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There Is No 'Lawsuit Abuse Tax'

Ads Attacking Legal System False

WASHINGTON, DC -- September 20, 2002 -- Current ads produced by the U.S. Chamber of Commerce that attack the legal system are false, according to Public Citizen, a national, nonprofit consumer advocacy organization. Shown in several states, the newspaper and television ads claim that Americans pay a "lawsuit abuse tax" equal to 2 percent of the price of any goods they buy. One print ad asserts that class action lawyers have a "simple formula for splitting settlements" that leaves consumers with next to nothing in compensation.

"The claims made in the Chamber's ads are about as accurate as WorldCom's accounting statement," said Joan Claybrook, president of Public Citizen. "They are as blatant as the lies told by so many corporations now under investigation for covering up illegal transactions. The real 'abuse tax' is the huge loss foisted on the public by an unprecedented wave of corporate fraud and abuse."

"Lawsuit Abuse Tax" Is a False Concept

Public Citizen has issued a press release analyzing the ads. The group points out that the Chamber created the term "lawsuit abuse tax," a concept based on miscalculations and false assumptions. One false assumption is that non-economic losses are "excessive," when in fact they compensate for very real pain, disfigurement, loss of fertility, and other injuries.

Another questionable assumption touted by the ads is that costs of the civil justice system such as attorney fees and administrative costs should be at the same level as those of the workers' compensation system. However, the workers' compensation system is a payment schedule, not an assessment of responsibility that addresses complex questions about product safety, corporate fraud and negligence.

Ad About Class Actions Considered Unfair and Misleading

The Chamber print ad about class action lawsuits also contains misleading information, according to Public Citizen:

  • The ad extols proposed H.R. 2341 as a "Bill of Rights" to promote judicial scrutiny, but fails to mention that the legislation would give businesses a major advantage over consumers in class action cases. It could also allow more corporate fraud to go unpunished. (See Democrats' Dissenting view to H.R. 2341).
  • The ad suggests that consumers have to "pay money out of their own pockets" to cover class counsel's fees. According to Public Citizen, however, class action consumers receive refunds for overcharges, unauthorized fees and other scams in almost every class action.
  • The ad suggests that it is wrong for attorneys' fees to exceed the monetary benefit that a class action award provides to any individual consumer. In fact, judges are required to fix reasonable attorneys' fees based on the entire sum of benefits provided to all class members.

"The Chamber appears to have two goals in mind with this ad campaign," said Frank Clemente, director of Public Citizen's Congress Watch. "It is providing a huge media buy in key state elections that will create a climate favorable to pro-business candidates who want to weaken the tort system, and it attempts to divert public attention away from corporate fraud and abuse that can be prevented with a strong tort system."

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