That s why I am happy to report passage last week of H.R 2366, the Small Business Liability Reform Act of 2000, in the House of Representatives by a vote of 221-193. Small business liability in the United States today resembles a wealth redistribution lottery more than an efficient system of compensation for those injured by the wrongful acts of others. In every state, small businesses often agree to significant out of court settlements even when the case is unwarranted just to avoid going to court and facing costly litigation. The threat of financial drain on small businesses often eliminates their ability to grow and expand. Many choose against carrying liability insurance to avoid the risk that trial lawyers and potential plaintiffs will view them as a potential goldmine.
Consumers bear part of the burden as well.
Whether small businesses settle or go to court, they often pass their costs on to the customer. The Small Business Liability Reform Act changes all that. It sets standards and places caps on punitive damages. Further, this bill limits the imposition of joint and several liability. Currently, a plaintiff may seek to recover damages from several defendants - a product s manufacturer and its distributor, for instance.