Forest products industry needs litigation reform

Michigan’s forest-products industry is having a hard enough time competing on a global market as demand for newsprint and magazine stock continues to decline amid the shift to digital media. The last thing we need to contend with is out-of-control litigation.

We’re the largest industry in rural Michigan, employing 97,000 people and generating $20 billion in revenue. Our members would like to spend their time focusing on growing the state’s most-important renewable resource and shifting from traditional products like paper to more advanced materials like cross-laminated timber panels.

But it’s hard to attract the capital to make this transition when U.S. industry is saddled with uncertain liabilities generated by frivolous class-action lawsuits. The Michigan Forest Products Council supports the Fairness in Class Action Litigation Act, or FICALA, because it will reduce the incentives for lawyers to bring borderline, poorly substantiated lawsuits that are designed primarily to enrich plaintiff attorneys and extract settlements from their targets, not steer money to their clients.

Class actions have their place when large numbers of consumers have suffered the same injury and want to band together to pursue a single case. But class litigation has gotten out of hand, with plaintiff attorneys pursuing companies almost indiscriminately over often picayune claims involving product labeling or employment disputes. FICALA would require class-action lawyers to show that the members of the class suffered an actual injury or harm. Lawyers also would have to disclose conflicts of interests with representative plaintiffs, a particular problem in consumer class actions where attorneys often build their cases around friendly plaintiffs and settle mainly for fees. Under FICALA, lawyers are only paid if the class members are paid.

FICALA also promises to bring welcome relief from abuses in the mass-tort system. It would require attorneys to demonstrate they have actually investigated each claim before including them in multidistrict litigation, cutting down on advertising-driven mass lawsuits. Clients would be required to receive at least 80 percent of settlements, discouraging fee-only agreements. And defendants could appeal key rulings to a higher court before being forced to go through the time expense of discovery and trials.

Michigan’s forest producers compete in a worldwide market for customers and capital. We need to invest in our businesses and manage our forests to produce the most desirable trees and cut down on dangerous pests like the emerald ash borer. It’s difficult to do any of this when the litigation climate is uncertain and investment opportunities look safer in other countries. FICALA will help move the odds more in Michigan’s favor.

COMMENTS