Business liability legislation an early gift?
by Lynne W. Jeter
Published: December 9,2002
It looked doubtful.
But faced with increasing pressure from voters, who shifted the balance of the Mississippi Supreme Court closer to the center on Nov. 5, legislators finally agreed on liability limits and passed a business liability tort reform bill 20 days later, 82 days after an extended special session began and three days shy of Thanksgiving.
“This is a nice turkey for Thanksgiving,” said Katherine Kerby, president of the Mississippi Defense Attorneys Association. “Or maybe it’s the stuffing.”
Mississippi Economic Council president Blake Wilson said the legislation “marks an important accomplishment for passing significant milestones for easing our state’s image as the ‘jackpot justice state.’”
The general tort reform bill, passed 108-12 in the House and 43-6 in the Senate, caps punitive jury awards, protects local retailers in lawsuits where manufacturers are the real targets, and shifts financial responsibility in some cases with multiple defendants. Gov. Ronnie Musgrove signed a medical malpractice tort reform bill into law on Oct. 8.
“It’s fitting this legislation comes just before Thanksgiving Day,” said Musgrove, who signed House Bill 19 into law Dec. 3. “All along, I’ve said we needed civil justice reform that was fair and balanced, and I’m pleased legislation has been put together that meets these criteria. I am pleased with a major portion and I will review the provisions. I look forward to shifting the focus toward other areas that demand our attention such as education, jobs and health care.”
“What a year!” said Ron Aldridge, Mississippi state director for the National Federation of Independent Businesses (NFIB). “It’s one I’ll never forget. After a hard fought battle, we were successful.”
On an almost daily basis during the extended special session, Aldridge, along with a score of interested business folks following the proceedings, had trekked from his office at 3000 North State Street to the Capitol. “We were up there until 10 o’clock last night and I’ll be back early in the morning,” he said the week before lawmakers passed the bill. After it was passed, Aldridge said: “It was worth it, and our state’s judicial system, health care and economic development opportunities will be strengthened. We didn’t get all we wanted, but what we did get was significant. It’s a ‘work in progress’ and it will be up to our judiciary to implement the legislative intent of a more fair and balanced court system.”
Highlights of the business liability tort reform bill, effective Jan. 1, 2003, include:
• Venue reform provides greater fairness in where a case can be tried. Venues in civil actions are limited to the county where the defendant resides, where the alleged action or omission took place, or where the event occurred that caused the injury. Civil actions alleging a defective product may also commence in the county where the plaintiff purchased the product. Civil actions against a non-resident may also commence in the county where the plaintiff resides or is domiciled.
• Joint and several liability reform reduces the risk of lawsuits aimed at those most able to pay but perhaps least at fault. Joint and several liability for non-economic damages are eliminated and economic damages are limited as several for the defendant if less than 30% at fault, and joint for the defendant if more than 30% at fault up to 50% recovery.
• Innocent sellers (retailers, wholesalers or distributors) can be dismissed from a lawsuit where the manufacturer is also sued, if they sell a product they don’t alter.
• Even though some specific exceptions apply, “hard caps” on punitive damage were set at 4% of net worth for a defendant with a net worth of $50 million or less; $5 million for a defendant with a net worth between $50 million and $100 million; $7.5 million for a defendant with a net worth between $100 million and $500 million; $10 million for a defendant with a net worth between $500 million and $750 million; $15 million for a defendant with a net worth between $750 million and $1 billion; and a $20 million cap for a defendant with a net worth of more than $1 billion.
• Innocent property owners were protected from liability for criminal acts by others in certain circumstances.
• To eliminate judge shopping, judges in circuit, chancery and county courts will not be assigned to a case until a defendant has filed a responsive pleading.
“The bill as a whole looks like the real thing,” said Kerby. “Unlike the med mal bill, this seems to be comprehensive and enforceable and it should bring protection to the doctors that the other bill did not. It’s also great news for our economic developers.”
Kerby voiced concerns about the constitutionality of the medical malpractice tort reform bill, after her warnings about judicial nullification were ignored and legislators left constitutional provisions intact in the new legislation. A constitutional amendment for the bill could have been added to the Nov. 5 ballot, but was not.
“The constitutionality is based on whether or not (the law) existed at the time Mississippi got its constitution in 1890,” said Kerby. “If it’s old common law, you can probably attack any changed legislation. For example, there were no caps pre-1890. However, the Legislature has made lots of changes in common law that have been upheld, such as workers’ comp. Changes to things like products liability, which were not big events pre-1890, are going to stick. Except for the caps, I think the bill is not vulnerable to legitimate attack on a constitutional basis. It’ll come, but I predict the laws are going to stand up.”
Jerry McBride, president of the Mississippi Manufacturers Association, said the product liability section “could be appropriate if the innocent seller simply got the product in a box and sold it without changing it.”
“In that case, he ought not be sued,” he said. “The problem is, if the innocent seller is taken to court, even if he is dismissed from the lawsuit, lawyers will end up getting it into state court and we wanted it to go to federal court. We’re not totally happy with that.”
Robert Mims, CLU, of Robert B. Mims & Associates in Jackson, said business liability tort reform still has a long way to go. “I’m sure the plaintiff lawyers will find (the loopholes),” he said.
Earlier this year, the U.S. Chamber of Commerce ran full-page ads throughout Mississippi about the harmful effects of the state’s broken liability system. The chamber also released a Harris poll it commissioned that ranked Mississippi’s legal system as the worst in
“At last, Mississippi lawmakers are beginning to understand what America’s business community has been saying for years — that if they want economic growth, job creation and a better way of life for its citizens, then Mississippi’s tort laws must be changed,” said Thomas Donohue, president and CEO of the U.S. Chamber of Commerce. “While this bill is a step in the right direction, it is just that — a first step. The task of tort reform is far from finished in Mississippi, and I hope Mississippi’s elected leaders will address other unresolved issues when they return in January.”
David Baria, head of the Mississippi Trial Lawyers Association, said the bill was harmful to Mississippians. “Corporate America basically came to the Mississippi Legislature and said: Don’t make us pay when we kill people.”
McBride said that’s not the case. “It may be that (trial lawyers) are saying they hate the bill, but in actually, they like it because they’re trying
to con us.”
James Stewart, Ph.D., assistant professor of political science at Mississippi College, said it was too early to speculate whether the passage of tort reform legislation would affect the 2003 gubernatorial and legislative races.
“They’ve dragged it out now for so long that I think most people are sick o
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