The “tort reform” idea being discussed so frequently by the Louisiana business community this Christmas season really started in mid-January 1995, about three days into George W. Bush’s tenure as Texas governor.
Bush emerged from a meeting at an Austin salsa maker’s factory with a plan to fix the so-called jackpot justice system by limiting who could sue and what evidence they could present. That would cut out “the junk lawsuits that clog our courts,” Bush declared.
That was during a time when colorful Houston lawyers were grabbing headlines with verdicts like $11 billion over a dispute between oil companies and $10 million for the death of a pet. The way those trial lawyers spent their cut of those damages was just as an eye-catching like buying a fleet of Duesenbergs and hiring Dolly Parton to appear at a party.
Bush's position proved popular for many corporate insurers and real estate developers, who often sat in the defendant's chair at those civil trials. Bush had raised about $4.1 million — or about 10 percent — of the money for his gubernatorial campaigns from donors wanting "tort reform," according to Texans for Public Justice, an Austin-based advocacy group.
Louisiana soon followed Texas and passed laws that insulated corporations from lawsuits. But that was two decades ago, and now the business community wants more.
A deluge of recent reports has led to demands for rolling back laws that, in the words of Louisiana Association of Business and Industry President Stephen Waguespack, “create a robust and competitive business environment for trial lawyers,” who are the legal representatives of people suing companies for personal injuries.
When the session starts in April, LABI — and others — want lawmakers to push bills that would allow juries to find out if the person injured in a car wreck was wearing a seat belt. Injuries tend to be more significant when seat belts are not attached. They also want to lower the jury threshold — that is, allow juries rather than judges to hear trials when the damages being sought are less than $50,000.
“It’s one of those ‘be careful because you might get what you wish for,’” Republican state Sen. Dan Claitor, a Baton Rouge lawyer, said of the push for more tort reform.
Lowering the jury threshold to zero would add a few more years to resolve trials. Lifting the seatbelt gag law would require litigants to hire accident reconstruction, biomechanical experts to determine what part of an injury came directly from the accident the victim didn’t cause and what part was exacerbated by not wearing a seatbelt.
Still, the theory, reinforced by the reports, is that Louisiana’s less-than-friendly business environment has compelled auto insurance companies to raise their rates for four consecutive years.
No insurance company has said it would lower rates if either or both bills pass. And the rate increases have proven profitable.
Allstate Corp. revenues grew 5 percent in 2017 to $38.5 billion. Allstate’s net revenues reached $3.07 billion last year, meaning roughly a 10 percent profit, or more money than the state general fund appropriates for highways and higher education.
The American Tort Reform Association on Oct. 31 determined that Louisiana was the fifth-worst “judicial hellhole” in the nation. It pretty much blames Democratic Gov. John Bel Edwards, though it ranked the state at No. 2 in 2014 during Republican Gov. Bobby Jindal’s administration.
ATRA has some grassroots support. But the Washington, D.C.-based organization whose aim is to restrict lawsuits is funded primarily by tobacco, insurance, chemical and pharmaceutical companies.
In another October release, the U.S. Chamber of Commerce’s Institute for Legal Reform calculated “liability exposure” — insurance costs and other factors — to determine the average Louisiana household pays $4,015 in litigation costs.
A year ago, the Chamber ranked list-loving Louisiana at the bottom for “legal climate,” saying “the state scored poorly in all key element categories.”
Though sounding like a super-sized version of businessmen’s clubs that dot Main Streets around the nation, the U.S. Chamber is America’s largest lobbyist, spending $104 million in 2016, according to the Center for Responsive Politics, to persuade lawmakers on a variety of issues, such as rejecting equal pay provisions. Its funding comes primarily from Fortune 500 companies.
A 2009 analysis by Cornell University School of Law Professor Theodore Eisenberg found the Chamber’s periodic “legal environment” rankings are “substantively inaccurate and methodologically flawed” to prop up its point. "The Chamber’s uses of the survey fail to account for the sample design, fail to account for the same respondent rating multiple states, fail to account for industry effects, and fail to distinguish among respondents based on their knowledge of a state. The survey may discourage investment in the United States," Eisenberg wrote.
A Dec. 18 report by the New York Law School’s Center for Justice & Democracy showed that civil cases account for 18.1 percent of the nation’s court docket. Torts — litigation seeking damages for personal injuries — amount to only 4 percent of 2016 state court civil caseloads. And those statistics have shown a downward trend for at least five years.
Nearly half the civil cases involve contract disputes, mostly between businesses.
And, by the way, Texas courts accounted for the two largest verdicts in 2017, the latest full year of data available, according to TopVerdict.com. Both were contract disputes with judgments totaling close to $9 billion. Only one of the dozen verdicts, also from Texas, involved a personal injury claim.