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Tort Reform Even a Democrat Could Love

When Intel Chief Executive Craig R. Barrett introduced Senator Dianne Feinstein at an Apr. 22 speech in San Jose, he praised the California Democrat for backing a low-profile bill to rewrite court procedures. "I was surprised he even knew about it," Feinstein says.

While ambitious efforts to take on the powerful trial bar founder on Capitol Hill, the seemingly mundane Class Action Fairness Act seems on the fast track to passage. But its success is not due primarily to a phalanx of high-profile business backers, like Barrett. Rather, the key to the bill's passage is a pivotal group of Demo-crats who have broken with powerful party constituencies, including plaintiffs' lawyers, environmentalists, and civil rights groups.

Central to the Dems' decision is the modest scope of the bill. Rather than capping corporate liability or lawyers' fees, as Big Business would prefer, the bipartisan approach of Senate co-sponsors Charles E. Grassley (R-Iowa), Herb Kohl (D-Wis.), and Orrin G. Hatch (R-Utah) would make it easier for a large class action -- one with at least 100 plaintiffs and $5 million in damages -- to be moved from state to federal court. The goal is to discourage forum-shopping, a tactic in which lawyers file claims in remote courts with a reputation for being sympathetic to plaintiffs. Federal courts offer a broader jury pool, are more likely to dismiss claims, and have bigger staffs to handle complex cases -- all of which should make class-action litigation easier on defendants without denying citizens access to the system.

Because sizable class actions tend to be the bailiwick of a few boutique law firms, and because the bill won't deny access to courts or cap damages, it carries less political risk for wayward Democrats than other tort reforms might. "This isn't some sop to the business community," says Chuck Alston, executive director of the centrist Democratic Leadership Council. "Democrats are giving this issue a hard look because they've come to understand the problem."

The measure, which could hit the Senate floor in June, is close to capturing the 60 votes needed to scuttle a filibuster. Dems from states heavy in manufacturing, tech, or financial services ultimately will decide the bill's fate. To win them over, business has enlisted a slew of connected Democratic lobbyists, including former Clinton legislative aide Patrick J. Griffin and ex-Clinton and Gore adviser Thurgood Marshall Jr. Democratic consultant Dewey Square Group is leading the grassroots mobilization in states such as Washington, Connecticut, Louisiana, Nevada, and Rhode Island, where there's a shot at swaying fence-sitting Dems.

Even business lobbying efforts are taking a populist tack. The $1 million-plus Litigation Fairness Campaign, led by the U.S. Chamber Institute for Legal Reform, depicts consumers and mom-and-pop shops as the real victims. The strategy seems to be working. The decisive moment for Feinstein was when Mississippi widow Hilda Bankston testified before the Senate Judiciary Committee that she had to shutter her small drug store after it was named as a defendant in cases targeting huge pharmacies.

"Hilda Bankston was enough for me," Feinstein says. The senator had reservations about the original bill but worked with former Solicitor General Walter E. Dellinger, a leading New Dem, to craft revisions Judiciary could pass and even a Democrat could love. The amended bill, which cleared committee on Apr. 11, has the support of a half-dozen Democrats.

If the reform becomes law, it could serve as a model for future business-lobbying efforts. Ambitious assaults on the trial bar fail year after year: Execs might conclude that small steps toward tort reform are the only way to go. Lawmakers, local TV station owners, and consumer groups are pushing Federal Communications Commission Chairman Michael K. Powell to back off of one of his proposed media-consolidation rules. Powell's controversial plan, scheduled for a June 2 vote, would allow a TV network to own stations covering 45% of the nation's audience, up from the previous 35% limit. But FCC members are now talking about cooling the controversy by closing an obscure loophole.

Here's how: Because of an anachronistic rule in place since the early days of UHF television, local stations above Channel 13 count as only half a TV station when toting up a network's holdings. By giving all TV stations the same value -- which makes sense in a time when two-thirds of Americans get their broadcast TV through cable -- Viacom (VIA), News Corp. (NWS) and other networks would be much closer to the 45% cap. That would give Murdoch & Co. far less room to expand. Such a move would likely quiet, but not silence, Powell's critics. As Congress wraps up work on the third major tax cut of the Bush Presidency, Administration officials are discussing a fourth round of reductions before the 2004 elections. One top priority for next year: A new version of tax-free savings accounts. Bush surprised allies by failing to consult with them before proposing the package in this year's budget. The White House dropped it for 2003 after criticism that Bush's version would discourage employers from offering retirement plans.

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