Prospects For Tort Reform Strong In Many States

Monday, January 31, 2011 - 01:00

Despite the shellacking its candidates took in last November's elections, the nation's always-formidable lawsuit industry remains optimistic about advancing its liability-expanding agenda here in Washington. What the new House majority may prevent plaintiffs bar lobbyists from achieving legislatively, they expect to achieve administratively through the regulatory agencies of the executive branch.

In state capitals across the country, however, personal injury lawyers have good reason to be concerned about their prospects. With the party that they staunchly support suddenly in a weaker collective position in state legislatures and governors' mansions than it has been in for many decades, trial lawyers' legislative strategy will, by necessity, become one largely of defense, as opposed to offense.

Relative to the last two years, the litigation lobby's chances in 2011 for achieving significant new expansions of liability at the state level seem rather remote, with some exceptions.Trial lawyers remain quite strong in states including California, Illinois, Maryland, and New York where, with all due respect to new Governor Andrew Cuomo, personal injury lawyer and notoriously anti-tort reform Assembly Speaker Sheldon Silver may still be the state's most powerful politician. But tort reformers' chances for enactment of reasonable liability limits in several states appear very good, indeed.

Prepared for its members and issued late last month, the American Tort Reform Association's annual Civil Justice Reform Outlook surveys the legislative prospects of civil justice legislation on a state-by-state basis. Space limitations and the proprietary nature of some of the information included in ATRA's outlook preclude wholesale sharing here, but following below are highlights of what I consider some of the most hopeful possibilities for affirmative reforms.

Oklahoma And South Carolina

Arguably, the two states with the brightest prospects this year are Oklahoma and South Carolina, where the 2010 elections helped improve the overall environment for enactment of affirmative civil justice reform.

In Oklahoma, ATRA and its state allies expect several reform bills to be proposed and passed. These bills will address transparency in the law, trespasser responsibility, judicial selection, collateral sources, and elimination of joint and several liability. We also expect passage of a $400,000 limit on noneconomic damages, a Private Attorney Retention Sunshine Act (PARSA), Consumer Protection Act reform, a bill setting up an asbestos bankruptcy trust, and the implementation of a 10-year statute of repose.

With its election of Governor Nikki Haley, South Carolina is expected to undertake another busy year of civil justice reforms. She campaigned on tort reform and soundly defeated her trial lawyer/legislator opponent.Meanwhile, House Speaker Bobby Harrell and Senate Majority Leader Harvey Peeler have already introduced several affirmative bills.

Peeler's S.B. 22, the South Carolina Fairness in Civil Justice Act of 2011, would limit the award of punitive damages in all personal injury actions to either three times the amount of the plaintiff's compensatory damages or $350,000, whichever is greater, as well. The bill also includes PARSA language to govern the retention of private attorneys by the state attorney general or a solicitor. The bill limits the amount of compensation outside counsel can receive in contingency cases and uses a pay scale where the percentage of compensation decreases as the settlement amount increases. Section 5 of the bill limits appeal bonds to the amount of the judgment or $25 million, whichever is less, for a business entity that employs more than 50 people and has gross revenues exceeding $4 million for the previous tax year, or $1 million for all other entities and individuals. Lastly, the bill provides for lifting the existing "seat belt gag order," which precludes evidence of a plaintiff's failure to wear a seat belt being adduced at trial.

Though trial lawyers reportedly plan to reintroduce False Claims Act legislation, observers in the Palmetto State suggest there's no chance it will move.

Pennsylvania

With the Keystone State's recent election of Governor Tom Corbett, tort reform-minded majorities in both houses of the legislature, no longer fearing the veto pen of former Governor Ed Rendell, are now poised to push an affirmative legislative agenda centered on the elimination of joint and several liability. A package of other important reform measures is still being developed at press time.

By way of background, ATRA currently ranks Philadelphia, Pennsylvania's largest city, as the worst of the nation's Judicial Hellhole . In Harrisburg, trial lawyers last year had House allies attach an amendment to a transportation bill that would have allowed plaintiffs lawyers to include a plea for a specific amount of noneconomic damages during closing arguments to juries in auto accident cases - a practice not currently allowed under Pennsylvania law. Though this was a narrowly focused insurance issue, a broad and effective coalition comprising the Insurance Federation of Pennsylvania, the Pennsylvania Chamber of Commerce, NFIB, the Pennsylvania Hospital Association, the Pennsylvania Medical Society and just about every other state business trade association galvanized in opposition. This coalition, forged under fire, remains intact and is engaged in ongoing discussions with lawmakers about the need for broader reform of the civil justice system there. Prospects for success are substantial.

Wisconsin And Minnesota

Early last month, Wisconsin's new governor, Scott Walker, unveiled sweeping legal reform proposals and called a special session of the legislature. At press time, the state Senate had already passed a bill with provisions that require product liability plaintiffs to prove existence of a "reasonable alternative design" when alleging a product's defective design. Enactment would end the Badger State's current reliance on the overly broad "consumer expectation" test and bring it in line with 46 other states.

The bill also would adopt the Daubert standard for expert testimony already in place in more than 30 states and all federal courts; overturn the Wisconsin Supreme Court's 2005 decision ( Thomas v. Mallet ) that embraced the deeply flawed "risk contribution" theory in cases involving lead-based paint, making Wisconsin the only state in the country to rely on this theory; and preserve existing law for determining punitive damages but then set a cap of $200,000 or two times compensatory damages, whichever is greater.

In Minnesota, where elections resulted in a tectonic shift in the legislature, civil justice reform proponents are optimistic about the prospects for advancing reform through the legislature. Key leaders in both the House and Senate have already indicated that civil justice reform is a priority. Minnesotans for Lawsuit Reform, the state's primary civil justice reform organization, has a number of affirmative reform priorities, which include allowing the interlocutory appeal of class action certifications; shortening the statute of limitations from six years (the lengthiest in the country) to three or four; repeal of the seat belt gag rule; and offer of settlement legislation. Consumer protection act reform is also likely to be considered. Of course, Governor Mark Dayton is not generally viewed as an ally of civil justice reformers, and he could present a significant impediment to such legislation.

North Carolina and Tennessee

North Carolina's legislature began its current session last year, but it does not pre-file bills, so the business agenda is still being developed. And with November's elections giving pro-growth Republicans majorities in both the House and the Senate for the first time in well over 100 years, the prospects for tort reform seem very good. Accordingly, ATRA expects the trial lawyers to be stuck playing defense.

In Tennessee during the upcoming session, ATRA expects legislation that would place limits on both punitive and noneconomic damages. With substantial pro-growth electoral gains in the House, that body is expected to move out of committee several civil justice reform measures this year. But because key GOP senators are attorneys themselves, the ultimate fate of such proposals remains uncertain. The good news is that, at this time, ATRA is not aware of any liability-expanding efforts planned by the litigation lobby.

Florida, Texas And New Jersey

As recently noted on ATRA's new Judicial Hellholes website, personal injury protection (PIP) insurance fraud in Florida is, according to state regulators, "out of control." Auto insurance premiums are skyrocketing as a result. Just as Tallahassee lawmakers last year dealt effectively with the scourge of slip-and-fall fraud, observers there are hopeful that PIP racketeers can be reined in this year.

Both houses of the Texas legislature remain firmly in the hands of tort reform-friendly majorities, and a newly reelected Governor Rick Perry has signaled his desire to build on comprehensive reforms enacted last decade with new "loser pays," public nuisance, barratry, workers compensation and trespass reforms in the mix, among others. But Senate rules in Austin require a two-thirds majority to advance a bill to a floor vote, so some bipartisan support will be needed for civil justice reforms to make it all the way to the governor's desk.And though the business community now has a political advantage, the Texas Trial Lawyers Association remains a powerful force with many friends in the legislature.

Of course, the litigation industry also remains strong throughout New Jersey, home to once-and-future judicial hellholes, and ATRA expects it to again push an expansion of wrongful death liability while actively opposing consumer fraud reform. But tort reformers, backed by Governor Chris Christie, have some momentum. They support three affirmative reform bills already filed during the current legislative session. One seeks to limit appeal bonds to the total value of the monetary judgment or $50 million, whichever is less. Another would revise the individual's cause of action under the Consumer Fraud Act and make other revisions regarding applicability (see trial lawyers' opposition noted earlier). The third pertains to liability, standards of care and insurance coverage for medical malpractice actions.

Though lawsuit industry lobbyists expect to work their liability-expanding wiles successfully with executive branch regulators here in Washington this year, they know the jig is up when it comes to quietly attaching their trial lawyer earmarks to bills in Congress. They also know they're in for a long, hard slog in state capitals across the country, as voters have dumped incumbents beholden to the plaintiffs bar and replaced them with lawmakers committed to tort reform and other pro-growth policies.

As these new majorities work to create jobs and otherwise revive their respective states' economies, ATRA and its trusted state-level allies will communicate the latest news and call the national business community to action as needed. Meanwhile, I invite your insights and support as ATRA and all proponents of civil justice reform prepare for what should be a very productive year.

Tiger Joyce is President, American Tort Reform Association, based in Washington, DC. He can be reached at (202) 682-1163 or through the organization's primary website, www.atra.org.