WASHINGTON, DC, May 11, 2006 — The Foundation for Fair Civil Justice
hailed a new study that gives state policymakers and corporate
executives a new tool to predict the future economic conditions
of the states arising from the burden placed on their economies
by their civil justice systems.
“This tort liability index measures which states have high tort
costs, and which have enacted reforms to better position
themselves for future economic growth,” said Dan Pero, president
of the Foundation for Fair Civil Justice (FFCJ), a coalition of more
than 60 state and national organizations advocating legal
reforms at the state level. “CEOs and site selection planners
now have a new economic analysis to use in evaluating where to
expand jobs and operations, along with complementary reports
such as the U.S. Chamber Harris Poll on states’ litigation
environments and the American Tort Reform Association’s
“Judicial Hellholes” reports identifying pro-plaintiff court
jurisdictions.”
The study — “U.S. Tort Liability Index: 2006 Report” — authored
by Dr. Lawrence J. McQuillan and Hovannes Abramyan under the
auspices of the California-based think tank, Pacific Research
Institute (PRI) — ranks the civil justice system of each state
based on the economic inputs and outputs in 39 categories of
empirical data.
These categories include: the extent of monetary tort losses in
each state; the existence of caps on certain damage awards; the
enactment of substantive legal reform efforts by state
legislatures; the adoption of procedural and structural reforms
to discourage lawsuit abuse; and a more general analysis of the
litigiousness of each state.
The PRI study resulted in an index score for each state to
arrive at an overall ranking for the states. The data reveals
the previously hidden and obscure strengths and weaknesses of
the civil justice system in each state.
“Underlying the simplicity of the PRI rankings, however, is a
wealth of data that provides a new perspective on each state’s
civil justice system,” Pero said. “It is this in-depth analysis
that gives executives such a powerful tool with which to manage
liability risks.”
In the overall scoring, for example, Texas ranks number one out
of 50 primarily because it has recently enacted more legal
reforms than any other state. While Texas can be proud of its
commitment to legal reform, Texas, along with many other states
that have recently passed legal reforms, must now take steps to
ensure that its lower courts apply these laws fairly in actual
trial settings.
As illustrated by the results of the U.S. Chamber Harris Poll,
defense attorneys managing cases in Texas report that the Texas
lower courts continue to be unfair and biased in the way these
courts apply the laws and procedural rules and thus create a
pro-plaintiff environment. The American Tort Reform Association
(ATRA) has recognized this problem by designating certain areas
in Texas as Judicial Hellholes.
In the PRI study, Texas came in last in seven out of the 39
variables, including its rules relating to trial bar contingency
fees, the lack of punitive damage caps, and the ATRA Hellhole
designation.
These remaining serious problems in Texas help to explain how
Merck could be hit with an outrageous $253 million Vioxx verdict
in a Texas Hellhole even though overall, the state has made so
much progress in legal reform. While Texas has taken dramatic
strides, it still has urgent priorities in reforming its lower
courts and eliminating the Hellholes. The PRI study recognizes
these deficiencies in that Texas ranks 43rd in the
PRI “Threats” category that focuses on the litigation
environment.
Why do the PRI study rankings matter?
“A poor civil-justice system acts as a burdensome tax weighing
down the standard of living for ordinary citizens,” the authors
conclude. “Meaningful legal reform, on the other hand, will pay
future dividends in the form of stronger economic growth and
higher personal income. The PRI study helps to predict which
states will have slower growth.”
Pero sees a far-reaching impact for this new PRI U.S. Tort
Liability Index along with the other two studies.
“The PRI study folds in the work of many other scholars showing
that a higher ranking leads to more jobs, wage increases and
growth in a state’s economy,” Pero says. “PRI’s analysis focuses
attention on the previously obscure economic impacts of state
civil justice systems that need immediate reforms. The U.S.
Chamber Harris Poll provides a complementary scorecard revealing
the performance of courts in fairly and competently applying the
law in each state. The ATRA Hellholes study highlights specific
court jurisdictions that need to be cleaned up. These three
studies together, showing both the economist’s perspective
and the litigator’s perspective, provide a complete
picture of what’s right and wrong in each state, and how the
state’s future economy will perform given these strengths and
weaknesses.”
“We fully expect these three studies will help to guide CEOs in
their investment and relocation decisions, prompt competitive
reforms between states in the race for jobs, and put civil
justice reform front and center as a jobs issue. We applaud
these three studies for revealing the tremendous costs imposed
on consumers and employers by the trial bar-dominated civil
justice systems in many states.”
Full PDF copies of the PRI and ATRA Hellholes reports are
available on the FFCJ website at
www.AmericanJusticePartnership.org. Pacific Research Institute
and ATRA are FFCJ Partners.
The U.S. Chamber Institute for Legal Reform Harris Poll report
is available at
www.instituteforlegalreform.com.
For Comments:
Dan Pero, President
Foundation for Fair Civil Justice
517-214-4254 (cell)
Dpero@FFCJ-mail.org
www.AmericanJusticePartnership.org
