May 11, 2001

Restaurants, small businesses need protection from costly litigation abuse

(Washington, DC) Saying that just one costly and frivolous lawsuit is enough to put a restaurant out of business, the National Restaurant Association applauds bipartisan legislation that would protect small businesses from litigation abuse. Similar bills were introduced in both the House of Representatives and the Senate on Thursday.

The legislation, the Small Business Liability Reform Act of 2001, is sponsored by Sen. Mitch McConnell (R-KY) and Joseph Lieberman (D-CT) in the Senate and Reps. Asa Hutchinson (R-AR), Tim Holden (D-PA), Richard Burr (R-NC), Jim Moran (D-VA), Steve Chabot (R-OH) and Cal Dooley (D-CA) in the House of Representatives. It would cap punitive damages against small businesses with fewer than 25 employees at the lesser of $250,000 or three times compensatory damages.

"Unfortunately the decision for people to sue is made all too easy in this country, and it is spiraling out of control," said Steven C. Anderson, president and chief executive officer of the National Restaurant Association. "All too often we hear of restaurants becoming targets of frivolous lawsuits. What we don't hear is that many restaurants can be put out of business from a single case. As a result, restaurants pay high-priced liability insurance to protect themselves from being sued. We applaud these congressional leaders for recognizing this growing problem, and working to end lawsuit abuse."

In addition to putting a cap on damages a small business must pay, the legislation would ensure that small business owners are only liable for such damages in proportion to their fault. The National Restaurant Association is a member of the Small Business Legal Reform Coalition and joins them in supporting this legislation and in calling for our legal system to be reformed.

Source: National Restaurant Association