State Rights vs. Federal Government

How can the Republicans, who back home and here incessantly talk up the need to transfer power from Washington to the states, be leading the drive to enact five major federal preemptions of traditional state authority in this Congressional session?

Taken together, the following five federal preemptions constitute the largest jurisdictional transfer to Washington in over half a century:

1. For two centuries, the common law of torts has been a matter for the states to decide. Republican-sponsored legislation misnamed “tort reform” is moving toward floor votes that both would begin an across the board federal displacement of state judicial standards covering product defect liability and, at the same time, weakening them to favor corporate defendants. With business reports showing declining liability costs, declining product liability premiums, declining relative verdicts and settlements and record corporate profits, it is permissible to wonder why, with nine of out ten wrongfully injured persons not even filing lawsuit, the party of Gingrich-Lott is engaging in such centralized decision making, by PAC- greased legislators, who unlike state judges and jurors, do not see, hear or evaluate the evidence in such court cases.

2. HR 2021–federal no fault auto insurance legislation–is another Republican favorite. No less than the Defense Research Institute (DRI), composed of lawyers who defend civil suits mostly on behalf of insurance companies, had to lecture the bill’s sponsors in Congressional testimony this May on the need for reform of auto accident reparations to remain true to four principles. These are in the words of DRI witness Michael Gladstone: “the retention of liability based upon fault, preservation of the civil jury system; availability of non-economic damages to the severely injured, and state, rather than federal solutions, to local problems.”

The House Republican “patients rights” bill even has a grotesque federal preemption that limits the court rights of patients severely injured by medical malpractice.

Chiding the supporters of this bill as moving to destroy these standards, Mr. Gladstone turned the screws on the Gingrich crowd when he declared, “liability based upon fault means that people and corporations are held responsible for their actions. In recent years, such areas as welfare reform, criminal justice, education, and athletics, members of Congress have called for more assumption of personal responsibility…”No fault” systems of liability are, by definition, a derogation from the principle of responsibility.”

3. HR 3789, a Henry Hyde production, would preempt, as a practical matter, state jurisdiction in a realm that has been traditionally relegated to the states. Under this scheme, state court consumer class actions can be lifted into the federal courts by corporate defendants even in cases where most class members and most of the legal issues involve primarily one state. More decentralization against federalist principles.

4. Although the corporate financial crime wave against defrauded investors, duly reported in the Wall Street Journal, Business Week and other business publications, shows no signs of abating, Republican are pressing for immediate enactment of S 1260 to take away from the fifty states investor class actions in the state courts. Only 44 such state lawsuits were brought in 1997, less than the 66 cases brought in 1996.

Instead of strengthening the legal remedies available to investors who lose tens of billions of dollars annually from fraudulent activities, the Republicans are bent on eliminating the jurisdiction of state courts under state laws dating aback to the early 1900s and centralizing such actions in the federal courts already weakened under a Gingrich-led law passed in 1995. So much for law and order against corporate crooks.

5. Regulation of insurance companies has long resided with the states, but now the Republican leadership is supporting federal legislation that would preempt state laws that protect policy holders when insurance companies convert from a mutual to shareholder ownership structure. This legislation, part of an omnibus financial services bill (HR 10), is designed to allow mutual insurance companies to become fugitives by nominally changing their domicile virtually at will and shop around for state with lax laws that will allow them to pocket tens of billions of dollars of assets that belong to the policy holders. The legislation is a slap in the face from the Republican leadership to the states that take seriously their responsibility to protect consumers from these rip offs, hardly a great vote of confidence in the fairness and efficacy of state regulation.

Congressional Republican leaders, with few exceptions, are caught between their conservative ideology on the hustings and their corporate expediency on the money. Not surprisingly, they have chosen the latter because they believe they can have both and get away with it. After all, Gingrich-Lott went all the way to enact NAFTA and GATT legislation that took excessive authority from both the states and the federal government and sent it to the autocratic World Trade Organization in Geneva. After that Clinton-led heist, this latest concentration of corporate power in the indentured arms of Washington is viewed openly by trade lobbyists and their Congressional allies as a prelude of more to come.

Unless the authentic conservatives take on the genuine corporatists in the Republican Party, it won’t be long before the corporations get their wish of Washington as a “one-stop injustice” center with the states pre-empted out of the way.

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