Sen. Cornyn Chairs Senate Hearing On Protecting Small Businesses From Lawsuit Abuse

Sen. Cornyn Chairs Senate Hearing On Protecting Small Businesses From Lawsuit Abuse

"The legal system should not be a tool to enrich trial lawyers at the expense of America's small businesses"

Sen. Cornyn's opening statement, as prepared for delivery, is below:

"As you see, the theme of this hearing is protecting main street jobs from lawsuit abuse. This seems to be a subject that is not getting much attention in Washington these days but one that I think that has a direct impact on our economy and our country's future. Dr. Teuscher, one of my constituents from Texas, is going to talk about what we've done in Texas in terms of medical liability reform and its impact on increasing access to health care.

"Runaway litigation costs American citizens and businesses millions of dollars every year. It is important to do justice when a wrong is committed. But meritless lawsuits have significant costs in terms of money and time spent in litigation. This drains American resources and prevents Americans from working to put our country on the road to recovery.

"Perhaps the most unfair aspect of these costs is that they weigh disproportionately on small and medium-sized businesses. Large corporations carry significant insurance and have robust budgets to cover their litigation costs. But for the smaller businesses, just one lawsuit can easily result in legal fees approaching a year's revenue.

"Small entrepreneurs who are netting $100,000 a year after taxes and payroll are prospering and likely creating jobs. But that $100,000 can easily be destroyed by the legal fees from even one lawsuit.

"Too often, for American main-street businesses, the cost of being sued - even if the suit lacks merit - can be tantamount to a death sentence for their business.

"Nonetheless, the Majority in this Congress is intent upon rewarding their allies and benefactors in the trial lawyer bar by passing legislation designed to increase the number of law suits in America.

"We are less than two months into the Obama presidency, but already these efforts have begun.

"In this Congress, there have already been three bills that contained provisions that are intended to increase litigation and create new business for the trial bar.

"The Lilly Ledbetter Act allows trial lawyers to sue for employment decisions that were made decades ago.

"The $1.1 trillion stimulus bill contained a provision that allows trial lawyers to enter contingency-fee contracts with state attorneys general to sue health care companies under HIPAA, which was previously enforced only by federal regulators.

"Similarly, the Omnibus Appropriation bill opened the door for contingency-fee lawyers to collaborate with State Attorneys General to bring lawsuits under the Truth in Lending Act.

"And that was just the beginning of the Democrats' plans to reward the trial bar. In the coming months, the Majority will undoubtedly unveil yet more bills to assist their allies in the trial bar.

"The so-called bankruptcy ‘Cramdown' bill will increase bankruptcy litigation. There will be efforts to outlaw consumer and employment arbitration, which is faster, cheaper, and more accessible than full-scale litigation, but less profitable for trial lawyers.

"There will be efforts to undo the important reforms of the Class Action Fairness Act, reviving the class-action strike suit in which trial lawyers made millions while their clients often received nothing more than coupons.

"Democrats will attempt to repeal the Supreme Court's longstanding case law on federal preemption. Such a move would allow trial lawyers to sue in state courts for alleged design and warning defects in products whose designs and warnings are mandated by federal law.

"The card-check legislation would mean that workers' wages and benefits would often be determined in tribunals rather than at the bargaining table.

"And the health care reform bill that is central to the Democrats' agenda in this Congress is unlikely to include a certain health care reform that has been proven to reduce costs and improve patient access--medical liability reform. Unfortunately, the Democrats' health care plan is more likely to increase than decrease health care litigation.

"The costs of all of this litigation will be significant, both from a strictly economic standpoint, and in other and more general societal costs.

"Republicans believe that we can, and must, do better. Runaway litigation has imposed too many costs on America for too long. And America cannot sue its way to prosperity.

"Our party's first great leader, Abraham Lincoln, advised his fellow lawyers to ‘Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man.' Lincoln concluded, ‘There will still be business enough.'

"Republicans still hold these beliefs dear. When wrongs are committed, compensation should be paid. But the role of the legal system is to do justice efficiently, impartially, and in a manner that preserves the peace of the community and the freedoms of each individual. The legal system should not be a tool to enrich trial lawyers at the expense of America's small businesses.

"I look forward to this afternoon's hearing and the testimony of our distinguished panel of witnesses. And I look forward to pursuing, along with my colleagues, a Republican legislative agenda of fairness and freedom from wasteful litigation."

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