SEMA eNews Vol. 20, No. 11, March 16, 2017

U.S. House of Representatives Passes Three Bills to Reduce Frivolous Lawsuits

By SEMA Washington, D.C., Staff

The U.S. House of Representatives passed three bills to combat frivolous lawsuits, which are a distraction for businesses and can create financial hardship. Small businesses are especially vulnerable to these kinds of abuses. In many instances, defending a small business in court drains precious resources, which could otherwise be used to make investments needed to grow the company. Below are summaries of the three bills that have now moved to the U.S. Senate:

  • The Lawsuit Abuse Reduction Act of 2017 (LARA) would require federal judges to impose monetary sanctions against lawyers who file frivolous lawsuits. Under current law, federal judges are allowed but not required to impose penalties. LARA would also eliminate a provision in current law that allows lawyers to avoid penalties by withdrawing frivolous claims after sanction proceedings have begun. Courts could also award the prevailing parties reasonable expenses and attorney’s fees in defending against a frivolous lawsuit.
  • The ‘Fairness in Class Action Litigation Act of 2017 makes significant changes to the procedure used for class-action litigation, requiring that classes consist of members with the same type and scope of injury. If successful, victims would be paid first before class action lawyers get paid. Also, the lawyer could not be a relative or have any employment or contractual relationship with the plaintiff.
  • The Innocent Party Protection Act makes it more difficult for trial lawyers to prevent lawsuits from being moved to federal court or to forum-shop for favorable state courts. The bill would prevent trial lawyers from entangling a local small businesses in a lawsuit as a mechanism to have the case heard in a local jurisdiction.

For more information, contact Eric Snyder at erics@sema.org.

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