After spearheading a bill that limited infamous strike suits against companies with falling stock prices, Rep. Chris Cox is launching another salvo across the bow of trial lawyers. Late last week, he was expected to introduce new legislation to limit class-action lawsuits.
The proposal, which Cox dubs “the right to choose your lawyer act,” is part of the Newport Beach Republican’s effort to reform the legal system. In 1995, Cox scored a big legislative victory when Congress overrode President Clinton’s veto of his legislation to limit securities fraud suits,a major concern of local technology companies.
As it is, consumers often are lumped into class-action suits without even knowing about it, or without having any real grievance. Under the current “opt-out” system, consumers specifically must ask not to be included in a class-action suit. Cox wants an “opt-in” system whereby consumers have to request to be part of a lawsuit.
“You and I are members of a lot of class-action lawsuits in cases that we didn’t authorize,” Cox said. “When lawyers settle these claims, they tend to settle them on bases favorable to them and not to their clients.”
The result of his legislation, Cox contends, is that “litigation will be client driven, rather than lawyer driven.”
Cox points to a recent case in which lawyers settled a class-action suit against American Airlines for the way it managed frequent flier miles.
“The lawyers got $25 million. What the consumer got was a coupon worth $25 on his next purchase of a full-fare ticket on American Airlines,” Cox said. “It’s worth $25 million to American Airlines to settle and have (the lawyers) go away because they save themselves litigation costs,and they cut off the claims of people who might actually be aggrieved. That’s the problem.”
The legislation is expected to inflame trial lawyers. Cox said he doesn’t expect Clinton to sign the legislation into law, but expects Gov. George W. Bush to do so if elected.
“It will be a big part of the agenda of President Bush,” Cox said. “He’s the first candidate for president to make tort reform a significant part of his platform.”
For the influential Newport Beach congressman, the class-action legislation is the latest effort in what’s been a busy term. Cox has chaired a committee on Russia, helped extend a moratorium on Internet taxes and tried to abolish estate taxes.
Cox also is involved in reforming the budget, writing the Republican platform and monitoring Chinese human rights and North Korea’s nuclear weapons program. And he’s running for re-election, where he’s considered a shoo-in: the 47-year-old has held his seat since 1988.
There’s even talk around Washington, D.C. that Cox is on Bush’s short list of vice-presidential candidates. Earlier in the year, Cox dismissed the idea. But in the past month, he’s subtly changed his tune.
“I’d certainly accept it if offered, but I don’t expect it,” he said.
For one thing, Cox said vice presidential feelers were sent to Colin Powell. And Bush hasn’t asked him about the position, he said.
Cox is helping Bush prepare for a final 60-day push after Labor Day that could include plenty of stops in Orange County. Cox dismissed talk that Bush has conceded California, where he trails Vice President Al Gore in polls, saying the Texas governor is fairly close in most samples.
But Cox noted that GOP gubernatorial candidate Dan Lungren in 1998 spent $35 million and still lost by 20 points to Gov. Gray Davis. He warned that Bush’s strategists might limit his activities in California if the Texas governor gets too far behind Gore.
During a recent visit to the Orange County Business Journal’s office, Cox focused mostly on his proposed legislation. He also discussed John Wayne Airport, saying he is getting ready to propose legislation to extend the curfew on late-night flights, which expires in 2005.
Cox, the fourth-ranking member of the House of Representatives, is chairman of the House Republican Policy Committee, where he is instrumental in establishing the issues that the majority party should focus on.
Cox also is the author, along with Sen. Ron Wyden, D-Ore., of extending the moratorium on Internet taxes. While it overwhelmingly passed the House earlier this year, it’s stuck in the Senate Commerce Committee where Democrats and a couple of Republicans have refused to support it. Cox said there’s an “even-money chance” the legislation will be signed into law this year. Otherwise the tax ban will expire next year.
“If it expires, there will be a rush by taxing jurisdictions to apply their new interpretations of ancient utility and telecommunications taxes to the web,” he said.
Last year, the Republicans passed legislation reducing the capital gains tax from 20% to 18%, but Clinton vetoed it. Cox said the House could pass a similar bill this year, adding election year politics might force Clinton to approve it.
“We have more opportunities for tax cuts because of the latest surplus,” he said. “It’s significantly bigger than previously anticipated.”
Earlier this year, Cox led the committee that investigated technology transfer to China and issued a widely praised report. The report prompted the most significant government restructuring in two decades with the National Nuclear Security Administration taking over nuclear weapons responsibilities from the Department of Energy.
Now Cox is chairman of a House leadership committee, which includes the chairmen of the House’s most influential committees, looking into the Clinton administration’s policy in Russia for the past eight years. Cox said the Clinton Administration’s policy toward Russia depended too much on personalities like Boris Yeltsin and pumped billions of dollars into existing corrupt government entities rather than building new institutions to promote free enterprise.
But Cox also said he is hopeful that a new generation of Russian political leaders elected last November can help stabilize the country. He particularly likes a current Russian proposal for a 13% flat tax.
Cox, who speaks Russian, is expected to complete the committee’s report by the end of September. Unlike the China report, the Russia report is seen as being more partisan, and it will be viewed as much more politically suspect coming out a month before the presidential elections.
Cox acknowledged as much but he said the Clinton administration’s “whitewashing” of Russia’s problems shouldn’t be ignored.
“An arm’s-length review of its own policy is impossible for the Clinton Administration to produce,” he said. n
