Torn by Tort Reform: Coalition of big and small business breaks up over diverging interestsAuthor(s): TERRY CARTERSource: ABA Journal, Vol. 84, No. 9 (SEPTEMBER 1998), p. 26Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/27840414 .

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NEWS

Torn by Tort Reform Coalition of big and small business breaks up over diverging interests BY TERRY CARTER

Everyone knows the danger of marriage-ending arguments?things get so raw and heated, words and ac tions so unkind, that the marriage is rended beyond repair.

That may be the problem facing the marriage of big and small business?which primarily means upstream manufac

turers and downstream dis tributors?in the movement to rein in and federalize tort law. They have toiled togeth er for years, crafting and pushing legislation, and de monizing plaintiffs lawyers.

When Republicans got control of Congress in 1994, it was a marriage made hap pier, certain that, finally, its goals were in reach?espe

cially putting strict caps on punitive damages and sew

ing shut the many pockets of joint and several liability.

But this summer's failed attempt at tort reform left the business community split. The legislation would have helped small business, esti mated at 80 percent to 90 percent of the movement. It drew strong, moneyed opposition, howev er, from big business, which said the bill would harm it. Though some opponents declared victory, the bill fell victim to megapolitics having nothing to do with the merits.

The Senate bill, S. 648, clearly was tailored to help small business. It capped punitive damages at the lesser of $250,000 or twice compen satory damages for concerns with fewer than 25 employees and annu al revenues of less than $5 million.

The failed legislation left the two sides that once were a united business front pointing fingers at each other and gossiping behind each other's backs, all the while talking of reuniting though licking fresh wounds.

"It broke my heart," says con sumer advocate Ralph Nader, re

capping the internecine warfare he watched in the tort reform move ment. His tongue is nearly piercing his cheek with the force of one of the lawn darts that plaintiffs lawyers

chased from the market. After all, Nader was joined in his opposition to this year's tort reform bill by an as sortment of Fortune 100 companies that ordinarily might be expected to put his mug shot on dart boards in the offices of upper management.

Then again, marital crisis some

Proposed legislation would have helped small-business operators.

times makes for strange bedfellows. And that can leave making up all the more difficult.

"We need to figure out how to put the coalition back together," says Donald Evans, senior counsel at the Chemical Manufacturers Associa tion in Arlington, Va., which took the lead in the big-business battle against the proposed reform. "We are natural allies. It's unfortunate that we ended up as opponents."

And on the other side, which not long ago was the same side, Vic tor Schwartz, of Washington, D.C.'s Crowell & Moring and counsel to the Product Liability Coordinating Com mittee (which pushed for the bill), says, "There were things that hap pened, but I look toward the future."

But those close to the man known as "Schwartz on Torts," for both his tort-law casebook and lob bying work, know he is concerned about the future. He has told col leagues that he spent too much time lobbying "what had been secure ter ritory," and that he fears some pe

rennial votes may have been lost. Ultimately, though, Schwartz

says he believes the measure would have made it on the merits. Then again, his opponents felt the same about their chances.

The bill failed because of parti san politics far removed from prod

? __ uct liability. It was attached to unrelat ed legislation that was doomed: Demo crats wanted to tack on managed health care reform. While it was a significantly scaled-down attempt at tort reform, it was the first time promi nent leaders of both parties and Presi dent Clinton were

ready to sign off on a

product liability bill.

Wary of Pre-emption The Civil Jus

tice Reform Group, the big-business coa lition opposing the bill, complained the black-letter drafting left it open to feder

al pre-emption of gains made in cer tain state tort laws. The small-busi ness group led by Schwartz argued the phrasing was clear and protec tive of those concerns.

There could be no tinkering. The White House had made it clear: Changes to the version Clinton had signed would not make it into law.

"Those [big business] arguments weren't valid," says Mary Beth Reil ly, lobbyist for the 600,000-member

National Federation of Independent Business. "The opponents were few and far between, but they were loud with deep pockets."

Robert McConnell of the D.C. of fice of Gibson, Dunn & Crutcher and counsel for the coalition, disagrees. He says his phone lit up when gen eral counsel of many of the 68 com panies in his group saw drafts of the bill. "I trust their judgment in this law better than a bunch of Wash ington lobbyists, including myself."

And it's trust that makes a marriage, as well as what it takes to rebuild one.

26 ABA JOURNAL / SEPTEMBER 1998 abaj/robert davis

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