Tuesday, March 9, 2004

A U.S. Chamber of Commerce report this week on the 10 states with the “worst legal climates” coincides with efforts in Congress and the states to enact lawsuit reform.

The report ranked Mississippi as the worst state for the third year in a row.

The U.S. Chamber chose the states based on what it says were awards to plaintiffs that exceed damages.

“Opportunistic trial lawyers are flocking to courts in a handful of out-of-the-way places that are stacked in favor of plaintiffs’ attorneys and that have shown a willingness to dole out huge awards in frivolous cases,” Chamber President Thomas Donohue said in a statement.

The judgments in Mississippi have included $30 million penalty against an insurance company for pressuring a married couple to purchase a high-risk insurance policy they did not need.

In 2001, five Mississippi jury awards ranked among the top 100 largest nationwide, including a $150 million judgment in an asbestos lawsuit in Holmes County.

Other states on the list are West Virginia, Alabama, Louisiana, California, Texas, Illinois, Montana, Arkansas and Missouri.

The list is intended “to encourage them to change,” said Sean McBride, spokesman for the U.S. Chamber’s Institute for Legal Reform. “Businesses are attracted to places that have a fair and balanced legal system.”

Delaware ranked as having the best legal climate. Virginia ranked third best, and Maryland ranked 21st. The District was not ranked.

However, trial lawyers are skeptical of the U.S. Chamber’s “worst legal climates” list.

“It’s total nonsense,” said Carlton Carl, spokesman for the American Trial Lawyers Association. He accused the U.S. Chamber of a conflict of interest for representing “the interests of corporate wrongdoers.”

The companies “don’t like any jurisdiction where there’s a jury or a judge that holds them accountable in court,” Mr. Carl said.

President Bush mentioned the need for tort reform in his State of the Union address in January. He especially wants Congress to limit damages in medical-malpractice lawsuits, which doctors say are forcing them out of business.

Congress failed to agree on a plan for limiting liability last year.

However, the Senate is considering other legislation that would make it easier for defendants in class-action lawsuits to switch the cases from state courts to federal courts, where rules on damages awards give juries less discretion. The House has approved the plan.

The legislation would “curb class-action abuses that are all too rampant,” said Margarita Tapia, spokeswoman for Sen. Orrin G. Hatch, Utah Republican and Senate Judiciary Committee chairman. “The bill provides additional consumer protections to avoid egregious settlements that give lawyers millions of dollars while leaving the plaintiffs with worthless coupons.”

The legislation would allow U.S. district courts to hear class-action lawsuits claiming more than $5 million in damages unless the state is the home of the corporate defendant or most of the plaintiffs live there.

It also is intended to prevent plaintiffs from searching out courts based on their history of granting large judgments.

The U.S. Chamber’s list of worst states is similar to an American Tort Reform Association report last summer on the nation’s worst “judicial hellholes” for unfair judgments.

Both the U.S. Chamber and tort-reform association rated Madison County, Ill., as the worst offender among the nation’s local courts.

Its reputation was hurt by a Madison County judge who granted a $10.1 billion judgment against Philip Morris USA for incorrectly marketing “light” cigarettes as less toxic than regular ones and a jury that awarded $250 million to a retired steelworker with asbestos-related cancer.

Since then, the blue-collar county outside St. Louis has become a magnet for class-action lawsuits against manufacturers, insurance companies, telecommunications companies and automobile dealers.

Illinois is one of several states whose legislature is considering tort-reform measures.

“Personal-injury lawyers shop their cases to these plaintiff-friendly jurisdictions because they know they’ll get a large verdict or settlement, a favorable precedent, or both,” said association President Sherman Joyce.

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