

  • The tort system is costing Americans more than $200 billion per year, equivalent to a 5 percent tax on wages. While some claims are legitimate, a large percentage are completely without merit. Even when the case is frivolous, individuals and business need to defend themselves, and this defense is often costly to both business and consumers. 
  • Individuals and attorneys who file baseless claims and victimize innocent people should be held accountable for their actions.
  • The Lawsuit Abuse Reduction Act (H.R. 420) will discourage frivolous lawsuits by reinstating several important provisions to Rule 11 of the Federal Rules of Civil Procedures that were changed in 1993. It also adds several new deterrents against baseless claims.
  • In 1993, the Civil Rules Advisory Committee, despite overwhelming support for Rule 11 from federal judges, decided to weaken the rule by allowing parties and their counsel to avoid sanctions simply by withdrawing their frivolous claims within 21 days of the motion for sanction being filed. 
  • The Lawsuit Abuse Reduction Act makes Rule 11 sanctions against attorneys or parties who file frivolous lawsuits mandatory rather than discretionary.
  • It removes Rule 11's "safe harbor" provision that currently allows parties and their attorneys to avoid sanctions for making frivolous claims by withdrawing them within 21 days after a motion for sanctions has been filed.
  • This legislation allows for Rule 11 sanctions for frivolous or harassing conduct during discovery and allows monetary sanctions, including attorneys’ fees and compensatory costs, against a represented party.
  • This bill will also extend Rule 11 sanctions to state cases that affect interstate commerce and reduce forum shopping by requiring that a plaintiff in a civil tort action may sue only where he or she lives or was injured, or where the defendant's principal place of business is located.
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