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Lawsuit Reform is Key Ingredient for Arkansas's Future

By Lt. Gov. Tim Griffin

Arkansas needs lawsuit reform to compete economically and increase access to health care. As we work to grow our communities, we are burdened by the threat of frivolous lawsuits and the hidden costs of an out-of-date legal system that unfairly target job creators and penalize the doctors that care for our loved ones. We are the only state in our region without lawsuit reform, but in November we can change that. That’s why I am supporting lawsuit reform and Issue 1.

Arkansans are the best workers in the world and can compete with anyone. For too long, however, harmful, misguided policies have burdened us. Despite these obstacles Arkansans have excelled. Just think what we could do with lower taxes, reasonable regulations, more educational choice and a leaner state government. These are the ingredients for growth and prosperity. That’s why I favor bold reform and am working with Gov. Hutchinson to transform a state government that taxes and spends too much. Arkansans are growing jobs and competing like never before, but the missing ingredient of lawsuit reform holds us back.

As a lawyer, I’ve seen how Arkansas is hurt by a legal system that makes us less competitive with neighboring states. Studies have consistently shown corporate executives consider a state’s legal climate when deciding where to invest capital to grow jobs. A decade ago in Mississippi, Toyota told then-Gov. Barbour that they would not consider an auto plant there until lawsuit abuse was addressed. (Mississippi passed lawsuit reform and then welcomed Toyota.) Similarly, small businesses are impacted: The National Federation of Independent Business’ Elizabeth Milito testified in 2017 before the U.S. Senate Judiciary Committee that “[t]hree-quarters of all small business owners in America express concern about frivolous or unfair litigation.”

Lawsuit reform will help us grow jobs and compete. Our judicial system disqualifies us from competing for some jobs which pass over us and head to our neighbors like Texas. Just 15 years ago, the Texas legal system had a horrible reputation because it was easily manipulated. After Texas adopted lawsuit reform, its legislature commissioned a study that showed the fiscal stimulus attributable to lawsuit reform was almost $2.6 billion per year, resulting in almost 500,000 new jobs. In 2011, Federal Reserve Bank of Dallas President Richard Fisher said, “The most important thing that’s happened to us [for economic development] is tort reform,” noting that the relocation of companies to Texas is “largely driven” by lawsuit reform that makes businesses more willing to expand and relocate there.

In 2003, our elected legislators passed common sense lawsuit reform that was widely seen as achieving its intended goal: bring stability and fairness to our often-arbitrary legal system. But the Arkansas Supreme Court invalidated it, and now the only viable way to adopt lawsuit reform is to amend our state constitution.

Issue 1 allows victims to recover for injuries and damages. It does not limit economic damages. Victims may be fully compensated for 100% of economic losses, including lost wages, medical bills and loss of property, for example. And while Issue 1 provides common sense limits on non-economic damages of $500,000, it does not limit punitive damages in cases involving intentional misconduct and caps punitive damages in other cases at the greater of $500,000 or three times total compensatory damages.

The proposals in Issue 1 are reflective of lawsuit reform found all over the country. Nineteen states limit contingency fees for attorneys. Thirty-three states have some form of damage caps, including all our neighboring states. Also, many states including Texas and Oklahoma cap non-economic damages lower than what Issue 1 proposes. In the federal court system, and in 16 states, the legislature has authority to approve or adopt court rules. Issue 1 is the sort of lawsuit reform adopted by other states and any suggestion to the contrary simply isn’t accurate.

In November we can make Arkansas a better place to grow jobs and raise our families. While we pursue the critical ingredients of tax reform, regulatory reform and education reform, let’s add the much-needed ingredient of lawsuit reform. Most states already have and are seeing the results. Let’s pass Issue 1 and give Arkansans a recipe for a more prosperous, healthier Arkansas.

 

This piece was originally published in Talk Business & Politics.

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