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House passes 'lawsuit abuse' bill reinstating mandatory Rule 11 sanctions; ABA opposes it

The U.S. House of Representatives has passed a “lawsuit abuse” bill that reinstates mandatory sanctions for frivolous claims in federal courts under Rule 11 of the Rules of Civil Procedure.

The Lawsuit Abuse Reduction Act of 2013 passed the House on Thursday by a 228-195 vote, report Legal Newsline and the Houston Chronicle blog Texas on the Potomac. The bill imposes mandatory sanctions and eliminates safe-harbor provisions that allow lawyers to avoid sanctions by withdrawing frivolous claims within 21 days after a motion for sanctions has been served.

Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, applauded the House action in a statement that said the bill puts teeth back into a “watered down” Rule 11. “Passing LARA will result in fewer phony lawsuits and less wasteful litigation,” she said.

The American Bar Association opposed the bill in a letter (PDF) sent the House earlier this week. Mandatory sanctions were part of Rule 11 when it was adopted in 1983, the letter says, but the provision was rescinded a decade later after the legal system was inundated with “an entire industry” of Rule 11 litigation.

The letter says the ABA disagrees with assertions that frivolous suits have increased significantly since mandatory sanctions were eliminated from Rule 11. “Numerous empirical studies by neutral observers do not support notions of skyrocketing litigation abuse,” says the letter by Thomas Susman, director of the ABA Governmental Affairs Office. “While anecdotal stories of litigation abuse and resulting financial ruin can be riveting, they are the exception and an inadequate substitute for concrete empirical data of lawsuit abuse. …

“Even if frivolous lawsuits have increased in recent years—a proposition lacking in empirical support—there is no evidence that the proposed changes to Rule 11 would deter the filing of non-meritorious lawsuits. In fact, past experience strongly suggests that the proposed changes would encourage new litigation over sanction motions and would thus increase, not reduce, court costs and delays.”

The ABA respects that some lawmakers are “deeply concerned” about frivolous lawsuits, the letter says, but Congress should defer to the procedure for amending the civil procedural rules that was established by federal law.